The MBA market index is down 5.7 percent in the February 24 week. It is down 18.9 percent from four weeks ago, and down 56.9 percent from a year earlier. Mortgage rates are up for the fourth week in a row, and applications are now down for the third consecutive week. MBA Deputy Chief Economist Kan said,"The 30-year fixed rate increased to 6.71 percent last week, the highest rate since November 2022, which drove a 6 percent drop in applications. After a brief revival in application activity in January when mortgage rates dropped down to 6.2 percent, there has now been three straight weeks of declines in applications as mortgage rates have jumped 50 basis points over the past month."

The contract rate for a 30-year fixed rate mortgage is 6.71 percent in the February 24 week, up 9 basis points from the prior week, up 52 basis points from four weeks earlier, and up 256 basis points from a year earlier.

The purchase index is down 5.7 percent from the prior week, down 24.7 percent from four weeks earlier, and down 40.3 percent from a year ago. The refinance index is down 5.5 percent week-over-week, down 4.8 percent from four weeks ago, and down 72.1 percent from the same time last year. The rise in mortgage rates has about equally had an impact on homebuying and refinancing. Kan also noted,""Data on inflation, employment, and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates."

The February 24 index for fixed rate mortgages is down 6.1 percent from one week ago, down 20.1 percent from four weeks earlier, and is 55.7 percent lower than a year ago. The index for adjustable rate mortgages is up a scant 0.4 percent week-over-week, down 1.7 percent from four weeks ago, and down 38.3 percent from a year ago. The renewed use of ARMs suggests that homebuyers are taking the less costly option for an initial period in order to afford the home purchase. This will probably add to a wave in refinancing should mortgage rates come down again enough to make it worthwhile.

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.