For the week ending Nov. 2, the Market Composite Index fell by four percent on a seasonally adjusted basis from one week earlier to its lowest level since December 2014. On an unadjusted basis, the Index was down by two percent compared to the previous week. The seasonally adjusted Purchase Index took a five percent dive from one week earlier to its lowest level since November 2016. The unadjusted Purchase Index was down by one percent compared to the previous week and was 0.2 percent lower than the same week one year ago. The Refinance Index decreased by three percent from the previous week while the refinance share of mortgage activity shrank to 39.1 percent of total applications from 39.4 percent the previous week.
Among the federal programs, the FHA share of total applications decreased to 10.1 percent from 10.3 percent while the VA share of total applications increased to 10.1 percent from 9.8 percent and the USDA share of total applications remained unchanged at 0.7 percent.
"Application activity decreased over the week for both purchase and refinance applications, with the overall market index down to its lowest level since December 2014," said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasts. "It's evident that housing inventory shortages continue to impact prospective homebuyers this fall."
Also on the decline was Fannie Mae’s Home Purchase Sentiment Index (HPSI)
, which dipped by two points in October to 85.7. Five of the six components within the index recorded declines. Doug Duncan, senior vice president and chief economist at Fannie Mae, noted that the HPSI has been in a downward trajectory since hitting a peak in the spring.
“While the October drop was broad-based—all but one of the six HPSI components declined—the net share of consumers who said it’s a good time to buy a home posted the largest decrease, tying its second lowest reading in the survey’s history,” said Duncan. “Among those who said it’s a good time to buy, 30 percent—a record high—cited favorable economic conditions as the reason. Meanwhile, the share of consumers who think the economy is on the right track continued to grow, reaching a new survey high. The contrast between the survey’s findings of weak home buying sentiment and overall economic optimism mirrors what we’re seeing in the broader economy. While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter, a first for the current expansion.”