Weekly mortgage application data tends to be so incremental that it usually doesn't warrant spending a lot of time focusing on. But last week, purchase applications soared to a level worth noting. This news suggests that home buying demand may be strengthening to a level not seen since its summer collapse. Here's the Mortgage Bankers' Association explaining the implications of purchase applications increasing 12.5% over the week prior:
"Taking into account typical seasonal patterns, purchase applications rose to their highest level of the year last week. On an unadjusted basis, purchase application activity is the highest since last May," said Michael Fratantoni, MBA's Vice President of Research and Economics. "An improving job market is beginning to pave the way for an improving housing market. Additionally, mortgage interest rates remained below 5 percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications."
Reaching the highest point on an unadjusted basis since May is particularly notable, because that's shortly after the home buyer credit expired. Home sales plummeted shortly thereafter. If purchases are back at levels seen last spring, then this could indicate that Americans have finally recovered from their home buyer credit-induced hangover. The market needs sales to strengthen compared to the levels seem last fall to work through its huge inventory of homes and stabilize prices.
Read the full press release at the Mortgage Bankers Association.