Freddie Mac's new pilot program & record home prices

Plus: Fannie Mae trims forecast for origination volume

June 24, 2024

👋 Good morning! Thanks for joining us. Today's newsletter is 574 words, 2 minutes.

Disclaimer: Average mortgage rates as of June 21, 2024. Š MND's Daily Rate Index.

1. FHFA approves Freddie Mac’s pilot to purchase second mortgages

The Federal Housing Finance Agency announced Friday that it had granted conditional approval to a Freddie Mac pilot program to purchase single-family, closed-end second mortgages on which the enterprise already owns the first lien.

FHFA proposed the new product earlier this year to provide borrowers with a lower-cost alternative to a cash-out refinance in higher interest rate environments.

“The limited pilot will allow FHFA to explore whether this closed-end second mortgage product effectively advances Freddie Mac’s statutory purposes and benefits borrowers, particularly in rural and underserved communities,” FHFA Director Sandra Thompson said.

2. Fannie Mae trims forecast for home sales and origination volume

Fannie Mae’s Economic and Strategic Research (ESR) Group said on Friday that affordability issues continue to limit home purchases despite a rise in listings.

The ESR Group revised its 2024 home sales forecast down to 4.82 million, a modest 1.3% annual gain from the previously expected 2.8%.

Mortgage origination volumes are also expected to stay low due to high mortgage rates and affordability challenges. Significant improvements in affordability are needed to boost homebuying activity.

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3. More Nuggets

🚨 HUD offers new disaster aid to Hawaii storm and flood victims. (HUD)

📊 Say goodbye to the 20% down payment. Zillow says you’ll need to put down roughly 35%, or almost $128,000, to afford a typical home. (Fortune)

💭 If you can’t beat high mortgage rates, consider joining them. (WSJ)

🏘️ Why Gen Z is tabling homeownership for now. (Axios)

4. Home prices hit record high in May

Home prices rose in May to a new high, with low inventory continuing to spur bidding wars among home buyers in some markets.

The national median existing-home price in May was $419,300, a record in data going back to 1999, the National Association of Realtors said Friday. That was up 5.8% from a year earlier.

Those high prices, paired with elevated mortgage rates, have limited the number of sales this spring—typically the busiest season for home buying.

5. Housing starts fall to a four-year low

Single-family and multifamily housing starts fell in May as high interest rates for construction and development loans and elevated mortgage rates held back both housing supply and demand.

Overall housing starts fell 5.5% in May to a seasonally adjusted annual rate of 1.28 million units, according to a report from the HUD and the U.S. Census Bureau.

The May reading of 1.28 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months.

You’re all caught up. See you on Wednesday!

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