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Takeaway: Mortgage purchase applications decline for the third week in a row and now point to a sharp and widening divergence vs pending home sales.

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.

THE JUNE SWOON ENDS WITH INCREMENTAL SWOON - Compendium

Today's Focus: MBA Mortgage Applications

The Mortgage Bankers Association today released its weekly mortgage applications survey data for the week ended June 27. 

We wrote on Monday that the strong Pending Home Sales number for May seemed at odds with the weak June mortgage applications data. We acknowledged, however, that there was still one week left in June that, if very strong, could explain away the difference.

This morning we got that number and it was quite weak. As such, we continue to expect the June Pending Home Sales number to be weak sequentially and likely to be accompanied by a downward revision to the May number. We illustrate the growing divergence between the two series in the first chart below.

Here's a summary look at the data: 

* Composite Index:  -0.2% sequentially and lower for a 3rd straight week 

* Purchase Apps:  Down -0.7% sequentially and also down for a 3rd straight week.   Ends June -15.9% YoY and +3.0% on a QoQ basis

* Refi:  Up +0.10% WoW with the YoY improving to -48.5% from -56.5% prior. 

* 30Y Rates:  The rate on the 30Y FRM contract returned to the lowest levels YTD at 4.28%, down from 4.33% the prior week.  Rates have now been negative on a YoY basis for 2 consecutive weeks and, on a monthly average basis, June marked the lowest cost of conventional home financing since April of last year.   

THE JUNE SWOON ENDS WITH INCREMENTAL SWOON - Pending HS vs Purchase Apps updated 

THE JUNE SWOON ENDS WITH INCREMENTAL SWOON - Purchase Apps   Refi YoY   

THE JUNE SWOON ENDS WITH INCREMENTAL SWOON - Purchase Apps LT w Summary Stats 

THE JUNE SWOON ENDS WITH INCREMENTAL SWOON - Purchase Apps Qtrly 

THE JUNE SWOON ENDS WITH INCREMENTAL SWOON - Composite Index Qtrly 

THE JUNE SWOON ENDS WITH INCREMENTAL SWOON - Composite Index LT w Summary Stats

THE JUNE SWOON ENDS WITH INCREMENTAL SWOON - 30Y FRM

  

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