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Economy in Brief

Mortgage Applications Up Again
by Tom Moeller February 25, 2004

The index of mortgage applications compiled by the Mortgage Bankers Association rose 2.1% last week following a 4.9% rise the week prior. The index is up 5.2% in February from the January average (-27.4% y/y).

Purchase applications rose 2.3% w/w (+37.1% y/y) but the February average is down 8.0% from January (+25.4%).

During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing home sales.

Refinance applications increased for the second week (1.9% w/w, -42.9% y/y) and are up 17.6% this month versus January.

The effective interest rate on a conventional 30-Year mortgage rose to 5.77% from 5.74% the prior week. The average rate this month has been 5.80% versus 5.91% in January and 5.96% last February. The effective rate on a 15-year mortgage rose 2 basis points to 5.13%.

Chairman Greenspan's testimony on the role of housing-related government-sponsored enterprises (GSEs) in the US economy can be found here.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.

MBA Mortgage Applications (3/16/90=100) 2/20/04 2/13/04 2003 2002 2001
Total Market Index 854.5 837.1 1,067.9 799.7 625.6
  Purchase 423.5 413.9 395.1 354.7 304.9
  Refinancing 3,361.9 3,298.3 4,981.8 3,388.0 2,491.0
Existing Home Sales Slip
by Tom Moeller February 25, 2004

Sales of existing single family homes reported by the National Association of Realtors fell 5.2% m/m last month to 6.04M, the lowest level since June. Consensus expectations had been for a smaller decline to 6.25M. December sales were revised down.

The figures reflect closings of home sales in earlier months.

Sales were off through most of the nation. In the Northeast sales fell 12.5% (-6.0% y/y). In the Midwest sales dropped 13.2% (-3.3% y/y) and sales in the West sales slid 5.7% (+4.5% y/y). Sales in the South rose 2.0% (+6.1% y/y).

The median price of an existing home slipped 3.5% m/m to $168,700 (+5.4% y/y).

The latest release from the National Association of Realtors is available here.

Existing Home Sales (000, AR) Jan Dec Y/Y 2003 2002 2001
Existing Single-Family  6,040  6,370 2.0% 6,098 5,593 5,290
Chicago Fed National Activity Index Quite Positive
by Tom Moeller February 25, 2004

The Chicago Fed National Activity Index (CFNAI) for January (0.49) was positive for the sixth month in the last seven.

A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.

During the last twenty years there has been a 76% correlation between the level of the CFNAI and quarterly growth in real GDP.

The three-month moving average of the CFNAI improved to 0.42, near the high of the last four years.

The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories & orders.

For a complete discussion of the latest Chicago Fed's National Activity Index click here.

Chicago Fed Jan Dec Jan '03 2003 2002 2001
CFNAI 0.49 0.05 0.38 -0.13 -0.39 -1.17
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