Mortgage Purchase Applications Tumble, But Still Positive

After several weeks of strength, purchase applications for home mortgages took a tumble and fell by 6.0 percent on a seasonally adjusted basis in the October 20 week. Yet without adjustments, which included the Columbus Day holiday in the prior week, purchase applications were up 4,0 percent on the week, improving the year-on-year gain by 1.0 percentage point to a very solid 10.0 percent in what is a positive signal for underlying home sales. Refinancing activity fell 3.0 percent from the previous week, though the refinancing share of total activity rose 0.9 percentage points to 49.5 percent. Interest rates moved higher, with the average rate on conforming 30-year fixed mortgages ($424,100 or less) up 4 basis points to 4.18 percent. MBA reports in recent weeks continue to show home buyers much more active than they were a year ago, yet strength here has translated poorly into strength of government housing data, which has been disappointing and shows a gradual slowing on most fronts. Later this morning, the release of New Home Sales for September will shed further light on the nation's housing sector.