Consumers Expect Brighter Economy, Slower Home Price Gains

Author: Tory Barringer February 10, 2014 

Consumers apparently haven’t gotten the memo that mortgage standards are tightening, if responses to Fannie Mae’s January National Housing Survey are any indication.
Fifty-two percent of respondents in the company’s latest survey said they think it would be easy to get a mortgage today, reflecting a climb of 2 percentage points. The number of consumers saying it would be difficult to obtain a loan fell 3 points, meanwhile, dropping to 45 percent.
“For the first time in the National Housing Survey’s three-and-a-half-year history, the share of respondents who said it is easy to get a mortgage surpassed the 50-percent mark,” said Doug Duncan, SVP and chief economist at Fannie Mae. “The gradual upward trend in this indicator during the last few months bodes well for the housing recovery and may be contributing to this month’s increase in consumers’ intention to buy rather than rent their next home.”
The share of consumers who said they would buy if they moved climbed to an all-time survey high of 70 percent, while the share of those who would rent declined to an all-time low of 26 percent.
Respondents also seem reluctant to accept projections of rising mortgage rates over the year, with the share of those expecting increases dropping for the second straight month to 55 percent. Five percent said they expect rates to drop, up slightly from the December survey.
On the other hand, it appears more people have taken notice of reports of slowing home price gains. The share of consumers expecting home prices to increase in the next year fell 6 percentage points to 43 percent, while the share expecting prices to stay the same increased 7 percentage points to 45 percent.
The average 12-month home price change expectation was 2.0 percent, a dramatic decline from December’s prediction of 3.2 percent.
Duncan said that while the dip in price expectations was notable, it is “consistent with our view of moderating home price gains this year from a robust pace last year.”
Consumer attitudes about the economy also improved last month, even with disappointing employment data hanging over the country’s collective head. The share of consumers who believe the economy is on the right track climbed 8 percent points to 39 percent, while the share who said it’s on the wrong track fell to 54 percent.
Asked about their own personal financial situation, 44 percent of consumers expect things to improve (up from 42 percent in December), while only 14 percent said they’ll be worse off.

Home prices in 2013 rose at fastest pace since 

housing boom

Feb 4, 2014

Home prices in 2013 rose at their fastest annual pace since 2005, CoreLogic reports.

On an annual basis, home prices nationwide, including distressed sales, jumped 11 percent in December 2013, but slipped 0.1 percent on a monthly basis, according to the CoreLogic Home Price Index (HPI).

CoreLogic’s forward-looking price index — the CoreLogic Pending HPI — forecast that prices, including distressed sales, will dip 0.8 percent month over month in January. But the index still foresees home prices rising 10.2 percent on an annual basis that month.

“Last year, home prices rose 11 percent, the highest rate of annual increase since 2005, and 10 states and the District of Columbia reached new all-time price peaks,” said Mark Fleming, chief economist at CoreLogic. “We expect the rising prices to attract more sellers, unlocking this pent-up supply, which will have a moderating effect on prices in 2014.”

Interest Rate Declines Continue into February

Author: Tory Barringer February 6, 2014 

This week brought more news of declines in mortgage interest rates, according to releases from Freddie Mac and Bankrate.com.
In its weekly published Primary Mortgage Market Survey, Freddie Mac put the average 30-year fixed mortgage rate at 4.23 percent (0.7 point) for the week ending February 6, down from 4.32 percent previously. A year ago, the 30-year fixed-rate mortgage (FRM) sat at 3.53 percent.
The 15-year FRM averaged 3.33 percent (0.7 point) this week, down from last week’s 3.40 percent.
Averages on adjustable-rate mortgages (ARMs) also fell, with the 5-year Treasury-indexed hybrid ARM dropping 4 basis points to 3.08 percent (0.5 point) and the 1-year ARM decreasing the same amount to 2.51 percent (0.5 point).
Frank Nothaft, VP and chief economist for Freddie Mac, once again pointed to weaker housing data as a factor in this week’s rate changes, noting declines in December pending home sales and a negative contribution to GDP from fixed residential investment.
“Also, the Institute for Supply Management reported a significant slowing in growth in the manufacturing industry in December than the market consensus forecast,” Nothaft added.
In its own weekly survey, Bankrate reported a drop of 7 basis points in the 30-year fixed average to 4.43 percent, with the 15-year fixed falling 6 points to 3.50 percent.
The 5/1 ARM also declined, decreasing 10 basis points to 3.27 percent.
“Worries about a slowdown in the U.S. and global economics and continued skittishness about the health of emerging markets is pushing investors into safe haven U.S. Treasury securities,” Bankrate said in a release. “This has brought the benchmark 10-year Treasury yield from 3 percent down into the 2.6 percent neighborhood, with mortgage rates hitting levels last seen

Report: Despite Gains, National Price Peak Far Off

Author: Tory Barringer February 4, 2014 

As home prices continue to soar year-over-year and commentators draw lines to historical averages, Clear Capital offers one piece of advice to all those waiting to see a national peak anytime soon: Don’t hold your breath.
In its latest Home Data Index Market Report, the company says the market won’t reach peak prices again until 2021 at its current rate of growth.
“National home prices are right in line (within 2 percent) with inflation adjusted long-run average levels, indicating prices have normalized post-bubble and future rates of growth will look more like historical rates of growth,” Clear Capital said in its report.
By the company’s data, inflation adjusted home prices at the metro level show 46 out of 50 metro markets’ home prices are at pre-2003 levels, with half reporting prices below 2000 levels. In fact, Honolulu is the only market in the top 50 to see home prices within peak levels, partly due to its “unique supply and demand” situation.
With so many markets still so far down from peak prices, “it’s time for conversations surrounding price trends to shift away from the 2006 peak as the point of reference,” says Dr. Alex Villacorta, VP of research and analytics at Clear Capital.
“For new deals and investors without legacy assets, the new housing environment should be framed in terms of more typical, moderate rates of growth with tempered optimism for the ongoing housing recovery,” Villacorta said.
The good news in all this, Clear Capital says, is that even with prices trending up, “we don’t see evidence of a price bubble forming again”—at least not in most markets.
“Double digit gains over the last year, while similar to rates of growth in the run-up to the bubble, are off a much lower price floor,” Villacorta observed.

December Home Prices Up 11% from 2012

Author: Colin Robins February 4, 2014 

CoreLogic released its Home Price Index (HPI) for December 2013, noting an 11 percent bump since December 2012. The figure includes distressed sales.
Anand Nallathambi, president and CEO of CoreLogic, was optimistic about the future: "After six years of fits and starts, we can now see a clearer path to a durable recovery in single-family residential housing across most of the United States."
The company is equally bullish about prices in January, projecting a 10.2 percent year-over-year gain.
Month-by-month, prices saw a 0.1 percent decline from November, falling in line with predictions CoreLogic made in its previous HPI report.
Looking ahead, the company’s year-to-year assessment indicates a possible rise and subsequent stabilization of home prices.
"Last year, home prices rose 11 percent, the highest rate of annual increase since 2005, and 10 states and the District of Columbia reached new all-time price peaks," said Dr. Mark Fleming, chief economist for CoreLogic. "We expect the rising prices to attract more sellers, unlocking this pent-up supply, which will have a moderating effect on prices in 2014."
The five states with the highest home price appreciation were Nevada (+23.9 percent), California (+19.7 percent), Michigan (+14.0 percent), Oregon (+13.7 percent), and Georgia (+12.8 percent).
Including distressed sales, Arkansas (-1.5 percent), New Mexico (-1.3 percent), and Mississippi (-0.2 percent) were the only three states to post home price depreciation in December, 2013. Excluding distressed sales, no states posted home price depreciation in December.

Foreclosure Rate Down to 2.5% at Year-End

Author: Tory Barringer February 3, 2014 

Last year saw “significant, sustained” improvements in both delinquency and foreclosure numbers, according to Black Knight Financial Services (BKFS).
The company’s Data and Analytics division released on Monday its year-end Mortgage Monitor Report, which builds on its recently released “first-look” stats for the year.
According to the report, 6.47 percent of the nation’s mortgages last year were delinquent, down from a peak of 10.57 percent in January 2010 and about 1.5 times the pre-crisis average of 4.27 percent (in December 2005). It was the fourth straight year of improvements.
Meanwhile, about 2.48 percent of loans were in some state of foreclosure—a rate about 4.6 times the pre-crisis average.
“In many ways, 2013 marked an abatement to crisis conditions in the U.S. mortgage market,” said Herb Blecher, SVP of BKFS’ Data and Analytics group. “Delinquencies neared pre-crisis levels, foreclosure inventory declined 30 percent over the year, new problem loan rates improved in both judicial and non-judicial foreclosure states, and foreclosure starts ended the year at the lowest level since April 2007.”
While transactions slowed in the later months, Blecher noted 2013 “was also the best year for property sales since 2007, with totals through November outnumbering the full year totals for each of the prior three years.”
Though sales and prices improved nationally—with prices coming up 8.5 percent year-over-year as of November—the company observed a gap in the recovery rates of judicial versus non-judicial states, with judicial areas seeing slower growth. The same trend was observed in negative equity improvement.
“With 75 percent of loans that are either seriously delinquent or in foreclosure being ‘underwater,’ the resolution of these inventories in many regions (and the speed at which that has occurred) has had a pronounced effect on reducing overall negative equity numbers,” Blecher remarked.
In addition, BKFS’ year-end data also shows that even in states with judicial slowdowns, foreclosure pipelines have been clearing over the latter half of 2013. Overall, judicial states’ foreclosure inventories still remain 3.5 times as big as those in non-judicial states, however.

December Existing-Home Sales Rise, 2013 Strongest in Seven Years

Media Contact: Walter Molony 

WASHINGTON (January 23, 2014) – Existing-home sales edged up in December, sales for all of 2013 were the highest since 2006, and median prices maintained strong growth, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.0 percent to a seasonally adjusted annual rate of 4.87 million in December from a downwardly revised 4.82 million in November, but are 0.6 percent below the 4.90 million-unit level in December 2012.

For all of 2013, there were 5.09 million sales, which is 9.1 percent higher than 2012. It was the strongest performance since 2006 when sales reached an unsustainably high 6.48 million at the close of the housing boom.

Lawrence Yun, NAR chief economist, said housing has experienced a healthy recovery over the past two years. “Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market,” he said. “We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population.”

The national median existing-home price for all of 2013 was $197,100, which is 11.5 percent above the 2012 median of $176,800, and was the strongest gain since 2005 when it rose 12.4 percent.

The median existing-home price for all housing types in December was $198,000, up 9.9 percent from December 2012. Distressed homes – foreclosures and short sales – accounted for 14 percent of December sales, unchanged from November; they were 24 percent in December 2012. The shrinking share of distressed sales accounts for some of the price growth.

Ten percent of December sales were foreclosures, and 4 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in December, while short sales were discounted 13 percent.

Total housing inventory at the end of December fell 9.3 percent to 1.86 million existing homes available for sale, which represents a 4.6-month supply at the current sales pace, down from 5.1 months in November. Unsold inventory is 1.6 percent above a year ago, when there was a 4.5-month supply.

The median time on market for all homes was 72 days in December, up sharply from 56 days in November, but slightly below the 73 days on market in December 2012. Adverse weather reportedly delayed closings in many areas. Twenty-eight percent of homes sold in December were on the market for less than a month, down from 35 percent in November, which appears to be a weather impact.

Short sales were on the market for a median of 122 days in December, while foreclosures typically sold in 67 days and non-distressed homes took 70 days.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.46 percent in December from 4.26 percent in November; the rate was 3.35 percent in December 2012.

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said that with jobs expected to improve this year, sales should hold even despite rising home prices and higher mortgage interest rates. “The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory,” he said. “With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home.”

First-time buyers accounted for 27 percent of purchases in December, down from 28 percent in November and 30 percent in December 2012.

All-cash sales comprised 32 percent of transactions in December, unchanged from November; they were 29 percent in December 2012. Individual investors, who account for many cash sales, purchased 21 percent of homes in December, up from 19 percent in November, but are unchanged from December 2012.

Single-family home sales rose 1.9 percent to a seasonally adjusted annual rate of 4.30 million in December from 4.22 million in November, but are 0.7 percent below the 4.33 million-unit pace in December 2012. The median existing single-family home price was $197,900 in December, up 9.8 percent from a year ago.

Existing condominium and co-op sales fell 5.0 percent to an annual rate of 570,000 units in December from 600,000 units in November, and are unchanged a year ago. The median existing condo price was $198,600 in December, which is 10.9 percent above December 2012.

Regionally, existing-home sales in the Northeast slipped 1.5 percent to an annual rate of 640,000 in December, but are 3.2 percent higher than December 2012. The median price in the Northeast was $239,300, up 3.6 percent from a year ago.

Existing-home sales in the Midwest fell 4.3 percent in December to a pace of 1.11 million, and are 0.9 percent below a year ago. The median price in the Midwest was $150,700, which is 7.0 percent higher than December 2012.

In the South, existing-home sales increased 3.0 percent to an annual level of 2.03 million in December, and are 4.6 percent above December 2012. The median price in the South was $173,200, up 8.9 percent from a year ago.

Existing-home sales in the West rose 4.8 percent to a pace of 1.09 million in December, but are 10.7 percent below a year ago. Inventory is tightest in the West, which is holding down sales in many markets, and multiple bidding is causing it to experience the strongest price gains in the U.S. The median price in the West was $285,000, up 16.0 percent from December 2012.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries. For additional commentary and consumer information. 

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