The mortgage bankers association announced today that despite a surge in refinance applications, purchase applications remain at depressed levels.
Specifically, the mortgage purchase index rose only 1.5% from last week to 257.1. While this index is the highest it has been in four weeks, it is representative of very weak demand for real estate which will likely be reflected in the April and May home sales data.
The index is also representative of the fact that the new $8,000 first time home buyer tax credit has not had any meaningful impact on demand. On February 13th, Congress voted to approve the new tax credit as part of the broader economic stimulus plan. That week, the mortgage purchase application index was at 257.3. Today it is at 257.1. In other words, the government is rewarding first time home buyers for doing something that they were already going to do regardless of the tax credit - not a great use of tax payer money.
Is this what the Obama administration means when they say that their economic stimulus plan will create or "save" millions of jobs?