Mortgage applications in the U.S. fell last week to the lowest level since November 2008, a reminder any housing recovery will take time to develop.

The Mortgage Bankers Association’s index of loan applications decreased 13 percent in the week ended Jan. 21, figures from the Washington-based group showed today. Both refinancing and purchase applications fell.

“Usually when rates go up, refinancing goes down,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “We don’t see existing home sales any higher at the end of the year.”

Declining home prices and rising lending rates may prompt Americans to hold off on both refinance and purchase applications. Any lasting recovery in the housing market hinges on lowering unemployment, which had been at 9.4 percent or higher for 20 months, the longest since monthly records began in 1948.

The refinancing gauge dropped 15 percent to the lowest in a year, while purchase applications fell 8.7 percent to the lowest level since October, the mortgage bankers’ group said.

The average rate on a 30-year fixed loan rose to 4.80 percent last week from 4.77 percent the prior week. The rate reached 4.21 percent in October, the lowest since the group’s records began in 1990.

At the current 30-year rate, monthly payments for each $100,000 of a loan would be $524.67 or about $13 less than the same week the prior year, when the rate was 5.02 percent.

The average rate on a 15-year fixed mortgage declined to 4.12 percent from 4.16 percent.

Less Refinancing

The share of applicants seeking to refinance a loan fell to 70.3 percent last week from 73 percent the prior week.

Residential real-estate prices dropped in November by 1.6 percent from a year earlier, the biggest annual decline in a year, according to the S&P/Case-Shiller index of home values in 20 cities released yesterday.

Confidence among U.S. homebuilders has stagnated as builders are reluctant to start projects while foreclosures mount. The National Association of Home Builders/Wells Fargo sentiment index registered a reading of 16 in January, the same as the past two months, data from the Washington-based group showed last week. Readings below 50 mean more respondents said conditions were poor.

The applications data contrast with sales figures showing a pickup in demand. Purchases of existing houses increased 12 percent to a 5.28 million annual rate last month, the most since May, as more distressed sales took place following several months of foreclosures moratoriums, figures from the National Association of Realtors showed Jan. 20.

New-Home Sales

A report today may show sales of new homes rose 3.5 percent to a 300,000 annual pace last month, according to the median estimate of economists surveyed by Bloomberg before the Commerce Department report at 10 a.m. Purchases are hovering close to record low of 274,000 reached in August.

Lennar Corp., the third-largest U.S. homebuilder by revenue, is among companies bracing for a slow recovery. The Miami-based builder on Jan. 11 reported fourth-quarter profit that beat analyst estimates on cost cuts and earnings from its distressed-investing unit.

“The housing recovery will traverse a long and bumpy road,” Stuart Miller, chief executive officer, said in a conference call that day.