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Takeaway: Q3 Housing data is off to an ambiguous start thanks to Holiday volatility. We'll have a better sense for how things are trending next week.

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.

Purchase Apps | Holiday Noise - Compendium 071515

Today’s Focus:  MBA Mortgage Applications

Data volatility is notoriously prevalent around holidays and seasonal adjustments are notoriously poor at fully resolving the peri-holiday choppiness in activity.  Superficially, the last two weeks of Purchase Application data appear to support that notoriety. 

After rising +6.6% in the week ending July 3rd, Purchase Demand in the latest week declined -7.5%.   We’re inclined to simply call it a wash and wait for next weeks data before attempting to discern any underlying shift in demand to start 3Q. 

The Data:  Purchase activity declined -7.5% in the latest week, taking the index back below the 200-level to 196.4.  From a rate-of-change perspective, however, the data was more sanguine as growth actually accelerated +10bps sequentially to +17.0% YoY.  Refinance activity, meanwhile, rose +3.7% with rates on the 30Y FRM contract steady for a second week at 4.23%.   Rates remain -2.3% lower than the corresponding period last year with the current rate of 4.23% comparing to the full year average of 4.35% and the 1H15 average of 3.97%. 

In short, the high-frequency Purchase Demand data remains good on an absolute basis and very good on a rate of change basis but the holiday convolutes a clean reading of the trend to start 3Q.  Hurry Up and wait.  

Purchase Apps | Holiday Noise - Purchase   Refi YoY  

Purchase Apps | Holiday Noise - Purchase Applications LT 

Purchase Apps | Holiday Noise - Purchase 2013v14v15 

Purchase Apps | Holiday Noise - Purchase Index   YoY Qtrly 

Purchase Apps | Holiday Noise - Purchase YoY  

Purchase Apps | Holiday Noise - 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