This morning's Employment Situation Report was stronger than expected. By historical standards, the "beat" isn't especially large (175k vs 149k forecast), but most market participants (at least those expressing opinions) are surprised there was a 'beat' at all. The great debate on the impact of uncommonly cold/snowy winter is at the heart of this expectation. In my conversations, even those who really don't think much of the weather impact are still willing to admit it exists in some small form....(read more)
Metropolitan areas considered leading markets on the National Association of Home Builders (NAHB)/First American index of that name increased to 59 this month, a net gain of one from the previous month. The 59 areas have returned to or exceeded their last normal levels of economic activity as measured by employment levels, housing permits issued, and home prices.
The Leading Market Index (LMI) had a nationwide score of 87, unchanged from February. This means that based on current permits, prices and employment data, the nationwide average is running at 87 percent of normal economic and housing activity. Thirty-two percent of the 350 metro areas tracked by the index had higher scores this month than last and 84 percent have shown improvement over the past year....(read more)
An additional 4 million homes regained positive equity in 2013 CoreLogic said today, leaving 6.5 million homes still underwater; about half the number that were in that position at the end of 2009. Homes still in a negative equity position constitute 13.3 percent of all residential properties with a mortgage while 42.7 million homeowners now have at least some equity.
While the negative equity problem has been slowly resolving CoreLogic said that the percentage of homes underwater was virtually unchanged from the end of the third quarter. This is due to a slowdown in the quarterly growth rate of CoreLogic's Home Price Index (HPI.)
While homeowners are seeing the net worth of their homes increase, many of the margins are still narrow. CoreLogic says that about 10 million of the homes in positive equity have less than 20 percent and may have a difficult time refinancing their homes. These "under-equitied" properties accounted for 21.1 percent of mortgaged homes nationwide. More than 1.6 million properties are referred to as "near-negative equity," that is having less than 5 percent equity and these remain in danger of slipping back underwater if home prices decline....(read more)
The venerable Freddie Mac Primary Mortgage Market Survey (PMMS™) is a cornerstone of mortgage rate data. It is both longstanding and highly accurate in capturing week-over-week movement. The only problem is that it is unavoidably backward-looking due to its methodology. There's no scandal here and Freddie does a good job of convey that methodology, saying
"The survey is collected from Monday through Wednesday and the results are released on Thursdays at 10 a.m. ET. Survey reminder emails are sent out on Mondays and lenders are asked to respond by close of business Wednesday. If we have received no response on Tuesday, we follow-up with a reminder email on Wednesday morning."
There's no harm in this if one of two conditions are met. Either rates need to be flat enough so that there's a minimal discrepancy between Thursday morning's rates and Freddie's (which will be most similar to Monday or Tuesday's rates) or mortgage rate watchers must be familiar enough with the methodology that they know it's backward-looking. The latter isn't going to happen on a broad scale and the former is hit and miss.
This week is a miss....(read more)
Even though they stated in a news release two weeks ago that institutional investment was waning, RealtyTrac has released a report on its impact on the housing market. Institutional investors are defined as those who have purchased ten or more residential properties in a calendar year and in January they accounted for 5.2 percent of home purchases, down from 8.2 percent one year earlier. In all of 2013 institutional investors purchased 354,000 properties or 7.40 percent and over the last three years their purchases have totaled 850,000 units. The January number was a 22 month low....(read more)
The volume of mortgage applications increased during the week ended February 28 for the first time since late January. This good news was muted slightly by the fact that the previous week had been a holiday for many with government offices and schools closed.
The Mortgage Bankers Association said its Market Composite Index increased 9.4 percent on a seasonally adjusted basis from the week ended February 21 and 11 percent on an unadjusted basis. The seasonally adjusted Purchase Index was 9 percent higher than the previous week but MBA noted that week was not adjusted to account for the President's Day holiday. The seasonally adjusted Purchase Index during the most recent week was 6 percent above the level during the last non-holiday week which ended February 14. The unadjusted Purchase Index was 19 percent lower than during the same week in 2013....(read more)
The Federal Housing Administration (FHA) Mutual Mortgage Insurance Fund will have a positive capital reserve balance at the end of Fiscal 2014 estimated at $7.8 billion and will not require a draw from the U.S. Treasury. This news was contained in an overview of the FY2015 budget for the Department of Housing and Urban Development (HUD) released today by HUD Secretary Shaun Donovan. The announced improvement of the fund immediately triggered a call from a lending industry group for FHA to reduce the premiums it currently charges homebuyers.
FHA will introduce several features in the upcoming fiscal year designed to strengthen its insurance fund and provide increased access to credit. First, it is asking for authority to collect an administrative fee. This will help it further develop its quality assurance efforts with a greater capacity to monitor loans and transform its business processes. HUD will also conduct a pilot housing counseling program for first-time homebuyers called Homeowners Armed with Knowledge or HAWK and will increase its overall counseling budget by 33 percent or $60 million....(read more)
Home prices, including sales of distressed homes, increased nationally by 12 percent in the 12 months ended in January CoreLogic said today. This was the 23rd consecutive month in which the company's Home Price Index (HPI) showed prices up nationally on a year-over-year basis. Excluding distressed sales prices rose 9.8 percent.
January prices, including distressed sales, rose 0.9 percent and excluding those sales were up 0.7 percent. Distressed sales are short sales and sales of bank-owned real estate (REO).
Three states surpassed their previous home price peaks in 2013. The three, Texas, Nebraska, and Louisiana established new price peaks for the month while 19 other states and the District of Columbia are within 10 percent of their peak prices. All three of the states setting new market had rates of appreciation below the national average in 2013. The new peaks may be as much a factor of having suffered smaller than average declines in home values during the housing crisis as an indication of strong appreciation during the recovery. On a national basis the peak to current change in the HPI from the peak in April 2006 to the present was -17.3 percent including distressed property sales and -13.3 percent excluding them....(read more)
Mortgage originations in January were at the lowest level in 6 years 2008 Black Knight Financial Services said today and data on prepayment speeds and the remaining universe of "refinancible" mortgages do not bode well for the refinance segment of the market. However, the company's January Mortgage Monitor notes that the home equity market is stirring. Last year was the first year since 2006 in which origination of those loans and lines of credit increased.
Origination volume dropped below 400,000 mortgages during the fourth quarter of 2013 for the first time since 2011 and by the end of the year were at the lowest point since mid-2008 when volume fell to around 300,000. The share of government-backed mortgages has also declined to 83 percent from a peak of 91 percent in 2009....(read more)
The Census Bureau said today that construction put in place in January was at a seasonally adjusted annual rate of $943.1 billion, up 0.1 percent from December and 9.3 percent higher than the rate of $863.1 billion in January 2013. On an unadjusted basis the January figure was $64.7 billion compared to $59.1 billion the previous year.
Total private construction was at a seasonally adjusted rate of $670.8 billion, an increase of 0.5 percent from the revised December estimate of $667.5 billion and 12.3 percent above the rate of $597.4 billion in January 2013. The unadjusted value of private construction in January was $47.49 billion compared to $51.1 billion in December and 42.1 billion one year earlier....(read more)
Pending sales changed little from December to January the National Association of Realtors® (NAR) said today. That is not surprising as the bad weather NAR blamed for the lackluster December pending sales numbers did not change going into January either.
NAR's Pending Home Sales Index (PHSI) inched up 0.1 percent to 95.0 in January while the December number was revised up to 94.9 from the previously announced 92.4. January pending sales were 9.0 percent below a year earlier when the PHSI was 104.4. The December index reading was the lowest since November 2011 when it stood at 94.6....(read more)
Builders and developers engaged in the multi-family market grew a little less confident in that market during the fourth quarter of last year. The Multifamily Production Index (MPI) developed by the National Association of Home Builders (NAHB) dropped four points from its third quarter level to 50. A second NAHB index, the Multifamily Vacancy Index (MVI), improved slightly for the quarter.
The MPI provides a composite measure of builder and developer sentiment about current conditions in three elements of the apartment and condominium market; construction of low-rent units, market-rate rental units and "for-sale" units, or condominiums. The components are ranked on a scale of 0 to 100 and scaled so that a number of 50 indicates that the same number of respondents report conditions are improving as report conditions are getting worse....(read more)
Freddie Mac posted its ninth consecutive quarter of positive net and comprehensive income on Thursday as well as a substantial profit for Fiscal 2013. The company reported net income of $8.6 billion for the fourth quarter of 2013 and $48.7 billion for the year. Comprehensive income for the two periods was $9.8 billion and $51.6 billion.
Comparisons with the prior quarter and prior year are skewed because of the release in Q3 2013 of a $23.3 billion deferred tax asset valuation allowance. However net and comprehensive income in the third quarter were $30.5 billion and $30.4 billion and in 2012, $11.0 and $16.0 billion.
In addition to the asset valuation allowance, other items that positively impacted Freddie Mac's financial results were:...(read more)
Foreclosure statistics continue to improve in the "first look" at January data provided Thursday by Black Knight Financial Services. While the time needed to complete a foreclosure increased yet again to 943 days, many of the other measures of mortgage distress hit new post-crisis lows.
Black Knight says that the number of loans in foreclosure is now the lowest since November 2008, only a few months after the beginning of the crisis. The pre-sale or foreclosure inventory rate in January was 2.35 percent, a 5.32 percent decrease from December and 31.17 percent lower than in January 2013. The company estimates there are 1,175,000 homes in some stage of foreclosure....(read more)
Foreclosure completions accelerated in January, rising 11.8 percent to 48,000 compared to 43,000 in December. CoreLogic's January National Foreclosure Report says this is a 19 percent improvement over January 2013 when 59,000 homes were lost to foreclosure.
Since the housing crisis began CoreLogic estimates that there have been approximately 4.9 million completed foreclosures nationwide, a rough average of 68,000 per month (January 2008-December 2013.) The company offers as context that completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006....(read more)