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DECK THE HALLS WITH MORTGAGE DATA

Wednesday appears to be the eye of the data storm this week, a bit of calm wedged betwixt payrolls and CPI.

And so, home loan demand data from the Mortgage Bankers Association (MBA) is the only game in town.

The upshot is that the cost of financing home loans increased last week, enough to keep would-be borrowers on the bench.

The average 30-year fixed contract rate USMG=ECI heated up by 5 basis points to 6.38%.

As a result, demand for loans to purchase homes USMGPI=ECI - among the housing market's most leading indicators - soured by 2.8%. Refi applications USMGR=ECI decreased by 3.6%.

Combined, total mortgage demand slid 3.8%.

Following last week's decision by the U.S. Federal Reserve, "investors interpreted (the Fed's) comments to signal that we are near the end of this rate cutting cycle,” said Mike Fratantoni, MBA’s chief economist.

“Purchase application volume typically drops off quickly at the end of the year, and this shifts the mix of the business," Fratantoni added, noting that refinancing accounted for a growing 59.0% of total mortgage activity, the largest share since September.

The 30-year fixed rate currently sits 37 basis points below where it was during the same week a year ago.

Over that same period, purchase applications have increased by 12.3%, while refi demand has spiked 86.0%.

While purchase applications are relatively forward-looking, all economic indicators are viewed through the rear view mirror.

Housing stocks, on the other hand, reflect where investors expect the sector to be six months to a year down the road.

With that in mind, investors seem to foresee leaky roofs and cracked foundations.

As of Tuesday's close, the S&P 1500 Homebuilding index .SPCOMHOME and the Philadelphia SE Housing index .HGX have woefully underperformed the broader market, having fallen 1.2% and 6.5%, respectively, over the last 12 months. During that time, the S&P 500 .SPX has advanced 12.4%.

(Stephen Culp)

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