Mortgage Applications Stabilize, But Analysts See Continued Weakness

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Dan Powell leaned up against the glass to take this shot from his vantage point at the game. As you can see, there is little that can be seen of the field.

Gary Thayer, chief economist for A.G. Edwards, told CNBC’s “Morning Call” that mortgage applications to purchase new homes are beginning to stabilize, but the large number of unsold houses means continued weakness in the housing market.

“We’ve been suffering with a weak housing market for the better part of a year now,” Thayer said Monday. “With inventory of unsold homes as high as it is, it will probably take the better part of this year to work off a lot of that. The good news is the rest of the economy is holding up pretty well, but housing is going to be a drag for a while.”

Vince Boberski, an economist at FTN Financial, expects more downbeat housing data to be released this week.

“We’re going to see a bias to the downside,” he said. “We think both new and existing homes are going to be down on the order of 1.5% to 2%. Part of that is driven by weather.”

Boberski said the Federal Reserve is focusing too much on short-term price movement and not enough on a potential loss of liquidity as trouble in the sub-prime mortgage market leaks into the prime sector.

“If you take a look at what’s driven consumer spending and the economy for the last three or four years, it’s really been credit expansion that’s come out of housing,” Boberski said. “Now, we’re balancing that against a willingness to take on credit card debt. If consumers aren’t willing to do that going forward, we’re going to have trouble making 2% GDP growth this year -– we could be even closer to 1%.”