this week in the housing market mortgage rates were mostly flat mortgage application volume was down and the sun belt is shining with new singlefamily home construction on the mortgage front freddie mac fmcc reported the 30year fixedrate mortgage averaged 509 as of june 2 down slightly from last week’s 510 average the 15year fixedrate mortgage averaged 432 up slightly from last week when it averaged 431 and the 5year treasuryindexed hybrid adjustablerate mortgage arm averaged 404 up from last week when it averaged 420 “mortgage rates continued to inch downward this week but are still significantly higher than last year affecting affordability and purchase demand” said sam khater freddie mac’s chief economist “heading into the summer the potential homebuyer pool has shrunk supply is on the rise and the housing market is normalizing this is welcome news following unprecedented market tightness over the last couple years” ah but summer is still several weeks away and higher mortgage rates are not generating new home loan volume the mortgage bankers association’s mba market composite index a measure of mortgage loan application volume was down 23 for the week ending may 27 compared to the previous week the seasonally adjusted purchase index dipped by 1 from one week earlier and the refinance index decreased 5 from the previous week and was 75 below the level of the same week one year ago “mortgage rates fell for the fourth time in five weeks as concerns of weaker economic growth and the recent stock market selloff drove treasury yields lower” said joel kan mba’s associate vice president of economic and industry forecasting “mortgage applications decreased to its lowest level since december 2018 as the purchase market continues to struggle with supply and affordability challenges” kan noted that last week’s purchase application level was down 14 from one year ago with most activity focused on larger mortgages  “demand is high at the upper end of the market and supply and affordability challenges are not as detrimental to these borrowers as they are to firsttime buyers” he said see also analysis why did 6 colleges shut down over the past 12 months on the home sales front one of the main frustrations facing firsttime buyers has been the lack of available inventory but that’s not to say new homes aren’t being constructed a data report from redfin rdfn found sun belt metro areas recorded the highest level of new home construction austin led the country with 311 singlefamily building permits per 10000 people in the first quarter followed by raleigh north carolina 307 jacksonville florida 292 nashville 266 charlotte north carolina 229 phoenix 227 houston 224 orlando 203 dallas 185 and las vegas 172 austin also led the country with the construction of new multifamily properties with 261 multifamily building permits per 10000 people in the first quarter followed by jacksonville 199 salt lake city 167 orlando 127 and denver 126 “if there had been enough homes at the start of the pandemic housing costs might not have skyrocketed the way they did over the past two years” said redfin chief economist daryl fairweather “the government should support homebuilding with things like subsidies and upzoning even as demand pulls back so the housingsupply hole starts to fill in there still aren’t enough homes to meet the pace of household creation and we need to be more prepared when demand inevitably picks back up” but that raises another question are the new homes being properly priced or are they overpriced a new study by researchers at florida atlantic university and florida international university determined four major us housing markets are overvalued by more than 60 while 11 others are overvalued by more than 50 boise idaho led the nation in overpriced housing thanks to an influx of new arrivals during the pandemic who bought up available property for their remote work the new research reported boise’s pricing history suggested homes now should cost an average price of 299202 although the typical buyer is paying 516548 which is 7264 above the area’s longterm pricing trend austin followed in the ranking of overpriced markets where buyers are paying 6770 more than they should “nearrecordlow mortgage rates helped fuel demand for housing especially during the pandemic and the competition for homes pushed prices higher” said dr ken h johnson an economist in fau’s college of business “but now the federal reserve is raising rates to curtail inflation and already that’s cooling demand”