The MBA market index is up 7.0 percent in the January 20 week from the prior week. It is up 24.2 percent from four weeks ago, and down 53.7 percent from a year earlier. While application and refinancing activity are much lower than a year ago, the recent decline in mortgage rates has helped send homebuyers into the market where they are finding moderation in prices, although supply is likely still an issue as current mortgage holders are not moving and homebuilders have cut back on new projects.

The contract rate for a 30-year fixed rate mortgage is 6.20 percent in the January 20 week, down 3 basis points from the prior week, down 20 basis points from four weeks earlier, and up 248 basis points from a year earlier.

The purchase index is up 3.4 percent from the prior week, up 12.8 percent from four weeks earlier, and down 31.6 percent from a year ago. The refinance index is up 14.6 percent week-over-week, up 54.4 percent from four weeks ago, and down 74.8 percent from the same time last year. People who plan to buy a home in the coming months may be locking in a lower rate while they shop. Current mortgage holders who borrowed at the peak in the fall months of 2022 may be taking the opportunity to refinance from an adjustable rate to a fixed rate, or to otherwise reduce monthly housing costs.

The January 20 index for fixed rate mortgages is up 7.1 percent from one week ago, up 26.1 percent from four weeks earlier, and is 54.7 percent lower than a year ago. The index for adjustable rate mortgages is up 4.5 percent week-over-week, up 1.3 percent from four weeks ago, and down 32.1 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.