The Mortgage Purchase Index Plunges – Again

Jon Market Commentary, Real Estate

The lack of movement for the purchase index underscores the lack of traffic and lack of demand in the housing sector. – Bloomberg News
Once again the Mortgage Bankers Association purchase applications index fell 5% week to week and 9% year over year (LINK). Mortgage rates have fallen 30 basis points over the past month and 10 points over the past week. This is stimulating refinancings but not buying.
Cash/investment buyers disappearing – cash buyers were 24% of new home sales in September this year compared to 33% in September 2013. If the number of buyers who require a mortgage are falling and cash buyers are fading, who is going to buy homes? This situation is exacerbated for new homebuilders, as 93% of a newly built homebuyers use a mortgage.

This post was published at Investment Research Dynamics on October 22, 2014.