The MBA mortgage applications index is down 0.8 percent in the September 8 week. It is down 5.6 percent from four weeks ago, and down 28.5 percent from a year earlier. MBA Deputy Chief Economist Joel Kan said,"Mortgage applications decreased for the seventh time in eight weeks, reaching the lowest level since 1996. Last week's decline was driven by a 5 percent drop in refinance applications to the weakest reading since January 2023." He continued,"Purchase applications increased over the week despite the increase in rates, pushed higher by a 2 percent gain in conventional loans. Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate."

The purchase index is up 1.3 percent from the prior week, down 3.9 percent from four weeks earlier, and down 27.5 percent from a year ago. The refinance index is 5.4 percent lower week-over-week, down 10.1 percent from four weeks ago, and down 31.1 percent from the same time last year. Refinancing accounted for 29.1 percent of total applications in the week compared to 30.0 percent in the prior week.

The September 8 index for fixed rate mortgages is down 1.5 percent from one week ago, down 6.1 percent from four weeks earlier, and is 27.3 percent lower than a year ago. The index for adjustable-rate mortgages is up 9.7 percent week-over-week, up 0.6 percent from four weeks ago, and down 41.5 percent from a year ago. Adjustable-rate mortgages account for 7.5 percent of total applications in the September 8 week, up from 6.7 percent in the prior week. A greater share of homebuyers is again opting for an adjustable-rate mortgage to improve initial affordability, and probably hoping for a chance to refinance at a lower rate before the reset.

The contract rate for a 30-year fixed rate mortgage is up 6 basis points to 7.27 percent in the September 8 week, up 11 basis points from four weeks ago, and up 126 basis points from a year earlier. In the prior week, the rate of 7.31 percent was the highest since December 2000. The rate for a 5-year adjustable-rate mortgage is 6.59 percent, up 26 basis points from the prior week, up 39 basis points from four weeks earlier, and up 176 basis points from the year-ago week.

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.