MBA - mortgage applications up
Mortgage applications increased 13.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 18, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 13.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 14.8 percent compared with the previous week. The Refinance Index increased 17.8 percent from the previous week. The seasonally adjusted Purchase Index increased 5.1 percent from one week earlier. The unadjusted Purchase Index increased 9.6 percent compared with the previous week and was 6.9 percent lower than the same week one year ago. “Ongoing turmoil in the Middle East brought interest rates lower last week. Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week,” said Michael Fr
atantoni, MBA’s Vice President of Research and Economics.
The four week moving average for the seasonally adjusted Market Index is up 1.9 percent. The four week moving average is up 1.6 percent for the seasonally adjusted Purchase Index, while this average is up 1.8 percent for the Refinance Index. The refinance share of mortgage activity increased to 65.7 percent of total applications from 64.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6 percent from 6.0 percent of total applications from the previous week.
Housing Data is Questionable
"Most consider President's Day weekend as the official start of the spring housing season. There is, therefore, no more crucial time than now to have reliable data at our disposal for home sales, prices and inventories. How else do buyers, sellers and investors know how to proceed? Unfortunately, the housing crash itself has undermined the veracity of those readings. With the boom and the bust came the attention. Housing brought our economy down, and in doing so, boosted itself to the headlines. As with any big story, a cottage industry sprang up around it. Data providers came out of the woodwork, and as online sale and foreclosure web sites proliferated, so too did their ability to add to that data pool.
The result is double edged: On the downside, some data providers are less-than accurate, but on the upside, their sheer numbers provide a system of checks and balances, tempering the most outrageous assertions. So it seems sort of appropriate that today, as a new controversy swarms around potential errors in home sales figures from the National Association of Realtors, the exalted and much-contested S&P/Case-Shiller Home Price Index is released. It reports that home prices are dangerously close to an official double dip. Other data providers have been asserting recently that S&P/Case-Shiller is too bullish (and of course too bearish).
As for the Realtors' data, I find this one more disturbing. While some I have spoken with today call the claim by CoreLogic (a housing data provider) that the Realtors overestimated home sales in 2010 by almost 1.5 million, 'overblown,' the Realtors themselves admit there is a problem. They are 're-benchmarking' their sales calculation process. 'The last re-benchmarking to the existing-home sales series was based on 2000 Census data, so NAR is undertaking a re-benchmarking using independent sources,' says NAR's Walter Molony. 'We are consulting with various outside housing economists, government agencies, and some academic experts on the methodology to determine if there is, in fact, any drift in NAR’s existing home sales data, and, if so, by how much.' Molony says at this point they believe any drift in the data to be 'relatively minor,' and he goes on to say CoreLogic's assumptions may be 'too high.'
Bottom line, though, if NAR overstated sales, then inventories are far higher than we think they are (inventory, or months supply, is based on a calculation of properties for sale and the current sales pace). We already have a great deal of uncertainty in the inventory numbers because of the so-called 'shadow inventory' of foreclosures and bank owned homes. Why do all these numbers matter in the real world of Sunday open houses and local market closings? Because sales and inventories drive prices and they drive expectations...the latter, perhaps, more important in the current market where consumer confidence is all but non-existent."
"Rising employment and incomes will mean that home sales will continue to edge up from their still depressed levels. The existing market will continue to outperform the new market, as buyers are attracted to heavily discounted foreclosed homes," Dales said. "Rising home sales will not prevent prices from falling either. Even though sales rose in the 1990s, prices still fell," he added. With well over 5 million homes either up for sale or in the foreclosure pipeline, the rental market could be strong, according to Dales. "The good news is that some of the vacant supply may be rented out. After all, the fact that rental demand is rising and rental supply is already tight means that for the next few years the rental market will be the best performing part of the residential market," he said. "For the first time since 1986, rentals yields are likely to rise above their long-run average of 5 percent. Falling house prices, though, will mean that gross rental returns remain below 10 percent," Dales said.
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