Housing and lending indexes fell last week as interest rates continued to climb.
The average rate on 30-year loans crept up another 3 basis points, while applications fell 8.6%, according to the Mortgage Bankers Association of America.
Housing starts nationwide declined 3.9% in March, to a seasonally adjusted rate of 1.45 million units, according to the Commerce Department.
But economists are having a hard time explaining figures in that report showing a decline of more than 16% in the West.
The region's housing and lending markets (excluding California) have performed better than the rest of the United States in the past several years, as people from both coasts have moved in. Economic indicators, including employment and earnings, did not change significantly from February to March, and California has seen some recovery.
"Whatever it is, I suspect it was an aberration," said Ken Goldstein, economist for the New York-based Conference Board, which produces consumer confidence figures. "It may be a temporary shock at the idea of rising rates," he offered.
Despite the Commerce Department's figures, lenders in the several key cities in the West are reporting business as usual on the production side.
"That (drop in housing starts) is just not true out here in Salt Lake City," said Jim Nabeker, vice president and regional manager for loan department at First Security Bank of Utah. "My loan officers are really busy, and there are houses going up everywhere."
Rising interest rates have not adversely affected applications, Mr. Nabeker noted.
"Hopefully, people understand that rates are still better than they were in the late '80s and early '90s," he added.
Colorado Springs is still enjoying a busy building season despite the interest rate hike, said Kim Wright, vice president of retail production for Peoples Mortgage Corp.
"Building is just getting busier here," she reported.
An interest rate jump is keeping certain potential homebuyers out of the market in Colorado Springs, Ms. Wright added. "It's difficult to find anything out here under $100,000 for sale, so some people with limited incomes are being knocked out of the market."
New home demand is still strong in Phoenix, reports Greg Teare, executive vice president for retail lending at Matrix Financial Services Corp. In fact, there is a backlog in home construction because the area is lacking skilled labor, he reports.
