Mortgage applications hit a 13-year low

With the tax credit mostly gone, we're starting to get a better sense of what the free market thinks of housing:

Mortgage applications to buy a home plunged last week — to the lowest level in more than 13 years — as the housing recovery continued to struggle following the expiration of the homebuyer tax credit, an industry group said Wednesday.

The Mortgage Bankers Association said application for mortgages to purchase a home sank a seasonally adjusted 3.1% for the week ended July 9 on a week-over-week basis, driving the volume to its lowest level since December 1996. On an annual basis, applications for the week were down 43%.

Much of the slowdown has come since the April 30 expiration of homebuyer tax credit. Homebuyers had until that deadline to sign contracts. Congress extended the deadline to close deals to Sept. 30.

The government's latest reading on new home sales plummeted to a record low in May, thanks largely to the expiration of the tax credit.

Here's a graph of mortgage applications since 1990 from Calculated Risk: