The MBA market index is down 4.4 percent in the June 30 week. It is up 6.1 percent from four weeks ago, and down 32.4 percent from a year earlier. MBA Deputy Chief Economist Joel Kan noted that mortgage applications fell to their lowest level in a month as the 30-year fixed mortgage rate reached its highest since the end of May. Kan said,"Purchase applications decreased for the first time in a month, as homebuyers remained sensitive to rate changes. Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country. However, the average loan size for a purchase application declined to $423,500 its lowest level since January 2023. This was likely driven by reduced purchase activity in some high-price markets and more activity in some of the lower price tiers as buyers searched for more affordable options."

The purchase index is down 4.6 percent from the prior week, up 7.1 percent from four weeks earlier, and down 30.2 percent from a year ago. The refinance index is 4.1 percent lower week-over-week, up 2.8 percent from four weeks ago, and down 37.1 percent from the same time last year. Refinancing accounted for 27.4 percent of total applications in the week, up slightly from 27.2 percent in the prior week.

The June 30 index for fixed rate mortgages is down 4.6 percent from one week ago, up 6.7 percent from four weeks earlier, and is 29.9 percent lower than a year ago. The index for adjustable rate mortgages is down 2.8 percent week-over-week, down 3.2 percent from four weeks ago, and down 55.8 percent from a year ago. Adjustable rate mortgages account for 6.2 of total applications in the June 30 week.

The contract rate for a 30-year fixed rate mortgage is up 10 basis points to 6.85 percent in the June 30 week, up 4 basis points from four weeks ago, and up 111 basis points from a year earlier. The rate for a 5-year adjustable rate mortgage is 6.00 percent, down 28 basis points from the prior week, up 7 basis points from four weeks earlier, and up 138 basis points from the year-ago week.

Mortgage applications for ARMs is likely to be a larger share of total applications in the coming weeks as homebuyers seek to ensure monthly payments are affordable, and in the hope that refinancing at a lower rate will be possible before the initial rate resets.

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.