Fannie Mae: Housing market pulled a head fake

GM. This is Mortgage Nuggets, the newsletter that gives you all the best & latest mortgage news. Every Monday, Wednesday, and Friday morning.

1. Fannie Mae: Economy Off to Surprisingly Strong Start in 2023, But It’s Not Expected to Last

Fannie Mae does not expect a housing recovery in 2023 due to two main factors.

1. Fannie Mae believe that high mortgage rates will continue to prevent many buyers from entering the market.

2. They also believe home listings will remain constrained as few sellers are eager to trade their fixed 3% mortgage rate for a plus 6% mortgage rate. That lack of inventory, of course, would make it hard for home sales levels to rise.

“Ongoing affordability constraints, the ‘lock-in’ effect creating a financial disincentive for the majority of current homeowners with mortgages to move, and still-tight inventories are expected to continue to limit home sales. Additionally, the 10-year Treasury has increased meaningfully in recent weeks, suggesting that mortgage rates are likely to begin rising again,” wrote Fannie Mae economists in their latest report.

Fannie Mae expects U.S. home prices to fall 4.2% in 2023 and another 2.3% in 2024.

However, it’s important to note that even if these price drops do happen, national home prices would end 2024 still up 29% over March 2020 price levels.

Anytime Fannie Mae discusses U.S. home prices; it’s a national aggregate. On a regional level, price movements vary.

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2. New Home Sales Hit 10-Month High

Sales of new single-family homes in the US increased by 7% in January, reaching their highest level in 10 months, according to a report by the US Census Bureau.

The annual rate of new home sales was estimated at 670,000, up 7.2% from the revised December rate. The increase was led by sales in the South, which rose by 17.1% from December.

The median sales price of new homes sold in January was $427,500, down 8% from December, while the average sales price was $474,400, down 12%.

The supply of new houses for sale was estimated at 439,000, equal to a supply of 7.9 months at the current sales rate.

3. CrossCountry alleges loanDepot shortchanged its own originators

CrossCountry Mortgage and LoanDepot are engaged in a lawsuit involving allegations of employee poaching and trade secret theft.

LoanDepot sued CrossCountry Mortgage last July, claiming it had poached at least 32 employees. CrossCountry has denied the allegations and has now countersued, alleging that LoanDepot "routinely and falsely" shortchanged its own originators' commissions.

The court battles have come at steep costs for both companies, with CrossCountry alleging spending at least hundreds of thousands of dollars in the case.

The case is ongoing, and the companies are expected to file responses by March 10th.

4. More Nuggets

🏦 Lendz Financial Enters Wholesale Market (NMP)

📉 Axios: Where the cheaper homes are (Link)

5. Mortgage Delinquency Rate Down 15% YOY

According to Black Knight, the overall delinquency rate declined 10 basis points to 3.38% month over month and down 15.1% year over year.

• The number of borrowers who are 30 days late with a mortgage payment decreased by 46,000 (-4.8%), while 60-day delinquencies also ticked down slightly.

• Serious delinquencies (90 or more days past due) continued to improve nationally, declining by 4,000, with such inventories falling in 44 of the 50 states.

• Foreclosure starts rose 17% in January to 33,000, the fourth consecutive monthly increase, but remain 37% below pre-pandemic levels.

The rising rate environment continues to affect mortgage prepayments, with January seeing the lowest level of prepayment activity on record (since 2000).

Black Knight is now applying expanded McDash loan-level mortgage data in its public metrics reporting, which represents more than 60% of active mortgages nationwide.

☀️ See you on Wednesday!

p.s. If you like this newsletter, your friends may too. Forward it to a friend, and let them know they can subscribe here. Written by Ian M.