"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Wednesday, February 23, 2011

Mortgages and Sales

We begin the morning off with the MBA Weekly Applications Survey. Last week was pretty bad, with the composite index falling 9.5%, the purchase index falling 5.9%, and the refinance index falling 11.4%. The only bright spot, and this was only a bright spot if you aren't a mortgage broker, is that the average rate for the 30-year fixed-rate mortgage also dropped to 5.12%.
This week? Things have picked up this week, according to the press release. The composite index is up 13.2% for the week ending February 18, with the purchase index up 5.1% and the refinance index up 17.8%. Apparently, people were jumping on the low interest rate bandwagon which headed lower thanks to concerns about Libya. The average rate for the 30-year fixed-rate mortgage dropped to 5.00%[1].
Now, let's move on to department store sales. Last week's ICSC-Goldman Store Sales saw a drop of 1.4% for the week. This week, the data for the week ending 2/19 shows a rebound as major retail chains reported an average of a 2.6% increase in sales. Comparing that to the Redbook, we had a 2.2% increase in year-over-year sales last week, while this week we're looking at a year-over-year increase of 2.7%.
In other words, the handful of minor market indicators we have are looking optimistic. That is all overshadowed, though, by the looming specter of the 10 AM EST release of Existing Home Sales figures for January 2011. The Econoday-surveyed analysts are looking for an annual rate of 5.25 million existing home sales, slightly down from December's 5.28 million annual rate, but we'll find out for sure at 10 AM.
[1] So, if you were refinancing or buying a home last week, and you got a good rate, thank the people of Libya.

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