Warren Buffett makes a big bet on the U.S. housing market

☕️ Good morning. This is Mortgage Nuggets. The mortgage newsletter that pairs perfectly with your morning coffee. Let’s dive into what I’ve got for you today.

1. New home purchase mortgage applications are up 35.5%

According to the MBA Builder Application Survey data, mortgage applications for new construction home purchases increased 35.5% in July on a year-over-year basis.

Month-over-month, applications increased by 0.2%, without any adjustment for typical seasonal patterns. MBA’s survey tracks application volume from mortgage subsidiaries of homebuilders across the country.

“Applications for purchase loans on newly constructed homes remained strong in July, up 36% annually, as new homes continued to account for a growing share of homes available for sale,” said Joel Kan, MBA’s vice president. LINK

2. Fannie Mae and Freddie Mac shareholders awarded $612M

A federal jury has awarded shareholders of Fannie Mae and Freddie Mac $612 million saying the FHFA acted improperly when it transferred ownership of shares to the United States for the public benefit.

Various shareholders had sued because they claimed the FHFA “shortchanged them $27 billion” by improperly claiming Fannie Mae and Freddie Mac were in their death throes when in fact they were already showing signs of recovering from the 2008 mortgage meltdown. (LINK)

Free report: These growing borrower segments present opportunities for new business

Wondering how to fill your pipeline when loan volume is scarce? New data from Maxwell gives lenders an exclusive look into home buyer groups taking on higher rates head-on.

Did you know the share of 18 to 24-year-old borrowers has increased by 18% year-over-year? Now is the time to cater to these rising home buyers. For exclusive data and actionable takeaways, download Maxwell’s Q2 Mortgage Lending Report.

3. Warren Buffett makes a big bet on the U.S. housing market

On Monday, Berkshire Hathaway disclosed to the SEC that it had made investments in three major U.S. homebuilders: D.R. Horton, Lennar, and NVR.

In total, Berkshire Hathaway bought 5,969,714 shares of D.R. Horton, 152,572 shares of Lennar, and 11,112 shares of NVR. Those shares are worth over $800 million—with more than $700 million of it being in D.R. Horton.

While Berkshire Hathaway CEO Warren Buffett did not publicly state the motive behind this investment, these stock purchases do coincide with a remarkable surge in U.S. homebuilder stocks. D.R. Horton and Lennar are up 38.0% and 36.2%, respectively, while NVR is up 33.5% this year.

4. More Nuggets

🧑‍⚖️ UBS will pay $1.4 billion to settle US charges that it defrauded investors in the sale of mortgage-backed securities. (NYTimes)

💸 Two former employees have filed a class-action lawsuit against Rocket Mortgage for allegedly failing to pay overtime wages. (CourtListener)

🔐 Overall rate lock volume was down 7% in July, with purchase lending accounting for 88% of total lock activity. (Black Knight)

5. 51% of Americans who don’t own a home fear they never will

A new survey by LendingTree asked 2,000 U.S. consumers about their homeownership dreams, fears, and challenges — and this is what LendingTree found:

• An overwhelming 94% of consumers say owning a home is part of the American dream — even if only 84% say it’s part of their dream.

• 51% of respondents who don’t own a home say they’re worried they never will. Among those who want to own one day, 49% say they can’t afford a down payment and 40% say home prices are too high in their area. Student loan debt weighs heaviest on millennials, with 19% citing it as a roadblock to homeownership.

• Of the 84% who’d rather own a home than rent, nearly 3 in 5 (59%) say they like the flexibility to do whatever they want with the space — 58% say they value not having to worry about renewing a lease.

☀️ See you on Friday!

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