Mortgage Purchase Applications Continue to Plummet

What housing market recovery? That's the question that realtors must be asking themselves since the end of the government tax credit. Mortgage applications from purchases continued to fall last week by another 5.7%, according to the Mortgage Bankers Association. They're down an amazing 42.4% since the credit expired at the end of April. Americans' demand for buying homes has sunk an incredibly low level.

How low? The MBA index is now at its lowest level since February 1997. Here's how that looks:

mba purchases 2010-06-09.PNG

The green line is where the index currently stands. This is the fifth week straight the index has declined, as Americans' interest in purchasing homes has fallen off a cliff.

It's even too early to begin asking when home buying might ramp back up -- it's still on the decline. At this point, we have to wonder when the bleeding might stop. It fell more last week than the week prior. It would now have to grow 75% to reach its level from the end of April. And as the chart shows, even that was pretty low compared to the peak of the housing market. Purchases would have to grow by 219% to match that high.

At some point, the market will settle at a new normal. Since the government credit skewed where that point lies, we'll have to wait and see over the next several months how housing fares without that support. And remember, these declines have been happening at sub 5% mortgage interest rates. If rates start rising, sellers will really be in trouble.

Note: All figures above are seasonally adjusted.

Small Reivision: Initially, I reported the decline to hit December 1996 levels. Due to the way MBA provides these numbers, it's hard to tell precisely how it compares to past levels. Others are saying February 1997, and since there was a point then very close to this month's value, that's the more conservative estimate, and thus, safer to report.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In