Purchase Applications Support Housing Sector’s Weakness

Today’s Mortgage Bankers Application index for purchases dropped 14% to 260.9 vs. the week of October 31st’s 279.3. The refinance index was even worse, with a 28% drop to 1075.4. This contraction does not speed up recovery in the housing sector.

Tighter lending/credit standards from banks also may be contributing to this contraction. Despite government efforts to increase liquidity, the average 30 year mortgage rate stands at 6.22% vs. last month’s 5.93%. Such long-term financial commitments from consumers require a more stable economic environment.

Higher unemployment rates (especially in housing bubble states like California and Nevada or manufacturing based areas such as Ohio and Michigan) and record low consumer confidence levels (38) are anything but that stable environment, and will probably keep a lid on demand until these conditions improve.

If today’s Challenger Jobs Cut report, which announced a 5 year high for upcoming layoffs @ 112.8k, is a guide, recovery is far down the road.

Comments

[billddrummer:]

Mr. Hill:

The definition of belie means 'to prove false or misleading.'

From the headline, it makes the reader think that statistics are better than the perceived weakness in housing, suggesting an improvement, not a deterioration, in purchase applications.

In fact, the opposite is true.

A better headline--"Purchase Applications Support Housing Weakness"

Please refer to the dictionary before posting misleading headlines.

Thank you.

2008 Nov 05 06:05 PM

[kebu77:]

Obama wants to make energy his top priority.

Home builders might get together and propose a massive effort to make existing buildings more energy efficient. Nega-watts are better than coal-fired power plants.

Same for the commercial construction industry.

2008 Nov 06 11:12 AM