While We Were Away…

Most of us enjoyed the holidays by taking last week off. The news, however, did not stop. Here’s a recap of what happened while we were away.

November New Home Sales Surge
HUD/Census reported sales of new single-family houses in November jumped to a seasonally adjusted annual rate of 733,000, 17.5 percent higher than the revised October rate of 624,000 and 26.6 percent higher than a year ago (579,000).

The median sales price of new houses sold in November was $318,700; the average sales price was $377,100. Inventory held steady 283,000, but the months’ supply fell to 4.6 months at the current sales rate.

HUD Nominees Approved–Except for Montgomery
The Senate approved three HUD nominees by vote voice on Dec. 21, but FHA nominee Brian Montgomery was not one of them.

Montgomery’s vote was delayed when Sen. Elizabeth Warren, D-Mass., and four other Democrats on the Senate Banking Committee demanded a recorded vote by the full Senate. The Senate is expected to take up Montgomery’s nomination when it returns from recess.

HUD nominees approved by the Senate included Len Wolfson as assistant secretary for congressional and intergovernmental relations. Wolfson served previously as a lobbyist with the Mortgage Bankers Association and also worked for HUD during the George W. Bush administration. The Senate also confirmed Susan Tufts as assistant secretary for administration and Irving Dennis as chief financial officer.

FHFA: Foreclosure Preventions at 3.9 Million
The Federal Housing Finance Agency released its third quarter Foreclosure Prevention Report, which shows Fannie Mae and Freddie Mac completed 41,465 foreclosure prevention actions in the third quarter, bringing the total number of troubled homeowners helped to 3.972 million since the start of the conservatorships in September 2008.

FHFA reported early-stage (30-59 days) delinquent loans rose 25 percent in the third quarter, driven primarily by Hurricanes Harvey, Irma and Maria in Texas, Florida and Puerto Rico, respectively. Of foreclosure prevention actions, nearly 3.3 million have helped troubled homeowners stay in their homes, including more than 2.1 million permanent loan modifications. The Enterprises’ serious delinquency rate remained flat at 0.95 percent at the end of the third quarter. The Enterprises’ REO inventory declined by 8 percent.

The report can be accessed at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/3Q2017_FPR.pdf.

Confidence Declines but Consumers Remain Upbeat
The Conference Board, New York, reported its December Consumer Confidence Index fell from its 17-year high in November. The December Index, 122.1, was well off its 128.6 November reading. The Present Situation Index increased from 154.9 to 156.6, while the Expectations Index declined from 111.0 last month to 99.1 this month.

Lynn Franco, Director of Economic Indicators with The Conference Board, said the decline in confidence was fueled by a somewhat less optimistic outlook for business and job prospects in the coming months. “Despite the decline in confidence, consumers’ expectations remain at historically strong levels, suggesting economic growth will continue well into 2018,” she said.

November Pending Home Sales Up Slightly
The National Association of Realtors reported its Pending Home Sales Index rose by 0.2 percent to 109.5 in November from 109.3 in October. With last month’s modest increase, the index remains at its highest reading since June (110.0) and is now 0.8 percent above a year ago.

Regionally, pending home sales fell in the South and West but rose in the Northeast and Midwest. Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. attributed the drop in the South to an earlier surge from storm-related disruptions and the decline in the West to continued inventory shortages and declining affordability.

NAR Chief Economist Lawrence Yun said pending home sales rose annually for the first time since June.

Redfin: November Housing Demand Index Falls 6.2%
Redfin, Seattle, said its Housing Demand Index fell by 6.2 percent from 136 in October to 127 in November. The seasonally adjusted number of buyers requesting home tours fell slightly by 1.9 percent, while the number making offers fell 14.7 percent month over month.

“Three years of low inventory is taking its toll on buyer demand in terms of tour and offer activity,” said Redfin chief economist Nela Richardson. “People still want to buy homes, especially before mortgage interest rates increase and prices rise even more. But there just aren’t enough homes for sale, especially at lower- to mid-level prices.”

Redfin said year over year numbers remained high. From a year ago, the Demand Index increased by 29.1 percent in November. The number of buyers requesting tours increased by 41.3 percent, and 10.5 percent more wrote offers. Demand has consistently remained about 30 percent higher than last year’s levels since May.

Across the 15 metros covered by the Demand Index, Redfin reported 18 percent fewer homes for sale last month than at the same time last year. November marked the 30th straight month of year-over-year inventory declines in these major markets and the fifth consecutive month of double-digit declines. New listings increased modestly by 1.5 percent year over year in November.

Mortgage Lenders Approach 2018 with Negative Outlook on Profit Margin, Refinance Activity
Fannie Mae, Washington, D.C., reported mortgage lenders again reported a negative profit margin outlook for the next three months, citing competition as the primary reason and continuing a quarterly trend beginning the same time last year.

The company’s Q4 2017 Mortgage Lender Sentiment Survey said on net, the share of lenders who said “competition from other lenders” was the top driver behind their negative outlook reached another new survey high for the fourth consecutive quarter. Other reported factors include consumer demand, staffing, and market trend changes. Additionally, the net share of lenders who expect to see growth in refinance mortgage demand over the next three months fell to the lowest reading in a year across all loan types (GSE eligible, non-GSE eligible and government). More lenders also reported declining refinance mortgage demand over the prior three months, marking four consecutive quarterly drops.

Fannie Mae reported the net share of lenders reporting demand growth over the prior three months has fallen for all loan types when compared with Q4 2016, Q4 2015 and Q4 2014, reaching the lowest reading for any fourth quarter over the past three years. However, the net share of lenders expecting increased demand over the next three months remains relatively stable for the fourth quarter over the past three years.

Fannie Mae also reported lenders’ net profit margin outlook has been negative for five consecutive quarters (since Q4 2016). Those expecting a lower profit outlook generally point to “competition from other lenders” as the primary reason. While institutions of all sizes and types generally reported an expected net decrease in profit margin, larger institutions were the most likely to do so.