Builder confidence increased in December

🚀 Happy Wednesday. We're headed into the holiday season at breakneck speed. Today’s newsletter is 598 words, a 2.5-minute read. Let’s dive in.

1. Navy Federal sued over mortgage disparity by race

Plaintiffs sued Navy Federal Credit Union in federal court Sunday, alleging the lender discriminated against Black and Latino mortgage applicants.

The class-action lawsuit comes days after a CNN report found a nearly 29 percentage-point gap between the credit union’s rate of acceptance for Black mortgage applicants (48.5%) in 2022, compared with White ones (77.1%). Latino applicants fared only slightly better than Blacks in the CNN analysis, at 55.8% acceptance.

The CNN report cites data publicly available from the Consumer Financial Protection Bureau but has received pushback from both Navy Federal and three credit union trade groups.

The Navy Federal allegations hew closely to those leveled against Wells Fargo in March 2022, after a Bloomberg analysis found a 25 percentage-point gap between the acceptance rate for Black mortgage applicants in 2020 (47%) and White ones (72%).

2. Mortgage applications for new construction rise

The MBA Builder Application Survey data for November 2023 shows mortgage applications for new home purchases increased 21.8 percent compared to a year ago.

“Lending on new construction has been the one bright spot in an otherwise slow year for purchase originations, the purchase market as a whole remains about 20 percent behind last year’s pace,” said Mike Fratantoni, MBA’s SVP and Chief Economist.

“It is also interesting to see that a growing portion of this demand for new homes is being financed by FHA loans. This is a sign that first-time buyers remain a strong force in this market,” he said.

3. Catch up quick

⚖️ Two law firms are taking on Fannie Mae's "Condo Blacklist," a secret list that bars certain properties from conventional financing. (Miami Herald)

🔐 November mortgage lock volume drops by 10.7%. (MCT Indices Report)

📰 NAR President Tracy Kasper vows to “keep fighting” in her first national interview since a Missouri jury found NAR liable for collusion. (CNBC Video)

🌋 A live feed of the volcano eruption in Iceland. (Youtube)

4. Builder confidence increased in December

Falling mortgage rates helped end a four-month decline in builder confidence, and recent economic data signal improving housing conditions heading into 2024.

Builder confidence in the market for newly built single-family homes rose three points to 37 in December, according to the National Association of Home Builders Housing Market Index (HMI).

With mortgage rates down roughly 50 basis points over the past month, builders are reporting an uptick in traffic. “The housing market appears to have passed peak mortgage rates for this cycle, and this should help to spur home buyer demand in the coming months,” Robert Dietz, NAHB chief economist, said in a statement.

• ℹ️ The HMI is a weighted average of three indexes, designed to range from 0 to 100. HMI readings above 50 reflect a generally favorable market view and outlook in the industry. HMI fell to a record low of 8 in January 2009, and set a record high of 90 in November 2020.

5. Housing starts hit 2023 high

New-home construction surged in November to a six-month high, benefiting from a lack of existing houses on the market and suggesting the crunch in residential real estate is easing.

Residential starts increased 14.8% last month to a 1.56 million annualized rate, Census.gov data showed Tuesday.

• Construction of single-family houses jumped 18% to the highest level since April 2022, while starts of multifamily projects increased 6.9%.

All regions reported increased housing starts in November, including a 16.3% jump in the South. New construction doubled in the Northeast, and rose 2.1% in the West and 1.4% in the Midwest.

👋 See you on Friday!

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