In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage purchase applications and durable goods orders.

• There was a slight gain in the number of people submitting mortgage applications to buy a home in the latest week’s data.  This data, from the Mortgage Bankers Association, however, does not have any information about approval rates and misses out completely on home purchases made with all-cash.  This data has also not correlated well with home sales in the past year.
• The number of applications for refinances declined in the past week.  But refinance activity year-to-date has been much better so far compared to the same period last year.  Mortgage bankers who have been making a living solely off refinances should prepare for some increase in refinance through the summer months this year because of various government programs to help out underwater homeowners, but they should also prepare for a near-collapse in refinance business in 2013 as long-term mortgage rates will surely rise.  Only the increases in mortgage originations for home purchases will be a source of income next year.
• Separately, durable goods orders recovered in March after a brief lull in the prior month.  From a year ago, the heavy long-lasting manufacturing product orders are up by 9 percent.  That is a solid gain.  Due to huge cash holdings by companies that are bound to be released to the market and the housing market recovery, a possibility of a fresh economic recession in 2012 or 2013 is virtually zero.
• The GDP forecast for the first quarter is raised a bit to 2.8 percent growth.  The second quarter GDP will likely be 2.5 percent.