Our Hedgeye Housing Compendium table (below) aspires to present the state of the housing market in a visually-friendly format that takes about 30 seconds to consume.
*Note - to maintain cross-metric comparability, the purchase applications index shown in the table below represents the monthly average as opposed to the most recent weekly data point.
Today's Focus: MBA Mortgage Applications
The Mortgage Bankers Association today released its weekly mortgage applications survey data for the week ended June 20.
The spring slump gives way to the summer slump with purchase demand leading the composite index lower for the week ending 6/30. Yesterday’s May New Home Sales figures were encouraging, but the best forward indicator on demand volume continues to signal slowing momentum.
* Composite Index: Down 1.0% WoW to 348.1 on the index, the second lowest print YTD
* Purchase Apps: Down -1.2% WoW with the YoY worsening 280bps sequentially to -17.9%. The second quarter finishes up +3.2% QoQ.
* Refi; Down -0.9% WoW with the YoY “improving” to -56.5% from -58.4%.
* Rates: 30Y Rates dropped -3 bps to 4.33%. Notably, mortgage rates were -2.9% YoY in the latest week – the 1st time the 30Y FRM contract has been negative on a YoY basis since 5/13/2013
Taken in conjunction with the previous week's 4.7% w/w decline in purchase applications, this week's -1.2% drop continues the erosion of the post-holiday bounce and returns the index to 176.4.
As a reminder, we're more interested in the mortgage purchase volume data as it's the better leading indicator of the direction of housing's momentum, while the refi data is largely a reflection of rates on a coincident basis.
Our expectation remains that the back half of this year and the first half of 2015 should see steady downward pressure on the rate of home price appreciation.
About MBA Mortgage Applications:
The Mortgage Bankers’ Association’s mortgage applications index covers more than 75% of mortgage applications originated through retail and consumer direct channels. It does not include loans delivered through wholesale broker and correspondent channels. The MBA mortgage purchase applications index is considered a leading indicator of single-family home sales and construction. Moreover, it is the only housing index that is released on a weekly basis.
Frequency:
The MBA Purchase Apps index is released every Wednesday morning at 7 am EST.
Joshua Steiner, CFA
Christian B. Drake
