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Takeaway: The MBA Purchase Applications Index sits at 172 3QTD, down 4.2% QoQ and the lowest quarterly reading since 1996.

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. 

A LOWER LOW FOR 3Q14 MORTGAGE DEMAND - Compendium 073014

Today's Focus: MBA Mortgage Applications

The Mortgage Bankers Association today released its weekly mortgage applications survey data for the week ended July 24. 

* A whole lotto not much sequentially as a -4% decline in refi activity and a +0.2% increase in the Purchase Index drove a -2.2% decline the composite index.

* So, where we care on the Purchase demand side, we remain just north of the YTD (and 10Y) lows recorded during peak weather distortion in February.  We are currently tracking -12% YoY and -4.2% QoQ.

* Rates on the 30Y FRM remained unchanged for a 3rd consecutive week at 4.33% and continue to hold near TTM lows.

Big picture, the tide of housing data remains red and this morning's Purchase Apps +0.2% w/w print doesn't change that. We remain bearish on the housing complex until the slope of HPI deceleration inflects. 

 

Why You Should Care:

We flagged the chart below last week, but as a reminder, it's our contention that HPI continues to decelerate through the end of 2014 and potentially well into 1H15. Historically, HPI trends and inflections have correlated strongly with the movement in housing-related equities. Consider the chart below, which shows the YoY rate of growth in HPI in green and the price of the ITB exchange traded fund for homebuilders. 

Hpi vs itb normal


 A LOWER LOW FOR 3Q14 MORTGAGE DEMAND - Purchase Qtrly

A LOWER LOW FOR 3Q14 MORTGAGE DEMAND - Purchase   refi YoY 

A LOWER LOW FOR 3Q14 MORTGAGE DEMAND - Purchase LT w Summary stats 

A LOWER LOW FOR 3Q14 MORTGAGE DEMAND - Composite LT w Summary stats 

A LOWER LOW FOR 3Q14 MORTGAGE DEMAND - Composite Qtrly

A LOWER LOW FOR 3Q14 MORTGAGE DEMAND - 30Y rate 

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