WASHINGTON - Mortgage applications fell in the week that ended May 27 for the second time in three weeks, reflecting fewer home purchases and less refinancing, according to a private report.
The Mortgage Bankers Association's index of mortgage applications declined 2.8 percent to 709.1 from 729.6 the previous week.
The gauge of home purchases dropped to the lowest level since the week that ended April 1, suggesting that higher home prices are deterring buyers. Federal Reserve Chairman Alan Greenspan said last month that some regions showed signs of unsustainable speculation that could make homes less affordable.
"Consumers will start to be a little more cautious about buying homes, particularly where prices have climbed so very, very rapidly," Lynn Reaser, chief economist at Banc of America Capital Management in Boston, said before the report. "What we're looking at is a market that has quite a bit of overheating and froth."
The mortgage bankers' survey covers about 50 percent of retail residential mortgage originations and has been conducted weekly since 1990. The base period is March 16, 1990, when the value for all indexes was 100.