Mortgage services.

Both of the major purveyors of home price indices have been in agreement for the better part of a year that the average home is appreciating between 4 and 5 percent per year.   The FHFA House Price Index showed only a 0.1% uptick in February while the Case Shiller Home Price Index rose 0.7%.  In annual terms, Case Shiller was at 4.5% and FHFA fell from 5.0 to 3.9%. In the bigger picture, these changes don't amount to much. Things get a bit more interesting when we examine the monthly movement. First off, and more by way of a general backdrop, the past few years have seen a bigger gap between highs and lows compared to the norms established between 2014 and 2019. The more interesting month-over-month development is highlighted in the next chart. Simply put, FHFA's index dropped to 0.1 from 0.3.  That's not a big deal in and of itself, but the plot thickens when we consider the following 2 facts: These indices are not seasonally adjusted (i.e. they show typical seasonal price patterns when viewed in a month-over-month interval) February (the most recent month available, released this week) almost always coincides with FHFA's index topping out for the year and Case Shiller's index in the midst of its normal springtime upswing. True to form, Case Shiller (the orange line) is seeing the normal upswing, even if at a more muted pace.  But FHFA fell near the lowest levels of the past 12 months instead of peaking. 

Mortgage rates were in the process of falling by the end of last week, but they made additional headway during the first half of the present week.  That means this week's mortgage application survey from the Mortgage Bankers Association (MBA) may be reflecting hesitation due to the elevated rates at the beginning of last week.  The chart below shows the day to day rate movement (MND) during the survey week as well as the weekly survey rate (MBA). Mortgage rates are not perfectly correlated with mortgage application activity--especially for purchases.  But the fairly quick rate spike in the early part of the week jives with the modest drops in both the refi and purchase indices from MBA. Both sets of application data are still higher than their average level from the past 2 years. MBA adds that demand for purchase applications "continues to be subdued by broader economic uncertainty and signs of labor market weakness," according to Joel Kan, MBA’s Vice President and Deputy Chief Economist. 

As is the case for the monthly data on New Home Sales from the Census Bureau, the National Association of Realtors (NAR) Existing Home Sales report does not make for exciting news these days. It's not that the news is tragic or alarming either.  It just sort of... is. Whereas New Home Sales have been able to hold sideways near their pre-covid highs, Existing Sales continue to languish near the lowest levels in decades.  Apart from the great financial crisis in 2008-2010, you'd have to go back to 1995 to see lower levels. "Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates," said NAR Chief Economist Lawrence Yun. "Residential housing mobility, currently at historical lows, signals the troublesome possibility of less economic mobility for society."