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Daily Dose

Unsustainable Home Price Growth Leads to Meager Home Sales in Some Counties

Home prices increased over the month and year in February in the majority of the 42 counties reviewed in DataQuick’s latest Property Intelligence Report. Home sales increased in the majority of the large counties over the month but not over the year, according to DataQuick. “While we saw a slight uptick from the extremely low sales levels reported in January, total sales remain far below historical levels,” said Gordon Crawford, VP of analytics at DataQuick.

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Freddie Mac Debuts New Report; Points to Market Instability

Freddie Mac released Wednesday its first Multi-Indicator Market Index, a gauge of market stability based on current levels of purchase applications, payment-to-income ratios, on-time mortgage payments, and employment. Based on a neutral, stable "0" point, the market in January sat at a score of -3.08, according to the index. However, that's still an improvement compared to the prior month and year.

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Closing Costs Sink Profits at Independent Mortgage Banks

According to the Mortgage Bankers Association’s (MBA) Performance Report for Q4, independent mortgage banks and mortgage subsidiaries of chartered banks took in an average profit of $150 on each loan they originated, a record low. That number was down from $743 per loan in Q3. “Fourth-quarter production profits were at their lowest levels since [the] inception of the Performance Report in 2008,” said Marina Walsh, MBA’s VP of industry analysis.

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Fourth-Quarter GDP Growth Bumped Up to 2.6%

According to the Bureau of Economic Analysis (BEA), the increase in real GDP last quarter mostly reflected positive contributions from consumer spending, exports, and nonresidential fixed investment. Those gains were partly offset by drags in federal government spending and expenditures on housing. The latest growth estimate was an improvement over BEA’s second report, which suggested 2.4 percent annualized growth.

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Yellen Projections Drive Up Interest Rates

In its weekly Primary Mortgage Market Survey, Freddie Mac reported an increase of 8 basis points in the 30-year fixed average rate, bringing up to 4.40 percent for the week ending March 27. Frank Nothaft, chief economist for Freddie Mac, explained the increase: “Mortgage rates rose following the uptick on the 10-year Treasury note after comments by the Federal Reserve Board Chair Janet Yellen indicated a possible increase in interest rates as soon as early 2015.”

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Pending Home Sales Down to Lowest Level Since 2011

The National Association of Realtors (NAR) reported yet another monthly decline in its measure of pending home sales, indicating continued softness in future sales figures. According to the latest monthly report, the group’s Pending Home Sales Index (PHSI)—a metric based on contract signings—dipped 0.8 percent in February to a reading of 93.9, its lowest point since October 2011. It was the eighth decline in as many months.

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New Employment Needs Emerge as Industry Morphs

Although employment is being reduced, the need for certain types of talent is more critical than ever, according to Rick Glass, founder of R.T. Glass & Associates, one of the mortgage banking industry’s leaders in executive search since 1993. However, he said the demand for certain types of skills has changed during the past several years, and continues to change in order to adapt to new regulations and fluctuating markets.

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BofA, FHFA Settle in $9.3B Agreement

Bank of America has agreed to a multibillion settlement with the Federal Housing Finance Agency (FHFA) to resolve allegations of securities fraud related to loans sold to Fannie Mae and Freddie Mac at the height of the housing bubble. Under the agreement, BofA will make an aggregate payment of approximately $9.33 billion, $3.2 billion of which will go toward the repurchase of certain RMBS at fair market value.

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FHFA Price Index Up 0.5% in January

Following two other reports on home price changes in January, the Federal Housing Finance Agency (FHFA) released its own House Price Index (HPI), pinning monthly growth at a seasonally adjusted 0.5 percent. December’s index, meanwhile, was revised slightly downward to show a 0.7 percent increase. According to the agency, the most recent improvement marks the 23rd in the last 24 months.

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Housing Barometer: Recovery ‘Staggering’ Forward; Headwinds Persist

Recovery in the housing market is stumbling back to solid ground, thanks to a rise in home prices and existing home sales, as well as a drop in foreclosures, according to the latest Housing Barometer report released Wednesday by Trulia. However, growth in these sectors is dragging disproportionally weaker growth in young adult employment and stagnation in the new home construction sector in its wake.

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