Reports Show Recovery of Housing and Mortgage Markets
Written By: Joel Palmer, Op-Ed Writer
Last week produced a number of positive trends for the housing and mortgage markets.
Fannie Mae reported that home buyers and sellers feel better about the market, as its monthly Home Purchase Sentiment Index increased in June.
According to the survey, the percentage of respondents who say it is a good time to buy a home increased from 52 percent to 61 percent. The percentage who say it is a bad time to buy decreased from 39 percent to 27 percent.
Potential sellers are more optimistic as well. The percentage of respondents who say it is a good time to sell a home increased from 32 percent to 41 percent. The percentage who say it’s a bad time to sell decreased from 62 percent to 48 percent.
“A second month of improvement in June allowed the HPSI to regain some of the sharp losses in optimism observed in March and April,” said Doug Duncan, senior vice president and chief economist.
“The share of renters who say it’s a good time to buy a home is now at its highest level in five years, suggesting favorable conditions for first-time homebuying, consistent with the recent rebound in home purchase activity.”
The nation’s Realtors are also more positive about the current state of the market.
The National Association of Realtor’s 2020 Market Recovery Survey showed 92 percent of respondents stated that a portion of their buyers have either returned to or never left the market due to the ongoing COVID-19 pandemic.
“The residential market has seen a swift rebound of activity as numerous states have begun to ease mandatory stay-at-home orders,” said Lawrence Yun, NAR’s chief economist.
“Many potential buyers and home sellers were kept at bay in the initial stages of the coronavirus outbreak, but Realtors® nationwide were able to quickly pivot, embracing technology and business practices to ensure the home buying process continued in a safe manner.”
Potential buyers may have more inventory to choose from. According to the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS), construction sector hiring increased 9.6 percent in May. This followed sector layoffs in March and April. This was the strongest rate of hiring in the history of the JOLTS data.
One more piece of data showing a recovery from the pandemic is a decrease in the number of mortgage loans in COVID-19 forbearance plans.
Last week, Black Knight reported that more than 435,000 homeowners exited a forbearance plan, the largest drop since the plans took effect.
Black Knight reported that 7.8 percent of mortgage lenders were in a COVID-19 forbearance plan. This is the lowest number of forbearance plans since April 28. This represented just under $900 billion in unpaid principal.
"This latest decline in the number of homeowners in active forbearance is an encouraging sign of continued improvement,” said Andy Walden, economist and director of market research for Black Knight.
The reduction…was driven at least in part by the fact that more than half of all active forbearance plans entering the month were set to expire at the end of June. While the majority of those have been extended, this week's data suggests a significant share were not.”
In addition to the weekly data, there were two policy announcements last week of interest to mortgage processors and underwriters.
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will extend several loan origination flexibilities in place due to COVID-19. These provisions were set to expire on July 31 and have been extended until August 31. These provisions include:
Alternative appraisals on purchase and rate term refinance loans
Alternative methods for documenting income and verifying employment before loan closing.
Expanding the use of power of attorney and remote online notarizations to assist with loan closings.
Also last week, the U.S. Supreme Court agreed to hear an appeal by the Trump Administration regarding a lawsuit by shareholders of Fannie and Freddie.
Shareholders filed suit in 2016 challenging the 2012 agreement that placed the two GSEs in conservatorship. The case is scheduled to be heard during the next term, which begins in October.
About the Author As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
