We are bombarded with metrics which we use to analyze trends, relate to other data, and to predict the future. Now MortgageDataWeb contributes some of our own metrics. Previously we looked at the percentage of variable rate mortgages to all mortgages (fixed plus variable rate mortgages) where the index has been declining for several years.
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A new metric looks at conventional purchase mortgages used to purchase new homes as a proportion of conventional mortgages used to purchase new or existing homes. There are 14.7 million home purchase observations in our data since January 2003. The data does not include home purchases without a mortgage. This new metric, which we call the "New/Resale Mortgage Index" has been charted by month and shown in the exhibit.
The chart reveals that new home purchases as compared with resales appear to peak during the winter months. In December of the past five years we see the highest value of the New/Resale Mortgage Index as compared with the index value for the prior 11 months. What this means is that the propensity to close on purchases of new homes as compared with existing homes is maximum during the winter months and the propensity to close on purchases of existing homes as compared with new homes is maximum during summer months.
Another trend is that the New/Resale Mortgage Index year over year values have declined in 2008. This reflects an increasing propensity to purchase and close on existing homes and a decreasing propensity to purchase and close on new homes in the first half of 2008. This trend suggests that home purchasers find greater values in the stock of existing homes versus new homes.