Almost all indicators of the housing market showed an upward trend according to the January 2018 edition of At A Glance, a monthly reference guide for mortgage and housing market data, released by the Urban Institute on Tuesday.
The report gave an overview of the home market size, originations, securitizations, credit availability and originator profitability, along with indicators on housing availability, first-time homebuyers, home price indices, delinquency and the Government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.
In terms of market size, the monthly report noted that the total value of the housing market had increased in Q3 2017. While total debt and mortgages were stable at $10.5 trillion, household equity reached a new high of $14.9 trillion, bringing the total value of the housing market to $25.4 trillion and surpassing its pre-crisis peak of $23.9 trillion in 2006.
The report indicated that the Housing Credit Availability Index, a marker on the ease of getting mortgage, indicated that mortgage credit availability had expanded to 5.6 in Q3 2017, the highest level since 2013. Agency MBS made up 59.7 percent of the total mortgage market with private label securities making up 4.6 percent and unsecuritized first liens at the GSEs, commercial banks, savings institutions, and credit unions making up 30.3 percent. Second liens comprised the remaining 5.5 percent of the total, the report said.
According to the report home prices remain affordable by historic standards, despite increases over the last five years and the recent interest rate hikes. It indicated that even if interest rates rose to 4.75 percent, affordability would still remain at the long-term historical average.
The average first-time homebuyer was more likely than an average repeat buyer to take a smaller loan and have a lower credit score, thus requiring a higher interest rate, the report said. In October 2017, the first-time homebuyer share of GSE purchase loans was 46.4 percent, just off the highest level in recent history of 48.1 percent, in April 2017. The FHA continued its focus on first-time homebuyers, with its first-time homebuyer share at 81.9 percent in October 2017.
Home price appreciation also remained robust, despite slowing down from the strong year-over-year growth recorded in 2012-13. However, it will be interesting to see how rising mortgage rates impact this strong growth.