Mortgage Applications – More Weakness In MBA Applications
The housing market weakened this summer. Home price growth is going to fall in the next few months. Affordability is a problem in many cities.
The latest housing data comes from the MBA mortgage applications index. This composite index was down 3.2% week over year in the week of November 9th. That’s on top of the 4% decline in the first week of November. Purchase index fell 2.3% on top of 5% weakness. The purchase index is at its lowest point since February 2017.
Refinancing index fell 4.3% on top of a 3% decline. That put it at its lowest level since December 2000.
Unadjusted purchase applications fell 3% from this week last year. The refinance share of mortgages increased 0.3% from the prior week to 39.4%. Average interest rate on 30 year fixed mortgages increased 2 basis points to 5.17%. That’s the highest level since 2010.
Mortgage Applications – Redbook Shows Continued Strength
Retail sales and the labor market are lagging indicators. Meaning, by the time they show weakness, the stock market will likely be down over 10%.
Redbook same store sales report from the week of November 10th showed 6.1% year over year growth. The 6.5% annual growth pace is the strongest in a decade. Thus supporting the thesis that the economy is late cycle.
It sounds illogical that I’m expecting a strong holiday season for retailers. But that’s what happens when the leading indicators begin to show weakness. Especially if it happens while the laggards are still strong. This will be the last strong holiday shopping season in this cycle.
Mortgage Applications – Analyzing The NFIB Survey
Your opinion on the NFIB survey depends on your overall opinion on the macro economy. It’s tough to review. You can say the October index is at a 4 month low. Or you can say that it’s just 1.4 points below its record high in August.
On the negative side, when indexes fall from amazing to great, it’s very bad in rate of change terms. The economy is on its last legs. Fed is getting too hawkish and global growth is slowing. Any modest blemish on what was one of the shining parts of this cycle is a bad signal.
