Housing Sector Experiences Free Fall After Weak Housing Loan Data (PHM, LEN, KBH, CHCI, DHI)

Data released by the Mortgage Bankers Association today indicated that US mortgage applications have fallen for the third consecutive week. With inclement weather restraining customers, the demand for home purchase loans sank to the lowest level in 13 years.

According to the Mortgage Bankers Association (MBA), for the week ended February 19, there has been an 8.5% fall in the seasonally adjusted index of mortgage applications for both purchase and refinance loans. A continuous drop in the demand for purchase loans, which is considered an early indicator of home sales, would not bode well for the US housing market. The housing market is already hard hit and remains highly vulnerable to setbacks and heavily reliant on government intervention.

Michael Fratantoni, MBA's vice president of research and economics, said in a statement "As many East Coast markets were digging out from the blizzard last week, purchase applications fell, another indication that housing demand remains relatively weak.” He continued that the urgency to lock in purchases by potential homebuyers is missing as the inventory of homes available in the market is high.

Following the release of the data, Pulte Homes (NYSE: PHM) fell 3.83% to $10.55, while Lennar Corporation (NYSE: LEN) dropped 4.79%. Meanwhile, KB Home (NYSE: KBH) has lost 3.08% and Comstock Homebuilding Companies (NASDAQ: CHCI) has slipped 4.58%. DR Horton Inc (NYSE: DHI) also lost 3.56% since market open this morning.

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