Because of the monthly swings in housing releases — such as new and existing home sales and starts — it is always best to try to use averages of several months’ data (as the Case-Shiller index does) and to factor in all the available data on the market. The mortgage application index generally provides a good gauge of the underlying strength of the market. This weekly index is also volatile, but taking a one-or two-month average shows no clear upward trend from year-ago levels. Of course, investors often will not use standard mortgages to finance house purchases, thus insofar as the percentage of investor-purchased homes rises or falls, this will not be picked up by the mortgage application index.

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For more, check out the latest Housing Market Monitor.

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