The MBA market index is up 1.2 percent in the January 6 week from the prior week. It is down 11.4 percent from four weeks ago, and off 67.8 percent from a year earlier. While applications for new mortgages are down, refinancing activity took advantage of a dip in mortgage rates.

The contract rate for a 30-year fixed rate mortgage is 6.42 percent in the January 6 week, down 16 basis points from the prior week, the same as four weeks earlier, and up 290 basis points from a year earlier.

The purchase index is down 0.5 percent from the prior week, down 12.7 percent from four weeks earlier, and down 43.8 percent from a year ago. The refinance index is up 5.1 percent week-over-week, down 6.8 percent from four weeks ago, and down 86.1 percent from the same time last year.

The January 6 index for fixed rate mortgages is up 1.3 percent from one week ago, down 10.9 percent from four weeks earlier, and 69.2 percent lower than a year ago. The index for adjustable rate mortgages is up 1.1 percent week-over-week, down 16.5 percent from four weeks ago, and down 25.0 percent from a year ago.

The Mortgage Bankers' Association compiles various mortgage loan indexes. The purchase applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.

This provides a gauge of not only the demand for housing, but economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the Mortgage Bankers Association purchase applications, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once a home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Since the economic backdrop is the most pervasive influence on financial markets, housing construction has a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the MBA purchase applications index carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.