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Archive for the ‘Fed and Economy Watch’ Category

GSEs Continue Financial Winning Streaks

Freddie Mac and Fannie Mae (the GSEs) reported solid financial results for both the fourth quarter and the entirety of the 2018 fiscal year on Thursday. The annual income was higher for both GSEs, although each posted a decrease quarter-over-quarter. Fannie Mae's total comprehensive income for the fourth quarter was $3.2 billion compared to $4.0 billion in the third quarter, and it reported a $16.0 billion total for the year.  Because of ramifications from the 2017 tax act, its comprehensive income for the 2017 year was only $2.6 billion.

 

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Fewer Plan to Buy, But Others Aren’t Giving Up

The perceptions, expectations, and plans of prospective homebuyers appear to be undergoing a transition according to results from the most recent Housing Trends survey report from the National Association of Homebuilders (NAHB).  Rose Quint writes about the fourth quarter 2018 survey in a five-part series in the association's Eye on Housing Blog.  She says that, for starters, there has been a steady erosion in the percentage of adults who said they planned to purchase a home within a year. That share slipped quarterly from 24 percent in the fourth quarter of 2017 to 13 percent in both the third and fourth quarters of 2018.

 

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NAHB Takes a Detailed Look at First-Time and Trade-up Buyers

A total of 8.8 million households bought homes in the two years preceding the most recent American Housing Survey (AHS).  The survey, sponsored by the Department of Housing and Urban Development, is conducted by the Census Bureau every two years.  The AHS is a nationally representative survey of residential structures in the US and of the households that occupy them. Results of the 2017 survey were released last year and the National Association of Home Builders (NAHB) has taken a detailed look at the findings, publishing several blog entries.  Carmel Ford of NAHB's Economics and Housing Policy Group has now published a paper on the characteristics of those recent buyers and their transaction.

 

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Global Concerns Slow Mortgage Apps, Even With Lower Rates

Mortgage applications have now fallen in six of the last eight weeks. The Mortgage Bankers Association (MBA) said its seasonally adjusted Market Composite Index, a measure of application volume, fell lost another 3.7 percent on a seasonally adjusted basis during the week ended February 8.  On an unadjusted basis the composite was down 4.0 percent. The Refinance Index decreased 0.1 percent from the previous week although the refinancing share of applications submitted rose to 43.2 percent. During the week ended February 1 refinancing had a 41.6 percent share.

 

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NAR: Home Price Gains at a “Healthier” Pace

An asset bubble can burst, or it can develop a slow leak, and float more or less gradually back to normal levels. The National Association of Realtors'® (NAR's) quarterly report on existing homes and metro home sales seems to indicate that the housing market, where skyrocketing prices were a concern not that long ago, is following the latter pattern.  Not only are sales slowing, but inventories are growing, and appreciation appears to be gradually decelerating. The NAR said the median price of a single-family home sold in the fourth quarter of 2018 was $257,600, a 4.0 percent increase from the median of $247,800 a year earlier.  The year-over-year gain in the fourth quarter of 2017 was 5.3 percent.

 

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Housing Sentiment May Be Bouncing Back

Respondents to Fannie Mae's January National Housing Survey adopted a new outlook to go along with the new year, primarily in responses about their personal financial situation.  As a result, the Home Purchase Sentiment Index (HPSI) increased 1.2 point to 84.7, taking back some of the 2.3 points it shed in December.

The improvement was driven by an 8-point increase in the net share of respondents reporting higher income than 12 months earlier. At 27 percent, that net is 11 points higher than in January 2018.  This was partially offset by a 6-point decline in the net percentage of those who said they were not concerned about losing their job.  The net of 73 percent is unchanged from a year ago.

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Conventional Loan Access Rebounds After HARP-Related Losses

The Mortgage Bankers Association's (MBA's) Mortgage Credit Availability Index (MCAI), a measure of access to mortgage credit, partially rebounded from an unusually large downturn in December.  The Index rose 2.3 percent in January to 179.0. A lower MCAI indicates that lending standards are tightening while increases means credit is loosening.  The MCAI fell 7.3 percent the prior month, driven by a 14.5 percent decline in the Conventional MCAI. The Conventional MCAI increased 4.9 percent while the Government MCAI was unchanged. Of the component indices of the Conventional MCAI, the Conforming MCAI increased by 7.3 percent, and the Jumbo MCAI increased by 3.0 percent.  

 

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Mortgage Volume Little-Changed Despite Lower Rates

Mortgage applications suffered their third consecutive decline during the week ended February 1.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, decreased 2.5 percent on a seasonally adjusted basis from the previous week.  On an unadjusted basis the index was up 12 percent from the week ended January 25. That week's results included an adjustment for the Martin Luther King Jr. Day holiday. The seasonally adjusted Purchase Index was also down for the third time, falling 5.0 percent from the previous week. 

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Moderating Home Prices May Turn the Tide for Would-be Buyers

The CoreLogic Home Price Index puts the annual rate of appreciation nationally at 4.7 percent in December and the gain from November 2018 to December at 0.1 percent.  All states but Louisiana and North Dakota had price increases over the 12 months ended in December 2018. The highest rates were in Idaho at 11.7 percent, Nevada at 10.8 percent, and Utah, 8.7 percent. Frank Nothaft, CoreLogic's Chief Economist noted that price increases have been moderating.  "Higher mortgage rates slowed home sales and price growth during the second half of 2018. 

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Here We Go Again on Housing Reform. Is This Time Any Different?

There was a flurry of rumors and a bit of a bull market around the Freddie Mac and Fannie Mae stock a few weeks ago after Federal Housing Finance Agency (FHFA) acting director Joseph Otting told FHFA staff that the agency would soon announce plans to remove the Freddie and Fannie (the GSEs) from conservatorship. It has been crickets since except for a recent statement from the White House that it would be releasing a comprehensive framework for housing finance reform "shortly," but that no decisions had been made regarding its substance.

 

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