The MBA market index is up 3.0 percent in the March 17 week. It is up 10.8 percent from four weeks ago, and down 51.6 percent from a year earlier. Mortgage rates were down for a second week in a row, which helped maintain application activity. MBA Deputy Chief Economist Kan said,"Both purchase and refinance applications increased for the third week in a row as borrowers took the opportunity to act, even though overall application volume remains at relatively low levels."

The contract rate for a 30-year fixed rate mortgage is 6.48 percent in the March 17 week, down 23 basis points from the prior week, down 14 basis points from four weeks earlier, and up 198 basis points from a year earlier. Kan noted,"Treasury yields declined last week, driven by uncertainty over the health of the banking sector and worries about the broader impact on the economy." However, the dip in rates may support homebuying this spring. Despite limited supply, homebuyers are being vigilant and snapping up units as they come on the market. There is also an opportunity for those who got a mortgage when rates were around 7 percent in the fall of 2022 to refinance to a better rate, or those who took out an adjustable rate mortgage to switch to a fixed rate.

The purchase index is up 2.2 percent from the prior week, up 10.3 percent from four weeks earlier, and down 36.2 percent from a year ago. The refinance index is up 4.9 percent week-over-week, up 12.8 percent from four weeks ago, and down 68.4 percent from the same time last year.

The March 17 index for fixed rate mortgages is up 3.0 percent from one week ago, up 9.7 percent from four weeks earlier, and is 52.6 percent lower than a year ago. The index for adjustable rate mortgages is up 3.8 percent week-over-week, up 24.8 percent from four weeks ago, and down 35.5 percent from a year ago. The renewed use of ARMs suggests that homebuyers are willing to take the less costly option for an initial period in order to secure a home purchase. However, where possible, consumers will almost certainly prefer to lock in a fixed rate.

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.