Wednesday, July 25, 2012

FHFA: House Price Index up 0.8 percent in May

U.S. house prices rose 0.8 percent on a seasonally adjusted basis from April to May, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.8 percent increase in April was revised downward to a 0.7 percent increase. For the 12 months ending in May of 2012, U.S. prices rose 3.7 percent. The U.S. index is 17.0 percent below its April 2007 peak and is roughly the same as the May 2004 index level.

The FHFA monthly index is calculated using purchase prices of houses with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine census divisions, seasonally adjusted monthly price changes from April to May 2012 ranged from -1.0 percent in the West South Central division to +1.7 percent in the Pacific division.

Monthly index values and appreciation rate estimates for recent periods are provided in the table and graphs on the following pages. Click here for complete historical data at

Monday, July 23, 2012

Mortgage Banking: What's Driving Tight Credit

Mortgage Banking magazine featured Fed Chairman Ben Bernake's remarks to NAHB at the International Builders Show in a comprehensive article by George Yacik about the tight credit market for mortgage loans. According to the article, lending standards have gotten tighter in recent months, primarily the result of lender's reaction to Fannie Mae's action to require lenders to buy back mortgages even when the mortgages were made to Fannie Mae standards.  Some banks, like Bank of America, have stopped selling mortgages to Fannie Mae.

From the article:

No one is more aware of that than Federal Reserve Chairman Ben Bernanke, who noted in his speech to the Washington, D.C.-based National Association of Home Builders (NAHB) in February that "the state of the housing sector has been a key impediment to a faster recovery. In the typical economic recovery, a resurgent housing sector helps fuel re-employment and rising incomes. But that scenario has not played out this time."  The main reason for that, he said, is tightened mortgage credit. "In prior recoveries, mortgage credit had begun to grow four years after the business cycle peak - but not this time around," he said. "Despite monetary policy actions that have helped drive mortgage rates to historically low levels, many lending institutions have tightened underwriting conditions dramatically, relative to the pre-recession period. Given the lax standards during the credit boom, some tightening was doubtless appropriate to protect consumers and ensure lenders' safety and soundness. However, current lending practices appear to reflect, in part, obstacles that are limiting or preventing lending even to creditworthy households," said Bernanke.