Home Prices Soared to Six-year Record in September

Any improvements in home prices is a positive indicator of the overall health of the economy. The improvements are an even better indicator when this excludes distressed home sales. PrivoCorp as a processing company has seen volumes of new home sales as well as refis increase over the past few months mirroring the observations of the Niche Home report as well as the corelogic data.

As per Niche Report Home prices nationwide, including distressed sales, increased on a year-over-year basis by 5 percent in September compared to September 2011, the biggest increase since July 2006 and the seventh consecutive increase in home prices nationally on a year-over-year basis, according to CoreLogic Pending’s HPI indicates that October prices will be even stronger, rising by 5.7 percent on a year-over-year basis from October 2011 and falling by 0.5 percent on a month-over-month basis from September 2012 as sales exhibit a seasonal slowdown going into the winter.

Excluding distressed sales, October house prices are poised to rise 6.3 percent year-over-year from October 2011 and by 0.2 percent month-over-month from September 2012. The CoreLogic Pending HPI is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month.

On a month-over-month basis, including distressed sales, home prices fell by 0.3 percent in September compared to August*.  The HPI analysis from CoreLogic shows that all but seven states are experiencing year-over-year price gains.

Excluding distressed sales, home prices nationwide also increased on a year-over-year basis by 5 percent in September compared to September 2011. On a month-over-month basis excluding distressed sales, home prices increased 0.5 percent in September compared to August , the seventh consecutive month-over-month increase. Distressed sales include short sales and real estate owned (REO) transactions.

“Home price improvement nationally continues to outpace our expectations, growing five percent year-over-year in September, the best showing since July 2006,” said Mark Fleming, chief economist for CoreLogic. “While prices on a month-over-month basis are declining, as expected in the housing off-season, most states are exhibiting price increases. Gains are particularly large in former housing bubble states and energy-industry concentrated states.”

“Home prices are responding to better market fundamentals, such as reduced inventories and improved buyer demand,” said Anand Nallathambi, president and CEO of CoreLogic. “So far this year, we’re seeing clear signs of stabilization and improvement that show promise for a gradual recovery in the residential housing market.”

Highlights:

•  Including distressed sales, the five states with the highest home price appreciation were: Arizona (+18.7 percent), Idaho (+13.1 percent), Nevada (+11.0 percent), Hawaii (+8.9 percent) and Utah (+8.7 percent).
• Including distressed sales, the five states with the greatest home price depreciation were: Rhode Island (-3.5 percent), Illinois (-2.3 percent), New Jersey (-1.8 percent), Alabama (-1.3 percent) and Delaware (-0.5 percent).
• Excluding distressed sales, the five states with the highest home price appreciation were: Arizona (+14.0 percent), Idaho (+10.5 percent), Nevada (+9.5 percent), Montana (+8.5 percent) and California (+8.4 percent).
• Excluding distressed sales, this month only four states posted home price depreciation: Alabama (-3.1 percent), New Jersey (-1.6 percent), Delaware (-1.4 percent) and Rhode Island (-1.3 percent).
• Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to September 2012) was -27.0 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -20.4 percent.
• The five states with the largest peak-to-current declines, including distressed transactions, are Nevada (-53.9 percent), Florida (-44.7 percent), Arizona (-41.7 percent), California (-37.2 percent) and Michigan (-35.0 percent).
• Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 18 are showing year-over-year declines in September, nine fewer than in August.

*August data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.

Average 30-Year Rate Sets New Record Low

Mortgage rates returned to record low levels yesterday, according to Freddie Mac’s latest weekly mortgage rate survey.

According to the Freddie Mac survey for the week ended September 20, 2012, 30-year fixed-rate mortgages averaged 3.49 percent, matching the record low set late in July.

Last week, 30-year fixed home loans were at 3.55 percent. A new historical low was set for 15-year fixed-rate mortgages; average rates tumbled from 2.85 percent last week to 2.77 percent as of yesterday. The previous record low was 2.80 percent, set at the same time as the record for 30-year fixed loans.

Last Thursday, the Fed confirmed that it would buy $40 billion a month worth of mortgage-backed securities, a move known as quantitative easing, or QE3, as this is the third implementation. QE3 is intended to drive further recovery for the country’s housing market and overall economy; this would lead to lower mortgage rates, thus better opportunities for homeowners to refinance.

Many analysts see this continuing trend as something that could potentially help the struggling U.S. housing market. Refinancing homes under these lower rates could help people reduce the amount of interest they spend on their mortgages.                                                                                                                                                       

However, home sales figures have been slow to recover, and in fact, have been lower in some categories month-on-month. Previously occupied home sales, for instance, dropped to 4.55 million for the month of May, yet still increased on a year-on-year basis.

Last year, mortgage rates were at 4.09 percent for 30-year fixed-rate mortgages, so borrowers can potentially save more than $1,000 annually if they would refinance now. Companies like PrivoCorp - the fastest contract mortgage processors in the country are the ones to look for by brokers. If you are a borrower, then go to companies like First Rate Mortgage Group (www.firstratemtg.com) for the lowest rates in the country.

Housing Starts Decline in July, Ending Winning Streak

Single-family housing starts fell 6.5% in July from the month prior while multifamily starts jumped nearly 10%.As per the Census Bureau reported Thursday morning that single-family starts fell to a 502,000 seasonally adjusted annual rate in July from a 537,000 rate in June.

Prior to July, single-family starts moved up four months in a row. Starts have risen 17% from a year ago.

The Wells Fargo Securities Economics Group reported that much of the building is “partially built-out developments where land prices have fallen and new homes can compete with foreclosures in neighboring areas.”

There is also demand for smaller land parcels near key employment centers, but not in the outskirts of major housing markets that are still plagued by foreclosures and depressed house prices. “The implication is that the upside for single-family construction has a relatively low ceiling at least until jobs and income growth improves and a large proportion of the foreclosure pipeline is cleared,” according to WFS economists.They expect builders will start construction on 510,000 single-family homes this year, up 18.4% from 2011. In July, construction of multifamily units rose to a 229,000 seasonally adjusted annual rate from a 209,000 rate in June.Total housing starts were at 746 thousand (SAAR) in July, down 1.1% from the revised June rate of 754 thousand (SAAR). Note that June was revised from 760 thousand. Single-family starts decreased 6.5% to 502 thousand in July.This shows the huge collapse following the housing bubble, and that total housing starts have been increasing lately after moving sideways for about two years and a half years.Total starts are up 56% from the bottom start rate, and single family starts are up 42% from the low.

This was slightly below expectations of 750 thousand starts in July, but the key is starts are up solidly from last year. Right now starts are on pace to be up about 20% from 2011. Also note that total permits were at the highest level since 2008.Overall, multifamily construction is up 30% from July 2012. “The multifamily sector is a bright spot for new construction,” the WFS report says. “The demand for apartments is expected to remain strong over the next several years.”

What this means for contract processing companies like Privo Corporation (PrivoCorp) is to be seen (positive obviously!) - www.privocorp.com

Shrinking Housing Debt Nothing to Fear?

U.S. consumers owed $8.995 trillion on their residential loans at the end of March—the lowest debt figure recorded in almost five years, according to new figures compiled by National Mortgage News and the Quarterly Data Report.

It seems like peak of the market occurred in the fourth quarter of 2009 when consumers owed $10.138 trillion on their homes Since that time, outstanding loan balances nationwide have declined steadily each quarter. Maybe the reason for the reduction in loan balances is loans being removed from the loan tally, plus some consumers that have the ability to refinance are engaging in “cash-in” refis where they bring money to the closing table to reduce their payments even further. According to figures compiled by Freddie Mac, roughly 70% of consumers who are refinancing either keep their loan balance the same or reduce it. In recent quarters that ratio has been as high as 77%. As Freddie Mac economist Frank Nothaft once noted, “This is primarily a 'rate-and-term' market, meaning that the typical homeowner is looking to cut their interest rate or shorten their loan term.”

When Mortgage Servicing Rights ( MSR) begin increasing in size again, that’s a different matter. It likely won’t happen until the housing market stabilizes and more consumers decide to buy new or existing homes—something that will only come when the employment picture improves in earnest.Of the $8.995 trillion in outstanding home mortgages today, 76% are fixed-rate loans, the lowest reading since 2008.Servicing advisors who make their living off of MSRs don’t seem particularly worried about the shrinking residential loan balances. “It’s not something we get hung up on,” said one manager based in Denver. “In time it will start rising again.”Also, investment bankers believe it’s just a matter of time before MSRs begin to rise in value, though they’re not sure when.

As on March 31, Wells Fargo Co. ranked first among all servicers with MSRs of $1.84 trillion, a 2% gain from a year ago. Bank of America ranked second with $1.69 trillion (-16%), followed by JPMorgan Chase with $1.1 trillion (-8%).

The top three servicers, combined, have a market share of 51.57%, according to NMN/QDR. We at PrivoCorp are waiting and watching for the results to improve - and the most important metric we are looking at is the employment picture.

Record Low Rates Drive Refis, But No Sales

New-home sales fell unexpectedly in June, tumbling 8.4%, after sales in May hit the highest level in two years, according to the Census Bureau’s latest snapshot on the housing market.The disappointing drop in sales was partially due to an upward revision in the May figures by 23,000 units.

The Census Bureau reported Wednesday morning (Aug 2012??) that sales of newly built single-family homes fell to a 350,000 seasonally adjusted annual rate in June from a 382,000 rate May.

The April sales rate was revised upward by 15,000 units.Despite the drop in June, new-home sales rose 15% compared to June 2011.Wall Street analysts were forecasting that new-home sales would edge up 1% or less from May to June.After strong sales in the winter and spring, forecasters pared back expectations following a National Association of Realtors report last week which found existing-home sales fell 5.4% in June.In trading Wednesday several homebuilding firms saw their stock prices decline. KB Home was down 3% with Ryland Homes and D.R. Horton falling by 2% each.

This is a report from publicly available data sources and information provided to the SEC.