Rates on New Home Loans Increase Slightly

Interest rates on loans for new homes increased slightly in March, according to data recently released by the Federal Housing Finance Agency (FHFA).  The average contract rate on conventional loans for newly built homes increased 13 basis points, to 3.50 percent.  Although initial fees and charges on the loans declined from 1.17 to 1.08 percent, that still resulted in an effective rate (amortizing the initial fees) that edged up 11 basis points, to 3.61 percent.  So far in 2013, rates on loans to purchase new homes have been drifting upward, reversing a downward trend that prevailed throughout most of 2011 and 2012.

The average term on loans for new homes in March was 28.4 years, up 0.2 years from February.  Meanwhile, the average price and loan amount both increased—the average price from $387,100 to $388,400, the average loan amount from $291,200 to $295,300.   Neither is quite back up to the average dollar figures reported at the end of 2012, however.

The changes in purchase price and loan amount resulted in an increase in the average loan-to-price ratio on conventional mortgages for new homes to 77.7 percent (up from 77.0 in February).

This information is based on FHFA’s Monthly Interest Rate Survey (MIRS) of loans closed from March 25 to the end of the month.   Loan terms are typically established 30 to 45 days before closing.  For other caveats and limitations of the survey data, see the technical note at the end of FHFA’s April 25 News Release.

House Prices Continue Their Ascent

Nationally, house prices continued to rise in February, contributing to the overall recovery in U.S. house prices. According to the most recent release by the Federal Housing Finance Agency, U.S. house prices rose by 0.7% on a month-over-month seasonally adjusted basis in February. This is the thirteenth consecutive monthly increase for the House Price Index – Purchase Only. Over this 13-month period, house prices have risen by 7.4%. Over the past year house prices have risen by 7.1%

The February increase in house prices was geographically widespread, increasing in nearly every division of the country. The Census Bureau uses divisions to segment the four major regions of the country; Northeast, Midwest, South, and West. As Chart 1 illustrates, February house prices increased in each division of the country except the Middle Atlantic region. Despite the February decline, house prices in the Middle Atlantic region are 1.9% higher than when they bottomed out one year ago.

Chart 2 compares national house prices, which began a sustained recovery in 2011, with mortgage applications for purchase, a measure of mortgage demand. According to the FHFA, the House Price Index – Purchase Only is composed of the purchase prices of houses with mortgages owned or guaranteed by Fannie Mae or Freddie Mac. As the chart below illustrates, the trend in house prices has generally mirrored the trend in mortgage applications for purchase. Prices are moving higher as demand increases from buyers coming back to the market and pushing application volumes up from housing bust lows, levels last seen in the late 1990s. Between January 2011 and February 2013, the HPI – Purchase Only has risen by 6.4%. Meanwhile, the Mortgage Bankers Association’s Mortgage Applications for Purchase Index has risen by 5.8% over this same period.

For full histories of the FHFA US and 9 Census divisions, click here.

U.S. House Prices Climb, But Remain Below Their Pre-Recession Peak

Nationally, house prices continued to rise in the first month of 2013, contributing to the overall recovery in U.S. house prices. According to the most recent release by the Federal Housing Finance Agency, U.S. house prices rose by 0.6% on a month-over-month seasonally adjusted basis in January. This is the twelfth consecutive monthly increase for the index. Over this twelve month period, house prices have risen by 6.5%

The Census Bureau uses divisions to segment the four major regions of the country; Northeast, Midwest, South, and West. As Chart 1 illustrates, the recovery in house prices is occurring in every division of the country. However, the contribution of January house prices to the recovery in each division varied. January house prices in divisions such as West South Central, West North Central, South Atlantic, Pacific, and Mountain, and East North Central added to the overall recovery already occurring in those divisions. Conversely, house prices in New England, Middle Atlantic, and East South Central subtracted from the general recovery already underway in those regions. However, these monthly declines were comparatively small.

While a recovery is taking place across the U.S., house prices in most divisions remain below their pre-recession peak. Only house prices in the West South Central area of the country, which includes Texas, Arkansas, Oklahoma, and Louisiana, have surpassed their pre-recession high. Previous research showed that there is a tendency for the areas where house prices declined the most to have strong rebounds. However, despite the stronger recovery experienced by these divisions, their house prices remain significantly below their peak. As Chart 2 illustrates, house prices in the Pacific, the South Atlantic, and the Mountain divisions, regions of the country that have experienced the greatest price increases, are furthest from their pre-recession high. These three divisions include the states where the house price bubbles and subsequent declines were the largest: California, Arizona, Nevada and Florida.

For full histories of the FHFA US and 9 Census divisions, click here.

Case-Shiller and FHFA House Price Indexes – 2012 Closes With Solid Gains

The Federal Housing Finance Agency (FHFA) and S&P/Case-Shiller (CS) released home price indexes for the end of 2012 today. The monthly FHFA national indexes were up 0.6% for the month (December over November, seasonally adjusted), 1.4% for the quarter (average fourth quarter months over average third quarter months, seasonally adjusted) and 5.9% for the year (December 2012 over December 2011, non-seasonally adjusted). The quarterly CS national indexes were up 2.0% for the quarter (fourth quarter over third quarter, seasonally adjusted) and 7.3% for the year (fourth quarter 2012 over fourth quarter 2011, non-seasonally adjusted).

These gains were broadly distributed around the US. The FHFA indexes for all 9 Census divisions were up on a year over year basis and 7 of 9 were ahead for the month. The CS indexes showed all 20 cities in the composite index up for the month and only New York down slightly on a year over year basis. Both FHFA and CS show all regional markets safely above their cyclical troughs.

After a long challenging period this is an impressive end to 2012 for house prices. We expect 2013 to be a continuation of the gains made in 2012 with further improvement in the overall housing sector.

For full histories of the 20 markets included in the Case-Shiller composite, click here cs.

For full histories of the FHFA US and 9 Census regions, click here fhfa9.

For full histories of the FHFA 50 state level house price indexes, click here fhfa50.

 

FHFA House Price Indexes – Progress In 2012

The Federal Housing Finance Agency (FHFA) released monthly home price indexes for October today. The national house price index increased 0.5% from the September level on a seasonally adjusted basis. The index is now 5.6% higher than its low point in March 2011. Most of the gain occurred in 2012.

Among the nine Census divisions, seven posted gains for the month ranging from 0.4% to 2.0%. The Middle Atlantic and New England divisions had modest declines of 1.3% and 0.3%, respectively. All nine divisions remain above earlier troughs established mostly in the first half of 2011. The Pacific and Middle Atlantic divisions hit bottom in February 2012. The East South Central division was the earliest to turn the corner in December 2010. Current gains since the troughs ranged from 0.8% in the Middle Atlantic division to 13.4% in the Mountain division.

Most parts of the country have seen steady gains in house prices so far in 2012. The Middle Atlantic and New England divisions are the exceptions having remained essentially flat since early 2011. But some of the current slow growth in these divisions can be interpreted as the absence of a strong rebound following the steep declines seen in some other areas. There is a tendency for the areas where house prices declined the most to have strong rebounds. Three of the four divisions with the largest gains in house prices include the states where the house price bubbles and subsequent declines were the largest: California, Arizona, Nevada and Florida.

For full histories of the FHFA price indexes for the US and 9 Census divisions, click here fhfa9.

 

FHFA House Price Indexes – Additional Gains In Most Areas

The Federal Housing Finance Agency (FHFA) released monthly home price indexes for August today. House prices nationally increased 0.7% from July levels on a seasonally adjusted basis. This brings the cumulative gain for 2012 to 4.6% after being essentially flat through 2011.

Around the country, six of the nine Census divisions posted modest gains in August from July, ranging from 0.2% in the Mountain states to 3.0% in Pacific states. House prices were essentially flat in the West South Central and South Atlantic divisions, and declined a modest 0.5% in the East South Central division.

All nine divisions followed the national pattern with a relatively flat performance in 2011, but the year-to-date gains in 2012 have been somewhat uneven, ranging from a low of 0.9% in the Middle Atlantic division to a high of 10.4% in the Mountain division.

It is important to note however, the general pattern that emerges: the areas with the largest recent percentage gains are those that rose the highest during the boom and fell the most during the bust. Those areas where the rise and fall was less extreme are recovering less lost ground and posting smaller percentage gains. This observation brings into focus the point that to accurately gauge the pace of recovery in house prices around the country it is important to consider the broader perspective of the extent of increases and declines in the different areas revealed in the full histories of the indexes.

For full histories of the FHFA US and 9 Census divisions, click here fhfa9.

 

Case-Shiller and FHFA House Price Indexes – Solid 2012 Gains So Far

Both S&P/Case-Shiller (CS) and the Federal Housing Finance Agency (FHFA) released monthly home price indexes for July today. Both organizations reported solid gains in house prices continuing so far this year. The CS 10 and 20 city composite indexes posted 1.5% and 1.6% gains respectively in July over June, bringing the year to date increases to 6.3% and 6.9% (on the non-seasonally adjusted basis they focus on). FHFA reported a less robust 0.2% increase nationally from June to July and a 4.1% increase so far this year (on the seasonally adjusted basis they focus on).

The non-seasonally adjusted data typically shows higher peaks and lower troughs throughout the year due to the highly seasonal nature of the housing sector. It’s also true that historically the CS composites have shown more extreme highs and lows than both the CS and FHFA national indexes. This is due in part to the inclusion of some of the most volatile markets among the 20 cities in the composites, and less averaging out than the national indexes.

All 20 cities in the CS composites posted gains for July, perhaps unsurprisingly given the non-seasonally adjusted data and summer being the height of the selling season. But summer has brought no guarantee of rising prices in these markets in the last few years and the most encouraging signal in this release is that the year to date increases so far in 2012 are stronger than in prior years suggesting this is fundamental improvement rather than pure seasonality.

Among the 9 Census divisions reported by the FHFA, 3 posted modest declines for July, but 8 of the 9 have shown good progress so far this year. The Middle Atlantic division, including New York, New Jersey and Pennsylvania, while still positive has the weakest growth of the divisions.

For full histories of the 20 markets included in the Case-Shiller composite, click here cs.

For full histories of the FHFA US and 9 Census regions, click here fhfa9.

FHFA House Price Indexes – Broad Based Increases

The Federal Housing Finance Agency (FHFA) released house price index results for the second quarter of 2012 today. House prices increased in most parts of the country, both on a quarterly and annual basis, and are at or above pre-boom trend levels in almost three quarters of the states. Today’s release includes monthly house price indexes for the US and the 9 Census divisions for June, and quarterly house price indexes for the 50 states, the District of Columbia, and metropolitan statistical areas.

The national FHFA purchase-only seasonally adjusted index has shown solid gains since the beginning of the year. The index increased 0.7 percent in June from May, 1.8 percent from the first quarter of 2012, and 4.0 percent from January of 2012. All 9 Census divisions have also posted appreciable gains so far this year.

Among the 50 states and the District of Columbia, all but Connecticut and Delaware have yet to reach bottom. Of the remaining 49 areas, 43 gained in the second quarter. In terms of returning to a more historically “normal” trajectory for house prices, 45 states and Washington DC have returned to or are approaching the trend in house prices established between 1975 and 2000. The exceptions are Georgia, Nevada, Michigan, Ohio and Indiana.

For more details on the path of house prices at the national and state levels click here: fhfa.

 

FHFA House Price Indexes – US, State and Metro Area Data

This month’s release from the Federal Housing Finance Agency (FHFA) includes monthly house price indexes for the US and the 9 Census divisions for March, and quarterly house price indexes for the 50 states, the District of Columbia, and metropolitan statistical areas for the first quarter of 2012.

The national FHFA purchase-only seasonally adjusted index shows house prices up 1.8 percent in March from February, and up 2.7 percent from March 2011, the cyclical trough. All 9 Census divisions are up in March from February, with increases ranging from 0.7 percent to 3.1 percent and averaging of 1.7 percent. Increases from one year ago range from 0.6 percent to 4.0 percent with an average of 3.4 percent.

Among the 50 states and the District of Columbia, results are mixed but encouraging, with 31 areas higher in the first quarter than in the fourth quarter, and 33 areas higher than one year ago. Measured from recent lows, 42 areas are above their troughs by an average of 2.5 percent. This is an increase from 38 areas last quarter. Of these 42 areas that have turned the corner, 9 have done so in the last six months, 28 in the prior six months and the remaining 5 bottomed out at least one year ago.

In nine states house prices have yet to bottom out: Colorado, Connecticut, Delaware, Georgia, Maryland, Massachusetts, New Jersey, North Carolina and Washington. However, with the exception of Delaware, there has been a significant deceleration in the rate of decline in these states. Excluding Delaware the average decline was 1.0 percent in the last quarter, 2.2 percent from a year ago, down from 4.9 percent in the year before. In Delaware house price declines accelerated in the most recent quarter.

To see the full history for FHFA house price indexes at the national and state levels click here: fhfa.

Data at MSA level is available at FHFA’s website: http://www.fhfa.gov/Default.aspx?Page=216

 

House Price Reports for February – Too Close To Call

Both S&P/Case-Shiller (CS) and the Federal Housing Finance Agency (FHFA) released monthly home price indexes for February today. The FHFA released data for the US and the 9 Census divisions, based strictly on February transactions. CS released data for their 10 and 20 city composites, and the component cities, based on three month averages including data from December through February.

The FHFA data show modest increases in February on both a seasonally adjusted (0.3%) and unadjusted basis (0.6%). The CS data show declines of 0.8% for both the 10-city and 20-city composites on an unadjusted basis, and increases of 0.1% and 0.2% for the 10 and 20-city composites, respectively, after seasonal adjustment.

Regionally, the FHFA data show 5 of the 9 Census divisions posting monthly increases when seasonally adjusted, and 6 of 9 increasing on an unadjusted basis. Both increases and declines were in a modest range. From a broader perspective, the Pacific division and to a lesser extent the Middle Atlantic division, continued to trend down while the remaining divisions continued to hover near 2011 levels.

The CS data show a similar pattern with most markets moving in a narrow range, but the results are highly dependent on the seasonal adjustment. Without it, only 3 of the 20 markets show monthly increases. With seasonal adjustment, 12 of the 20 markets show monthly increases, indicating that measured declines in some markets are the result of seasonal slowdowns during the winter months, rather trend based declines.

Markets that show non-seasonally driven price movement include a sustained improvement in the Phoenix market, continued declines in Las Vegas and Tampa, and continued deterioration in the California markets covered (San Diego, Los Angeles and San Francisco).

Notable developments outside these bubble markets include accelerating weakness in the Atlanta market, and continuing trend-like declines in Chicago, New York, Portland and Seattle. The remaining markets included in the CS 20-city composite show prices consistent with 2011 levels, moved mainly by seasonal variation.

For full histories of the 20 markets included in the Case-Shiller composite, click here cs.

For full histories of the FHFA US and 9 Census regions, click here fhfa.