The MBA market index is down 1.4 percent in the June 2 week. It is down 14.5 percent from four weeks ago, and down 32.5 percent from a year earlier. MBA Deputy Chief Economist Joel Kan said,""Mortgage rates declined last week from a recent high, but total application activity slipped for the fourth straight week. The 30-year fixed rate dipped to 6.81 percent, 10 basis points lower than last week but still the second highest rate of 2023 to date." He added,""Overall applications were more than 30 percent lower than a year ago, as borrowers continue to grapple with the higher rate environment. Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers."

The purchase index is down 1.7 percent from the prior week, down 12.7 percent from four weeks earlier, and down 27.1 percent from a year ago. The refinance index is 0.7 percent lower week-over-week, down 19.2 percent from four weeks ago, and down 42.3 percent from the same time last year.

The June 2 index for fixed rate mortgages is down 1.3 percent from one week ago, down 14.5 percent from four weeks earlier, and is 31.4 percent lower than a year ago. The index for adjustable rate mortgages is down 1.6 percent week-over-week, down 15.0 percent from four weeks ago, and down 44.1 percent from a year ago.

While potential homebuyers are keeping a close eye out for dips in the mortgage rate to improvement affordability, the lack of inventory means that prices are not falling much if at all in competition for what comes on to the market.

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.