Wednesday, April 14, 2010

New Feature: Monthly Housing and Mortgage Market Trend Sheet

Earlier optimism about a housing market recovering has faded in recent months. At the end of last year, pundits highlighted accelerating sales, increasing mortgage originations and stabilizing prices as signs that the housing market had bottomed and was poised to grow. But previous Notable # posts reported, at the beginning of 2010, both new and existing home sales fell as the effect of the home buyer tax credit waned. Additionally, nearly 5% of homes are in foreclosure and the government’s home retention programs are having little impact. Meanwhile, home inventories continue to remain high – reaching nearly three quarters of a year’s supply. Certainly these numbers don’t bode well for the recovery argument.

Other numbers are more hopeful, such as improvements in home affordability, but the news cuts both ways. Prices have dropped over the last three years, improving housing affordability and pulling some potential home buyers that have been renting off of the sidelines. Unfortunately on the other side of the ledger, homeowners with 2005 through 2007 vintage mortgages may be suffering the consequences of falling prices and underwater loans.

As we introduce our monthly Housing and Mortgage Market Trend sheet to the Banks and the Economy Blog – we face more questions about the uncertain direction of the housing sector. With mortgage rates at low levels for so long, what will happen to the refinance market? What impact will projected higher mortgage rates have on home sales and mortgage originations? Building permits are rising, but housing starts have remained flat – will we see starts pick-up this spring?

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