MBA: “No sign of a rebound in purchase applications yet”

MBA’s refinance index dipped 1% from the previous week and was 83% lower than the same period a year ago. The seasonally adjusted purchase index dropped 1% and down 3% when unadjusted. Compared to last year, purchase applications were down by 23%.

“Recent economic data will likely prevent any significant decline in mortgage rates in the near term, but the strong job market depicted in the August data should support housing demand,” said Fratantoni. “There is no sign of a rebound in purchase applications yet, but the robust job market and an increase in housing inventories should lead to an eventual increase in purchase activity.”

The refi share of mortgage activity inched up four basis points to 30.7% of total applications, and the adjustable-rate mortgage (ARM) share of activity remained unchanged at 8.5%. The FHA and VA shares of total applications fell to 13.3% and 10.8% week over week, respectively. The USDA portion hovered at 0.6% from the week before.

“Spending was likely even lower as housing demand, especially for new homes, has fallen rapidly,” said Ricky Goyette, an associate at Fannie Mae’s Economic and Strategic Research Group. “This is consistent with our view that declines in residential fixed investment, which historically lead to broader economic downturns, likely portend a recession.”