DEMAND CONTINUES TO DROP IN 3Q14

Takeaway: Housing demand is now down 5.3% QoQ thus far in the third quarter, continuing the trend of lower lows and lower highs.

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.

DEMAND CONTINUES TO DROP IN 3Q14 - Compendium 081314

*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 August 8th.


The Composite index fell -2.7% WoW as refi activity was weaker by -4.0% on the week and purchase demand slid -1.0% sequentially.

The anemia extends to August as purchase apps hold the 160 level for a 5th consecutive week and are now running -5.3% QoQ and at the lowest quarterly ave reading since 2Q 1995. 

  • Lower Lows in Purchase Demand:  The Purchase Index slid yet again to 164.8 on the index, down from 166.5 last week - marking a second week of decline and the 5th consecutive week at the 160-level.  As it stands, purchase demand continues to sit just above the 10Y lows recorded during the peak weather distortion trough in February while average purchase demand for 3Q to-date is currently tracking at its lowest level since 2Q of 1995.  
  • Refi & Rates:  Refinance activity declined -4% WoW with rates on the 30Y FRM contract static at 4.35% in the latest week.  Refi activity remains down -38.4% YoY and continues to improve as we traverse through the easiest 2013 comps. 

Summarily, the high frequency housing data continues to corroborate the sea of red currently blanketing our housing compendium.  As we’ve highlighted repeatedly, we’re inclined to remain bearish on the housing complex until the slope of HPI deceleration inflects.

DEMAND CONTINUES TO DROP IN 3Q14 - Purchase Apps Qtrly   YoY TTM

DEMAND CONTINUES TO DROP IN 3Q14 - Purchase Apps Qtrly Ave

DEMAND CONTINUES TO DROP IN 3Q14 - Purchase Apps LT w summary stats

DEMAND CONTINUES TO DROP IN 3Q14 - Purchase Apps 4wk rolling Ave

DEMAND CONTINUES TO DROP IN 3Q14 - Purchase   Refi YoY

DEMAND CONTINUES TO DROP IN 3Q14 - Composite Qtrly   YoY TTM

DEMAND CONTINUES TO DROP IN 3Q14 - Composite Index LT w summary stats

DEMAND CONTINUES TO DROP IN 3Q14 - 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