The MBA mortgage applications index is 7.2 percent lower in the January 26 week. It is 16.7 percent higher than four weeks ago and 13.1 percent lower than a year earlier. The purchase index is 11.4 percent lower in the current week and 9.8 percent higher than four weeks ago and 18.8 percent lower than a year earlier. The refinancing index is 1.6 percent higher and is 24.4 percent higher than four weeks ago and 3.0 percent higher than a year earlier. In the January 26 week, refinancing accounted for 34.2 percent of mortgage applications compared to 32.7 percent in the prior week.

MBA Deputy Chief Economist Joel Kan said,"Applications decreased compared to a holiday-adjusted week, driven by a decline in purchase applications that offset a slight increase in refinance activity." He continued,"Low existing housing supply is limiting options for prospective buyers and is keeping home-price growth elevated, resulting in a one-two punch that continues to constrain home purchase activity. The average loan size for purchase applications has picked up in recent weeks to $444,100, the largest average loan size since May 2022."

The fixed-rate mortgage index is 7.5 percent lower in the January 26 week. It is 15.9 percent higher than four weeks ago and 13.0 percent lower than this week last year. The adjustable-rate mortgage index is 3.1 percent lower and is 28.2 percent higher than four weeks ago and 14.0 percent lower than a year ago. Although mortgage rates have fallen below 7 percent and are the most affordable since November, lack of supply and higher prices are limiting home purchases, especially in the existing home market.

The contract rate for a 30-year fixed-rate mortgage is 6.78 percent in the current week. This is unchanged from the prior week, 2 basis points higher than four weeks ago, and 59 basis points higher than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.23 percent in the week. This is 1 basis point higher than the prior week, 52 basis points higher than four weeks ago, and 85 basis points higher than a year earlier. In the January 26 week, adjustable-rate mortgages accounted for 6.6 percent of mortgage applications compared to 6.3 percent in the prior 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.