Where are the natural buyers?

While some recent housing data has shown some signs that the housing
market is close to a bottom, the purchase component of the weekly MBA
data still is evidence that natural buyers are not responding to
historically low interest rates. Mortgage applications for purchases
fell 4.4% for the week and are only 7.6% above the low in this cycle.
Refi’s rose 4.5%. The disconnect between the pick up in sales in certain
markets and the still sluggish level of purchases in this weekly data
can be partially explained by the large level of foreclosures that are
making up about 50% of sales and are being done many times in cash.
Today’s WSJ article highlights this as they report that 38% of
foreclosure sales are in cash in the Phoenix area, 67% in Punta Gorda,
FL and 39% in the Vegas area. The homebuyer that plans to live in the
home still seems to be cautious. ABC confidence fell 3 pts after 4 weeks
of gains.

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