Market Overview

MBA Mortgage Applications Increase 3.8% from Last Week

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The MBA Mortgage Applications Survey tracks new home mortgage applications and resembles a current indicator for the U.S. housing market. The Survey increased 3.8% versus the prior week. This is essentially bullish for the U.S. housing market.

MBA Mortgage Applications measures the change in the number of new applications for mortgages backed by the MBA during the reported week.

The current reading for this week shows the number of applications increased by 3.8%, this is inherently favorable for the housing market and the complimentary industries.

An increase in mortgages implies a healthy housing market, and because of the multiplier effect, housing has an impact on the rest of the economy.

Increases in mortgage applications suggest increased household income and in turn an economic expansion.

However, the Survey does not continually shake up the markets, as applications are very volatile, a look at a 4-week trend could shed some light on the U.S. economy.

The Mortgage Bankers Association [MBA] is the national association representing the real estate finance industry which compiles this information.


ACTION ITEMS:

Bullish:
Traders who believe that a rise in MBA mortgage applications is positive for the economy, you might want to consider the following trades:
  • Long building companies like PulteGroup (NYSE: PHM) because more houses being sold increases demand in more homes and as a result means more demand for home builders.
  • Long companies like Louisiana-Pacific (NYSE: LPX), who manufacture and distribute products and materials for home construction.
Bearish:
Traders who do not believe that the survey is a leading indicator for the general housing market, you may consider alternative positions:
  • Short building companies like KB Home (NYSE: KBH) because fewer mortgage application and home sales in turn means less demand for housing and home-builders.
  • Long do-it-yourself stores like Lowes (NYSE: LOW) or Home Depot (NYSE: HD) because if home sales decreases, it mean consumers are likely to just fix-up their existing house.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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