Purchase mortgage applications hit yearly high
Specifically, the purchase mortgage index was down 14.3 percent from the same week in 2010 but up 14.3 percent from the previous week. That particular index tracks the volume of national applications made by people wanting to purchase new homes. That 14.3 percent jump represents the highest number of purchase applications made this year.
Here are a couple of things worth mentioning. Bear in mind that the index is down compared to the same time a year ago, but there’s a major factor to consider when looking at housing market data in 2011 – there was a sizable tax credit for home buyers in place in 2010 and that is absent this year. It stands to reason that sales from a “no tax credit” period will be down when compared to one where a credit is in place.
Frankly, “apples to apples” comparisons will be impossible until such time as we can look at two periods where tax credits were not in place. We’ll be able to do that soon, however, as buyers were originally instructed to get homes under contract by the end of April last year and close on them by the end of June.
Still, any increase in purchase applications is good news considering that housing markets are still recovering. The question is why did those applications increase in the first week of March?
The answer is pretty simple – improving employment data shows that more people are going to work. People with jobs tend to purchase major items such as houses, while those who are looking for work do not.
The Mortgage Bankers Association points to an improving job market as the reason more people are considering buying homes and the data backs up that assertion. On March 10, the Arkansas Department of Workforce Services announced the January unemployment rate in the Natural State was 7.8 percent – an improvement from 8 percent a year ago. Nationally, the unemployment rate in January was 9 percent, down from 9.7 percent a year ago.
While no one will be whooping it up about a statewide unemployment rate of 7.8 percent and a national one of 8 percent, it’s still nice to see things heading in the right direction. A full economic recovery doesn’t happen overnight, after all, and it’s fairly obvious that an improving job market is a sign of good things on the horizon.
We’ll not tackle the question of whether we’re seeing the beginnings of a recovery. Still, improved unemployment data and an increase in purchase mortgage applications are encouraging. The Mortgage Bankers Association has predicted an increase in those applications throughout 2011, so we’ll just have to watch and see if that group is correct.
The Mortgage Bankers Association, by the way, updates its weekly application data on its site at MortgageBankers.org. Stop in regularly for the latest news about the mortgage market.
Home Sweet Home is distributed weekly by the Mortgage Bankers Association of Arkansas. Visit the Association on the Internet at mbaar.org.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.