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Despite the three-day week observed by most businesses last week, purchase mortgage applications more than held their own. The Mortgage Bankers Association (MBA) said its seasonally adjusted Purchase Index gained 5 percent for the week although it lost 31 percent on an unadjusted basis. It was 19 percent lower than the same week in 2022, also a holiday week. [purchaseappschart] The Refinance Index did not fare nearly as well. It was down 9 percent from the previous week and was 1 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 30.6 percent of total applications from 32.4 percent the prior week. [refiappschart] As a result, the Market Composite Index, a measure of all mortgage application volume, eked out a 0.3 percent gain on a seasonally adjusted basis from one week earlier and fell by 33 percent before adjustment. “Mortgage rates decreased for the fourth time in five weeks, with the 30-year fixed rate dipping to 7.37 percent, the lowest level in 10 weeks. There was a slight increase in applications overall, driven by a five percent increase in purchase applications, but refinance applications decreased over the week,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Rates have declined more than 50 basis points over the past six weeks, which has helped to spur a small increase in purchase applications, but activity last week was still around 20 percent lower than a year ago. The purchase market remains depressed because of the ongoing, low supply of existing homes on the market. Similarly, refinance activity will likely be muted for some time, even with the recent decline in rates, as many borrowers locked in much lower rates in 2020 and 2021.”

If you're just here for the conforming loan limit news, $766,550 is the number for 2024.   Does this mean no one can get a mortgage for more than $766,550?  No.  The conforming loan limit is the maximum amount that can be guaranteed by Fannie Mae and Freddie Mac (the government-sponsored enterprises or GSEs).  That guarantee has advantages in terms of the loan approval process and   interest rates.  There are plenty of mortgage options for higher amounts or that are not guaranteed by the GSEs, but conforming loans account for a vast majority of new mortgages. $766,550 is the base amount.  Higher cost areas have access to higher limits based on the average home prices in that area.  The county by county limits are listed separately,   HERE. The highest tier is $1,149,825 (base loan limit x 1.5).     Where do these numbers come from? The Federal Housing Finance Agency (FHFA) is the regulator of the GSEs.  It publishes various home price data.  Once the data is in for the 3rd quarter (typically by late November), it is compared to the 3rd quarter of the previous year and home prices are adjusted by the corresponding amount.    In situations where home prices fall, the limit does not fall, but it will not rise again until home prices move back above the levels associated with the previous limit.  For instance, let's imagine the loan limit was $700k, but prices fell enough to drop it to $600k.  The limit would remain at $700k year after year (even if prices were rising) until prices got back above $700k.

Today brings the release of the two main home price indices (HPIs) for the month of September (yeah, there's a bit of a lag).   The S&P Case Shiller HPI rose to prominence in the run up to the financial crisis (back then it was just Case Shiller), and has been a mainstay of home price tracking ever since.  While there is a national version of the data, Case Shiller's more popular HPI focuses on the 20 largest metro areas.  The 20 city index is understandably more volatile (smaller sample size = more volatility), but some would say more indicative of what the average American is seeing. The Federal Housing Finance Agency (FHFA) oversees Fannie and Freddie, the enterprises that set conforming mortgage guidelines and guarantee a vast majority of mortgage debt.  The FHFA also publishes the nation's broadest HPI.  It's notably less volatile than Case Shiller, but both tend to be moving in the same direction at any given time. In the current release, for instance, Case Shiller reported a 0.2% increase in prices month-over-month whereas FHFA saw a 0.6% increase.  Both numbers are 0.1% below last month's revised reading. Year-over-year numbers help put the trends in perspective.  In not so many words, prices are leveling off in moderately stronger territory after early 2023's shift.  That shift was "deceleration" according to FHFA and outright "contraction" according to Case Shiller's several months spent in negative territory.