Blog posted On March 14, 2019
Mortgage rates continued their downward trend this week. Mortgage applications reacted, with new purchase application submissions increasing and refinance application submissions down only slightly. US construction spending is up. New home sales are down.
The Mortgage Bankers Association (MBA) weekly mortgage application survey tracks week to week changes in new purchase and refinance mortgage application submissions. For the week ending 3/8, new purchase application submissions increased 4.0% and refinance applications declined 0.2%, for a composite increase of 2.3%. The data shows loan balances continue to increase, suggesting the market is tilting toward higher-end home buyers.
US construction spending tracks total spending on private and public construction projects. After a modest December, US construction spending rebounded in January, with investment in public projects hitting an eight-year high. Overall, spending is up 1.3% month-over-month and 0.2% year-over-year. Spending on private projects only inched up 0.2% and spending on private residential project is down 0.3%.
New home sales or the sales of newly constructed homes declined in January, down 6.9% month-over-month to an annual rate of 607,000. All regions experienced a decline except the West, where sales jumped 28%. New home sales data can be subject to revisions, especially in the wake of the 35-day government shutdown that delayed the release of January’s report.
The MBA’s associate vice president of economic and industry forecasting, Joel Kan, commented, “purchase applications have now increased year over year for four weeks, which signals healthy demand entering the busy spring buying season.” Next week, the Federal Open Market Committee (FOMC) will host its second semiannual monetary policy meeting of the year. Based on a slowdown in consumer spending and the tepid jobs report, no rate hikes are expected.