Interest Rate Roundup

Wednesday, November 19, 2008

MBA figures show purchases falling off the table

The list of negative leading indicators for the housing sector keeps getting longer. First, there was yesterday's dismal NAHB report. Then this morning, we got another batch of truly ugly Mortgage Bankers Association figures on loan applications.

The group's weekly index dropped 6.2% to 398.60 in the week of November 14 from 425 a week earlier. Refinance applications were up by about 2.6%, but purchase mortgage applications fell off the table. The purchase index dropped 12.6% to 248.50 from 284.40. That is the lowest level since a reading of 218.70 in the week of December 29, 2000.

Now here's the thing: The MBA figures do some crazy things around the holidays, with big increases and big decreases historically in the weeks around Christmas and New Year's. That's because of the difficulty of seasonally adjusting the figures. For example, the 12/29/00 week mentioned above showed a 21.4% drop in purchases ... but the week of 1/5/01 showed a 33.9% rise.

So if you exclude that spike down week in the MBA purchase index, you'd have to go all the way back to ... another holiday week, the week of 12/31/99, to find a lower reading (238). For the sake of the seasonal adjustment argument, let's exclude that number. If you do so, you have to go all the way back to the week of March 12, 1999 to find a NON-holiday reading lower than the 248.50 reading we just got.

Bottom line: The housing and mortgage markets are hurting ... really hurting. Anyone who says otherwise isn't looking at the data.


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