Enjoy access to a free NMLS renewal class when you attend an in-person event.
The latest round of industry data continues to provide evidence that the housing industry is gaining more strength–and while some challenges have yet to abate, there does not appear any sign of a slowdown, let alone a relapse.
The National Association of Realtors (NAR) latest Pending Home Sales Index (PHSI) report found a 0.1 percent month-over-month increase to a 106.8 level in December. Compared to December 2014, the PHSI was up 4.2 percent, marking the 16th consecutive year-over-year hike.
On a regional basis, the PHSI in the Northeast increased 6.1 percent to 97.8 in December but fell in the Midwest (down 1.1 percent to 103.6), the South (down 0.5 percent) and the West (down 2.1 percent).
“Warmer than average weather and more favorable inventory conditions compared to other parts of the country encouraged more households in the Northeast to make the decision to buy last month,” said NAR Chief Economist Lawrence Yun. “Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job creating areas. With homebuilding still grossly inadequate, steady price appreciation and tight supply conditions aren’t going away any time soon.”
On the servicing side of the industry, RealtyTrac’s Year-End 2015 U.S. Home Equity & Underwater Report determined that there were 6.4 million U.S. properties seriously underwater last year, roughly 11.5 percent of all mortgaged properties. This is a decline from the 7.1 million properties, or 12.7 percent, from the end of 2014. On the flip side, 12.6 million homes were considered equity rich, representing 22.5 percent of all mortgaged properties – and increase from the 2014 figure of 11.2 million properties, or 20.3 percent of all mortgaged properties.
“Over the past three and a half years, the number of seriously underwater properties has been cut in half, but we continue to deal with a long tail of seriously underwater properties, and it will likely be another five years at least before most of those remaining underwater properties move into positive equity territory,” said Daren Blomquist, vice president at RealtyTrac. “At the other end of the spectrum, the growing number of equity rich properties reflects a moribund move-up market and restrained leveraging of home equity by U.S. homeowners.”
Furthermore, RealtyTrac found that nearly half of all homes in foreclosure had some equity by the end of 2015, the highest percentage since RealtyTrac began tracking this data in the third quarter of 2013. And new data found fewer foreclosures were taking place. According to HOPE NOW, there were approximately 99,000 foreclosure alternatives–a combination of loan modifications, short sales, deeds in-lieu and workout plans–during November, versus an estimated 24,500 foreclosure sales. The number of serious delinquencies in November was roughly 1.65 million, down from 1.66 million in October.
“As we turn our attention to 2016, our data continues to indicate recovery in the overall housing market,” said Erik Selk, executive director at HOPE NOW. “Our November report shows that key trends remain consistent with previous reports. Specifically, foreclosure starts and foreclosure sales completed are at or near pre-crisis norms. Although fewer modifications are being reported, families are receiving assistance through foreclosure alternative solutions such as retention plans and formal repayment plans. This is reflective of an early intervention process that all servicers are employing. The goal is to keep families in their home and respond quickly when someone goes delinquent.”
More positive news came from Freddie Mac, whose latest Multi-Indicator Market Index reading came in at 82.5 for November, up 0.82 percent from October and up 7.23 percent from November 2014. Thirty-three states and the District of Columbia plus 57 out of the top 100 metro areas registered MiMi values in a stable range.
However, Freddie Mac Deputy Chief Economist Len Kiefer warned that some parts of the country are not enjoying this mostly good news.
“The regional variation of housing activity continues to become more pronounced. For example, we're still seeing declines in oil-dependent housing markets, whereas the hardest hit metros from the Great Recession continue to see some of the best improvement as they recover,” he said. “And at the same time, other markets are seeing even stronger improvement because of robust home sales fueled by strong local economies that remain largely affordable for the typical homebuyer. And in the short-term, we expect homebuyer affordability to remain strong with mortgage rates continuing to look very attractive to prospective homebuyers.”
Alas, not all the data was positive. The proverbial fly in the ointment is also from Freddie Mac: mortgage rates fell for the fourth consecutive week, according to the Primary Mortgage Market Survey for the week ending Jan. 28.
The 30-year fixed-rate mortgage (FRM) averaged 3.79 percent, down from last week’s 3.81 percent, while the 3.07 percent average for the 15-year FRM was below last week’s 3.10 percent. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.90 percent, slightly below last week’s 2.91 percent average.
Still, Freddie Mac Chief Economist Sean Becketti kept a cheerful outlook on the situation.
“A hesitant Fed, sub-four-percent mortgage rates (at least for a little while longer), and strong housing fundamentals should generate a three percent increase in home sales this year,” Becketti said.