A little over a year ago, the home buyer credit expired and home sales collapsed. They were relatively weak in the first part of 2010, even with the credit. But once that extra government incentive disappeared, sales plummeted to levels not seen since the 1990s. At the time, the sales were expected to pause for just a few months, and then resume at a brisker rate. A year later, sales remain very, very low.
This can be seen quite clearly by the latest data from the Mortgage Bankers' Association Index of mortgage applications for home purchases. Here's what its index looks like since 1990:
The green line represents the current index value.
I left off the actual numbers, per the MBA's request, so I just show the trend. But I can provide some perspective. As of the week ending June 3rd, the index was just 12% higher than it was as of July 9, 2010 -- when it hit a 13-year low. As you can see from the green line, it's currently hovering at 1997 levels.
Last week, the index was also 69% lower than it was when it hit its all-time high in mid-2005. Put another way, for every 10 applications for purchase mortgage bankers received then, now they only get three. You can see how consistent this current low level of purchase applications has been. They have risen a little bit from a year earlier, but only a little. Home buying demand remains very anemic.