Home prices are 3.6 percent above their year-earlier levels and up 4.4 percent in the second quarter, according to Standard & Poor’s Case-Shiller Home Price Indices. David M. Blitzer, chairman of the index committee at Standard & Poor’s, said the housing market is in better shape than it was at this time last year but warns that, despite upbeat second quarter numbers, more recent data suggests fewer gains ahead. Lack of demand combined with foreclosures and the shadow inventory could begin to affect home prices in the coming months. More here and here.
According to The Mortgage Bankers Association, the inventory of homes somewhere in the foreclosure process fell for the first time since 2006. The number of seriously delinquent loans, or those late by three months or more, dropped to 9.11 percent from 9.54 percent in the first quarter. Jay Brinkmann, MBA’s chief economist, said the numbers provided a mixture of good and somewhat bad news. Though foreclosure starts and the number of loans late by 90 days or more fell, the rate of first-time delinquencies, or those one payment behind, rose after four consecutive quarters of decline. More here, here, and here.
David Lykken of Mortgage Banking Solutions says mortgage rates could fall below 4.0 percent by the end of the year.
Sales of single-family homes fell 12.4 percent in July, according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development. Year-over-year, sales were down 32.4 percent. The past three months have been the worst on record for new home sales and July’s pace was the slowest since records began in 1963. An estimated 210,000 new houses were for sale at the end of July, a 9.1-month supply at the current sales pace. Six months of inventory is considered normal market conditions. More here and here.
According to The Mortgage Bankers Association’s Weekly Applications Survey, the Market Composite Index, which measures total mortgage application volume, rose 4.9 percent last week. The increase was the result of another boost in refinance activity as the average contract interest rate for a 30-year fixed-rate mortgage fell from 4.60 percent to 4.55 percent, a new record low. Michael Fratantoni, MBA’s vice president of research and economics, said refi applications were up 26 percent over their level four weeks ago and set a 15-month high for the Refinance Index. More here and here.
Existing home sales, which include single-family houses, townhomes, condominiums, and co-ops, fell 27.2 percent in July, according to The National Association of Realtors. Sales of single-family homes were at their lowest level since May 1995. Lawrence Yun, NAR’s chief economist, said the soft sales pace was largely due to the lingering effects of the homebuyer tax credit. Since the tax credit’s expiration, sales have fallen 34 percent. Yun believes sales will continue to be slow through September, but record-low mortgage rates and high affordability combined with an improvement in the job market could lead to a quick recovery. More here and here.
The Treasury Department’s monthly report on the Home Affordable Modification Program, or HAMP, shows 48.1 percent of the 1.3 million homeowners enrolled in the government’s mortgage aid program had been dropped by the end of July. The dropout rate at the end of June was 41.2 percent. Launched in April 2009, HAMP was intended to lower mortgage payments of homeowners at risk of foreclosure. Assistant Treasury Secretary Herb Allison said the cancellations were mostly the result of servicers working through a backlog of trial modifications accepted before the program required income verification. Both borrowers and the banking industry have complained of bureaucratic and paperwork problems associated with the troubled foreclosure-prevention effort. More here, here, and here.
David Wyss, chief economist at Standard & Poor’s, says that the economy won’t dramatically improve in the third quarter, though the numbers should be better. He feels the housing market has yet to rebound and is, at best, beginning to stabilize.
Pessimism among homeowners is on the rise, according to Zillow’s second quarter Homeowner Confidence Survey. One third said home values in their local markets have yet to reach bottom and 28 percent believed prices would drop in the next six months, up from 20 percent in the first quarter. Dr. Stan Humphries, Zillow’s chief economist, said the results weren’t surprising considering declining market conditions since the expiration of the tax credit. The barrage of bad news has homeowners becoming more responsive to current market conditions than they were in the past, Humphries said. Still, 38 percent of homeowners believed prices in their local market had reached their bottom and five percent said they are very likely to put their home on the market in the next six months if there are signs of a real-estate turnaround. More here and here.
According to The Mortgage Bankers Association’s Weekly Applications Survey, total mortgage loan application volume increased 13 percent last week due to a 17.1 percent jump in the Refinance Index. Refinance activity was at its highest level since May 2009. The Purchase Index fell 3.4 percent, despite mortgage rates near record lows. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.60 percent from 4.57 the week before. More here and here.