Yes, at the moment new home sales are a little higher year-over-year, but they have fallen a lot and continue to fall. Likewise new construction permits fell off 5.4% in November ( see U.S. Nov housing starts rose 4.5 pct) so future new home sales will be further down as well.
But new home sales contribute a small part of the stimulus that the economy received. Re-fi's contributed the larger part, and are lower than they were last year.
New home sales are declining, arguably cyclical, but none the less declining. (Note when comparing to the Commerce Dept reported figures, the seasonally adjusted data on the curve seem to be in the right ballpark, whereas something is amiss in the scale of non-seasonally adjusted data in the graph data set from economagic)
But that is new home sales only, and represents a small fraction of the total home sales. Below is the index for total mortgage originations up to Aug of 2003. Compare the last bar with the most recent MBAA report for Dec 19 week. Wherein:
The Market Composite Index of mortgage loan applications - a measure of mortgage loan applications for purchases and refinancings - decreased by 6.8 percent to 631.2 on a seasonally adjusted basis from 677.2 one week earlier.
On an unadjusted basis, the Index decreased by 7.7 percent compared with last week and was down 34.7 percent compared with the same week one year earlier.
Note that the overall index for Dec 19th week is lower than it was in Aug 2003.
In the table below, taken from Mortgage Originations: Total, Purchase, and Refinance Quarterly, 1990 to present note that the prepronderance of mortages have been re-fi's by about 71% or about $537B re-fi versus $220B home purchase. The bulk of that re-fi money is what has been stimulating the economy along with tax cuts.
Mortgage Originations: Total, Purchase, and Refinance Quarterly, 1990 to present |
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Mortgage Originations (Bil. $) |
Refinance Share (%) |
Refinance Originations (Bil. $) |
Purchase Originations (Bil. $) |
|
1990. Q1 | 115.789 | 19 | 22.000 | 93.789 |
1990. Q2 | 122.639 | 13 | 15.943 | 106.696 |
1990. Q3 | 120.050 | 13 | 15.607 | 104.444 |
1990. Q4 | 99.926 | 16 | 15.988 | 83.938 |
1991. Q1 | 105.840 | 30 | 31.752 | 74.088 |
1991. Q2 | 135.555 | 26 | 35.244 | 100.311 |
1991. Q3 | 151.889 | 21 | 31.897 | 119.992 |
1991. Q4 | 168.790 | 46 | 77.643 | 91.147 |
1992. Q1 | 225.490 | 59 | 133.039 | 92.451 |
1992. Q2 | 215.052 | 33 | 70.967 | 144.085 |
1992. Q3 | 219.823 | 47 | 103.317 | 116.506 |
1992. Q4 | 233.316 | 49 | 114.325 | 118.991 |
1993. Q1 | 189.511 | 42 | 79.595 | 109.916 |
1993. Q2 | 248.489 | 53 | 131.699 | 116.790 |
1993. Q3 | 289.747 | 51 | 147.771 | 141.976 |
1993. Q4 | 292.114 | 60 | 175.268 | 116.846 |
1994. Q1 | 261.521 | 48 | 125.530 | 135.991 |
1994. Q2 | 214.311 | 23 | 49.292 | 165.019 |
1994. Q3 | 157.342 | 13 | 20.454 | 136.888 |
1994. Q4 | 135.574 | 12 | 16.269 | 119.305 |
1995. Q1 | 119.314 | 11 | 13.125 | 106.189 |
1995. Q2 | 140.523 | 13 | 18.268 | 122.255 |
1995. Q3 | 189.767 | 27 | 51.237 | 138.530 |
1995. Q4 | 189.832 | 33 | 62.645 | 127.187 |
1996. Q1 | 194.196 | 48 | 93.214 | 100.982 |
1996. Q2 | 209.140 | 26 | 54.376 | 154.764 |
1996. Q3 | 190.632 | 17 | 32.407 | 158.225 |
1996. Q4 | 191.265 | 24 | 45.904 | 145.361 |
1997. Q1 | 173.744 | 29 | 50.386 | 123.358 |
1997. Q2 | 196.302 | 21 | 41.223 | 155.079 |
1997. Q3 | 222.168 | 27 | 59.985 | 162.183 |
1997. Q4 | 241.431 | 38 | 91.744 | 149.687 |
1998. Q1 | 301 | 53 | 160 | 141 |
1998. Q2 | 379 | 44 | 167 | 212 |
1998. Q3 | 382 | 44 | 168 | 214 |
1998. Q4 | 445 | 59 | 263 | 182 |
1999. Q1 | 350 | 54 | 189 | 161 |
1999. Q2 | 381 | 38 | 145 | 236 |
1999. Q3 | 309 | 23 | 71 | 238 |
1999. Q4 | 244 | 22 | 54 | 190 |
2000. Q1 | 200 | 21 | 42 | 158 |
2000. Q2 | 276 | 15 | 41 | 235 |
2000. Q3 | 286 | 17 | 49 | 237 |
2000. Q4 | 262 | 25 | 66 | 197 |
2001. Q1 | 396 | 55 | 218 | 178 |
2001. Q2 | 501 | 50 | 251 | 251 |
2001. Q3 | 453 | 45 | 204 | 249 |
2001. Q4 | 680 | 70 | 476 | 204 |
2002. Q1 | 507 | 60 | 304 | 203 |
2002. Q2 | 508 | 43 | 218 | 290 |
2002. Q3 | 694 | 60 | 416 | 278 |
2002. Q4 | 774 | 69 | 534 | 240 |
2003. Q1 | 757 | 71 | 537 | 220 |
Source: Housing and Urban Development (1990-1997); Mortgage Bankers Association of America estimates (1998-) |
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But the re-fi's are now declining as are new sales. That money is no longer 'pumping' the economy. That is what the concern is about.
< SNIP >
The other legacy of the refinancing boom is that banks have millions of loans locked in at low rates. Many banks sell loans to other banks or mortgage companies soon after closing on the mortgage with a customer, so they benefit from the fees the customer paid but aren't left with the loan on the books when interest rates begin moving upward.
Those that haven't will be "trying to get them off their books, selling them and getting higher-rate loans in," McCune said. In some cases, banks may sell the loans at a loss.