Two more positive datapoints for the housing market have recently come out: household formation and mortgage demand. Household formations accelerated to a new high in December, +1.95% on a year-over-year basis versus November’s year-over-year growth rate of 1.73%. Households are being formed at the fastest rate since the start of the financial crisis several years ago and it’s quite striking to see how quickly housing is recovering as a whole.
Meanwhile, mortgage applications surged, rising 12.9% week-over-week versus last week’s 10% rise. That brings the index level for purchase applications to 205, the highest level we've seen since the downturn bottomed. Total mortgage volume for the first two weeks of the year are running 6% below the full-year 2012 average.