The MBA market index is up 27.9 percent in the January 13 week from the prior week. It is up 12.3 percent from four weeks ago, and off 59.8 percent from a year earlier. While application and refinancing activity are much lower than a year ago, the recent decline in mortgage rates to nearly a full point below the high in September 2022 has helped send homebuyers into the market where they are finding greater supply and moderation in prices.

The contract rate for a 30-year fixed rate mortgage is 6.23 percent in the January 13 week, down 19 basis points from the prior week, down 19 basis points from four weeks earlier, and up 259 basis points from a year earlier.

The purchase index is up 24.7 percent from the prior week, up 8.9 percent from four weeks earlier, and down 35.0 percent from a year ago. The refinance index is up 34.2 percent week-over-week, up 18.0 percent from four weeks ago, and down 80.7 percent from the same time last year. For the former, people who plan to buy a home in the coming months may be locking in a lower rate while they shop. For the latter, some of these may be more recent mortgages at higher rates or a chance to refinance from an adjustable rate to a fixed rate.

The January 13 index for fixed rate mortgages is up 28.7 percent from one week ago, up 13.4 percent from four weeks earlier, and 61.0 percent lower than a year ago. The index for adjustable rate mortgages is up 16.2 percent week-over-week, down 0.6 percent from four weeks ago, and down 30.3 percent from a year ago. Homebuyers are opting for fixed rate mortgages where possible, but willing to take out an adjustable rate if that secures the right home purchase.

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.