As a result of the decline in mortgage applications, the 6-month moving average, which has been rising in tandem with house prices, dipped slightly in July. The 6-month moving average smoothes volatility in the month-to-month data. Holding constant all other influences, the recent decline in mortgage applications that likely stemmed from rising interest rates suggests that house price growth could decelerate in the coming months. However, other dynamics, such as pent-up housing demand and tight housing supply are expected to support house price growth. In addition, the rise of all-cash sales has diminished the role of mortgage applications for purchase as an indicator of housing demand. As a result, rising house prices and the housing recovery will continue. Nevertheless, mortgage applications for purchase, a key method of purchasing a home, will continue to be watched for clues about the direction of house prices.
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