Fewer consumers are applying for loans to purchase homes, recent data revealed. According to a report released by the Mortgage Bankers Association (MBA), last week’s applications for home loans fell 37% from a year ago, indicating a possible downturn in home sales this selling season.

Despite a seasonally adjusted 1.8% weekly increase in mortgage applications, MBA vice president for research and economics Michael Fratantoni warned that the annual plunge can hamper home sales in the coming months.

“The sharp decline in MBA’s Purchase Application index in May had provided a clear leading indicator of the drops in new and existing home sales that were reported for June and July.  Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September,” he said.

Meanwhile, there has been an increase in refinancing activity over the last couple of days. According to the MBA index, the refinance share of mortgage activity jumped to 82.9% of total applications from 82.4% from the previous week. The figure was said to be the highest refinance share recorded since January last year. The adjustable-rate mortgage share of activity, on the other hand, rose from 5.8% to 6.1%.

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