Housing Market Slowing Down

Sure signs of a slow-down in housing sector are now coming up before us. The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 14 and that reveals all supporting evidences for such a slow-down. The survey covers approximately 50% of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990.

The Market Composite Index, a measure of mortgage loan application volume, was down by 4.6% on a seasonally adjusted basis from last week. This week's figure is a drop of 31.3% from a year ago.

The purchase index sank by 6.2% this week to a level 19% lower than a year ago. The refinance index fell 1.6% this week to a level 46% lower than a year ago. New-home sales have sunk about 6% in the past year, while sales of existing homes are down about 7%.

Refinancings accounted for 35% of total applications last week. At the peak of its boom in 2003, refinancings accounted for more than 80% of applications.

Adjustable-rate loans accounted for 29% of applications. In March 2005, ARMs accounted for just over 36% of applications.