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Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage purchase applications.
- The number of people submitting mortgage applications for a home purchase rebounded somewhat in the latest week after having eased over the holidays.
- Activity rose 8 percent to an index value of 177 after touching 163 in the prior week. But the index is still slightly below the level 180 to 200 during most weeks in 2011.
- Because of excessively tight underwriting standards, about one-third of all home sales recently have been all-cash deals, bypassing the mortgage application process altogether. Therefore, one should not fully gauge home sales activity just from the mortgage data.
- One should further keep in mind that this mortgage purchase applications data, produced by the Mortgage Bankers Association, is a very useful gauge of week-to-week directional trends, but tends to have substantial drifts over a long period of time. From 1990 to 2005, purchase applications quadrupled, where as home sales only doubled. From 2005 to today, applications fell by nearly 65 percent while home sales fell by 40 percent.
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