Today’s Mortgage Banking Association purchase application report showed that the purchase application data was up 15 % year over year. The last 4 weeks on a year over year % have demonstrated growth.
We have had 16.75% year over year growth on a 4-week average.
From Calculated Risk:
Remember, seasonality has kicked in going out toward January 2021. So, total volumes will fall, but the key is to stay flat to positive for the rest of year on year over year basis. One thing to remember is that this level of growth is higher than what we had in the BC (Before Coronavirus) data, which averaged about 11.75% year over year. This was the data line before the virus hit.
Compare it to the last 6 weeks, which was when purchase application data went positive again on a year over year basis: 6 weeks = 15.6% year over year growth.
We don’t need to see high double-digit growth for the rest of the year to hold these gains, we just need to be flat to positive year over year each week. So, if the data cools down to the Before Corona Virus trend, that is fine. Even if we see single-digit growth year over year, that is ok up until we get to January 2021. Also, remember that the housing comps will be harder in the 2nd half of 2020 than the first half. What you don’t want to see is what we saw in the first few weeks of lockdown protocols. We saw double-digit declines in purchase application data before we found the bottom and moved on higher.
I addressed the concerns of a W shape housing recovery yesterday on HousingWire. Remember, the shock and fear of the virus and lockdown protocols were the significant drivers of the enormous declines on a year over year basis for the purchase application data. The mortgage market meltdown that started the week of March 9th didn’t help either. However, we are in a better place with credit now as mortgage rates have come back down.
Remember, be the detective, not the troll here, don’t let the housing twitter bears change the narrative based on a lower % yearly positive growth. Growth is growth, the 2020 housing crash bears blew it again. Only show concern we have double-digit year over year declines with the purchase application data.
Logan Mohtashami is a housing data analyst, financial writer, and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami, now retired, was a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his Facebook page https://www.facebook.com/Logan.Mohtashami and is a contributor for HousingWire.