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Archive for the ‘MND NewsWire’ Category

Existing Home Sales Reverse Course, Down 3%

Existing home sales put an end to two straight months of gains, retreating in April on both a monthly and annual basis.  The National Association of Realtors® said the sales of single-family homes, townhouses, condos, and cooperative apartments dropped by 2.5 percent from March's estimate of 5.60 million to a seasonally adjusted annual rate of 5.46 million. That put sales at a 1.4 percent deficit when compared to April 2017.  It was the second straight month that sales have lagged on an annual basis. Economists polled by Econoday were not looking for greatly improved numbers but results even missed that target

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Tax Cut Gains Forecast to Fade Away in 2019

Fannie Mae is backing down slightly on its economic forecast for the remainder of 2018.  The first quarter GDP growth of 2.3 percent was the slowest in a year, down from 2.9 percent a year earlier.  The company's economists, led by vice president and chief economists Doug Duncan, say they expect growth to pick up later in the year but the economic boost from last December's Tax Cuts and Jobs Act and this February's Bipartisan Budget Act of 2018, will fade next year and the labor market will tighten more than previously thought.  The earlier full-year 2018 forecast remains at 2.7 percent, but the company is lowering its projections for 2019 by two-tenths to 2.3 percent.                                                                                                                                           

 

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Refinance Applications Near 18-Year Low

Mortgage rates surged significantly during the week ended May 18, sending mortgage activity skidding for the fifth straight week.  The Mortgage Bankers Association (MBA) says its Market Composite Index, a measure of mortgage loan application volume, dropped by 2.6 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis there was a 3 percent decline.

The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week but remained  3 percent higher than the same week in 2017.

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Will “Freeing” Fannie/Freddie Improve Housing Finance?

In a prior article we summarized the options the Trump Administration might utilize to reform the residential mortgage financing system should Congress continue to drop the ball.  Two noted economists, Jim Parrott and Mark Zandi, writing for the Urban Institute, address the notion of shrinking Fannie Mae and Freddie Mac's (the GSEs) footprints and eliminating their cross-subsidy of higher risk borrowers.  This article summarizes their alternatives for ending the 10-year government conservatorship of the two companies.  

The director appointed to replace Melvin Watt when his term as director of the Federal Housing Finance Administration (FHFA) expires next year will undoubtedly reflect the attitudes of the Administration including their claimed commitment to changing the GSEs' status. The authors say one way may be to put the GSEs entirely back into private hands.

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Lenders: Income Verification Needs for “Gig” Economy

Late last year Fannie Mae included questions in one of its National Housing Surveys about working in the "gig" economy.  About a fifth of respondents claimed they earned at least some of their income through such employment.  Gig-economy workers tend to have flexible work arrangements, working on single projects or tasks preforming on-demand services such as transportation (Uber, Lyft) lodging rental (Airbnb and VRBO) food/goods delivery, and personal tasks (TaskRabbit). Because of its "on-demand" nature, the income stream from gigging can be less stable and its source less reliable.  

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White House Could Preempt Congress’ Inaction on GSEs

Two noted economists seem to be holding little hope that Congress will take up in any way changing the status quo of the government-sponsored enterprises (GSEs) before adjourning next January.  However, they say it is an issue on the Trump Administration agenda and they expect the Executive Branch will step into the fray.  In a paper published by the Urban Institute titled GSE Reform is Dead - Long Live GSE Reform, Jim Parrott and Mark Zandi ask, if Congress does fail to address GSE reform, what will the executive branch do with the opportunity?

 

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Rising Rates Tilt Origination Composition

The interest rates on loans that closed in April were the highest since Ellie Mae started tracking data in 2011.  According to the company's Origination Insight Report for April, the 30-year fixed rate for loans averaged 4.79 percent, up from 4.69 percent in March.  Not unrelated to that rapid rise is the increased domination of purchase loans.  Their percentage share increased 4 percentage points to 66 percent in April as refinancing shrunk to a 34 percent share.  The percentage of Adjustable Rate Mortgages also increased, claiming the highest share of total loans, 6.6 percent, since June 2014.

 

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Housing Starts Weakened as Expected in April

The leading construction indicators performed generally as analysts had predicted in April, stepping back from March's solid increases in both permits and housing starts.  Both sectors had been driven that month by surges in multi-family construction. The U.S. Census Bureau and the Department of Housing and Urban Development say that permits for private residential construction dipped by 1.8 percent in April to a seasonally adjusted annual rate of 1,352,000.  The March figure, originally estimated at 1,354,000 units, was revised up to 1,377,000.  

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Builder Confidence Perks Up After Three-Month Slide

The National Association of Home Builders (NAHB) and Wells Fargo said on Tuesday that builder confidence in the new home market ticked up two points on their Housing Market Index (HMII).  The May reading was 70, the fourth time this year the index has been at or above that point.  While May's number reversed a three-month decline, the level for April was revised down from. 69 to 68. "The solid May report shows that builders are buoyed by growing consumer demand for single-family homes," said NAHB Chairman Randy Noel.  

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Home Prices Driven up by Inventories, Again

Not only did the pace of home price increases quicken nationally during the first quarter of 2018, but the National Association of Realtors® (NAR) said those increases are felt in most metropolitan areas.   The national median existing single-family home price in the first quarter was $245,500.   This is a year-over-year increase of 5.7 percent from the median of $232,000 in the same quarter last year. The annual increase in the fourth quarter was 5.4 percent. Increases from the first quarter of 2017 were felt in 91 percent, or 162 of the 178 metro markets tracked by NAR. 

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