The housing train continues to gain momentum, helped by a strong New Home Sales report on Wednesday. In the latest report out from the Commerce Department, New Home Sales jumped 5.7% in September, hitting a new 2 ½ year high. Home prices followed this trend as well, increasing by 0.7% in August according to the latest data from the FHFA’s Home Price Index. The August increase was the seventh consecutive month of price improvements, indicating further traction for the recovering housing market. The cherry on top today was the FOMC statement which reiterated their commitment to keep rates at “exceptionally low” levels through at least mid-2015. The Fed’s promise to purchase $40B of MBS’s monthly simply helps to add more fuel to the growing fire that is our housing recovery.
Mortgage Applications took a dip for the week ending October 19th, thanks to rates moving ever so slightly to the upside. The overall index dropped 12%, and was led by a decline in refinance activity of 12.9%, and a drop in purchase activity of 8.3%. Refinance activity now accounts for 81% of all mortgage transactions, which is down slightly from last week.