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According to a careful analysis of data associated with the mortgage rates in March of 2016, it appears that new home sales have increased while mortgage rates have dipped. Both of these have happened at the same time that there have been significant shortages in the starter home market. The upward climb of mortgage rates in the month of February led to a drop and decrease for the first time in four weeks in March.

New home sales are on the rise primarily as a result of inventory lack in terms of trade-up home and starter homes. According to a weekly survey of lenders conducted by Freddie Mac, 30-year fixed rate mortgages hovered around 3.71%. One year ago the rate was extremely close to this at 3.69%. 15-year fixed rates were just under 3%, nearly identical with rates from just one year ago. An adjustable rate mortgage for five years can be had for an average of 2.89%, to last year’s 2.92%. Part of the reason for the landscape in the mortgage rate industry today, according to Freddie Mac lead economist Sean Becketti, is that the level of the federal funds rate aligned with the reduction in the Federal Reserve’s 10 year Treasury note yield.

Because of this, the existing 30-year mortgage rate decreased as well and purchase applications also fell over the March and they were down 3.3%, and applications for refinancing also decreased to the tune of 5%. That being said, home purchase loan applications are still up. Home purchase applications are, in fact, 25 percent higher than the same period one year ago.

There is another issue impacting the mortgage market, and that is that there’s an inventory shortage across the country. Research from the Department of Housing and Urban Development and the U.S. Census Bureau show that new homebuyers are more likely to consider new construction these days because it’s harder to identify an existing home. Declines were a common theme for home sales across most of the country outside of the West, which experienced a surge of 38.5%.

It’s also becoming harder for first-time buyers to afford a home in a metropolitan market. Even with mortgage rates just under 4%, the lack of homes has pushed prices up and means that many first-time purchasers cannot afford to access what’s available.