U.S. mortgage application activity fell last week despite borrowing costs on 30-year home loans declining to their lowest levels since November, Mortgage Bankers Association data released on Wednesday showed.
The refinance share of mortgage activity increased to 42.4 percent of total applications from 41.6 percent the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.22 percent, from 4.28 percent.
The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since November 2016, 3.50 percent, from 3.51 percent.
The news comes a day after U.S. homebuilding fell in March after unseasonably mild weather buoyed activity in February.
Housing starts decreased 6.8 percent to a seasonally adjusted annual rate of 1.22 million units as the construction of single-family homes in the Midwest recorded its biggest decline in three years, the Commerce Department said.
Economists had forecast homebuilding falling to a 1.25 million-unit pace last month. Housing starts were up 9.2 percent compared to March 2016.
Last month's decline in homebuilding was likely payback after the warm weather pulled forward construction in February, Reuters reported.
Single-family homebuilding, which accounts for the largest share of the residential housing market, fell 6.2 percent to an 821,000 unit pace last month, retreating from a near 9-1/2-year high. Single-family starts in the Midwest, which was lashed by a storm last month, declined 35 percent.
That was the largest drop since January 2014 and pushed starts to their lowest level since August 2015. Single-family building permits in the Midwest decreased 5.9 percent.
Single-family starts also fell 5.5 percent in the West and were unchanged in the Northeast. They rose 3.2 percent in the South. Last month, starts for the volatile multi-family housing segment dropped 7.9 percent to a 394,000 unit pace.
Still, housing remains on solid footing. Overall building permits increased 3.6 percent, driven by a 13.8 percent jump in the multi-family segment.
Though single-family permits fell 1.1 percent last month, they were not too far from the more than nine-year high reached in February. A tightening labor market, which is generating steady wage growth, is underpinning the housing market.
"Mild winter weather in the first two months of the year pushed construction forward," said Gus Faucher, chief economist at PNC Financial in Pittsburgh. "Homebuilding continues its gradual recovery."
The sector, however, remains constrained by a dearth of properties available for sale. Builders have failed to bridge the gap, citing a range of problems including shortages of labor and land as well as rising material prices.
(Newsmax wire service Reuters contributed to this report).