On Wednesday of every week the Mortgage Bankers Association releases its index of mortgage applications which provides data on applications for mortgages for both purchase mortgages and refinancing. For some reason this index is almost completely ignored by economic reporters. This is difficult to understand. While a single week's data is of limited value, because it is so erratic, a four week average can provide important up-to-date information on the state of the housing market. While speculators have played some role in buying up blocks of homes, especially after foreclosure, the vast majority of homes are purchased with mortgages. This means that the applications index is giving analysts an early glance on the state of the housing market. (Applications typically precede sales by 4-6 weeks.) The news last week is pretty bad in this respect. While applications are up some from prior weeks, applications over the last month have been running close to 10 percent below the badly depressed year ago data. Look for more surprised economists when data on house sales are released for February and March.
--Dean Baker
