The Best Housing Market Indicator

I believe mortgage purchase applications are the best forward looking indicator of housing demand as the first thing people do when buying a house (that is measurable) is apply for a mortgage. The chart below is the 4 week moving average of Mortgage Purchase Applications going back to 1990 by the Calculated Risk blog.

I marked with two arrows the spikes in mortgage applications we saw coincident with the tax credits that the government provided. As one can see applications are now at levels first seen in 1993. The housing market is clearly weakening despite what the recently released backwards looking data is saying.

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