Wednesday, March 22, 2006

Mortgage Purchase Applications Continue Decline

From Bloomberg:

U.S. MBA's Mortgage Applications Fell 1.6% Last Week

A gauge of U.S. mortgage applications fell last week to the lowest level of the year as home purchases and refinancing declined, a sign housing will be less of a source of strength for the economy.

The Mortgage Bankers Association's weekly application index dropped 1.6 percent to 565.0 from 574.4. The Washington-based group's purchase gauge fell 2.3 percent to 393.6 from 403.0. ...
Purchase applications are down 26 percent since reaching a high in June of last year, the mortgage bankers group said.
The mortgage bankers group's gauge of refinancing fell 0.6 percent to 1574.5 from 1583.6. The index is down 47 percent from a 12-month high reached in June.

Purchase applications have been sliding downward rather dramatically since last summer. If current mortgage applications are at the lowest levels of the year, it's highly unlikely that we're going to see any "Spring Boom" this year. While sales will certainly pick up above February levels, it looks like sales volume this year will continue to be significantly lower than levels set in the previous years. Many housing economists are calling for 2006 to be a record year, if the trends that begun in the Fall and through Q1 continue, I can't see how that will be the case.

Caveat Emptor!


Blogger skep-tic said...

this is interesting. february is usually the low point in the selling cycle. if march ends up being lower (as it looks like it will), then it should give the downward pricing trend some momentum. the smart sellers should realize there isn't going to be a spring bounce and react accordingly

3/22/2006 11:03:00 AM  
Blogger grim said...

My current estimate (done yesterday actually) puts March sales at roughly 1950. That would be ~13% below March '05 sales and ~15% below March '04 sales. My estimate also puts sales below 2002 and 2003. I'll need to compile the data for 2000 and 2001 to see just how deep the multi-year low will be.

March sales will most certainly be higher than February. There isn't any doubt about that.


3/22/2006 11:26:00 AM  
Blogger skep-tic said...

well if March sales are higher than Feb, then you will see articles proclaiming a spring bounce, even if sales are down YoY.

3/22/2006 11:37:00 AM  
Blogger grim said...

Depends on how they calculate the seasonal adjustments. My numbers are always unadjusted, the NAR and NJAR typically adjust for seasonality.


3/22/2006 12:02:00 PM  
Anonymous Anonymous said...

Those who cannot read the whole link here it is split:

3/22/2006 12:58:00 PM  
Anonymous Anonymous said...


3/22/2006 01:06:00 PM  
Anonymous Anonymous said...

Is this guy for real?

"Stop worrying about the housing market
When 2 billion people in India and China begin to earn wages equivalent to the US, averaging say $40,000 up from $1500, their global earning power will be staggering. 100 million will be super rich, all wanting to buy a house in California, NYC and Wisconsin. I already see the CPE (Chinese prosperity effect) in my lux high rise in San Francisco. We should rename the building Shanghai SF. This is a very exciting trend. I love immigration!
Someone tell David L. at NAR to reforecast. -- Bradley Inman"

3/22/2006 01:15:00 PM  
Blogger chicagofinance said...

Anon 1:15PM:

What a flat out pathetic lie!


3/22/2006 01:46:00 PM  
Blogger grim said...

I wouldn't put much weight in what Bradley says. Lately it seems as if he's been going for shock value and publicity.


3/22/2006 01:49:00 PM  
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