The Washington Posts (WP) – US: Homeownership rates are soaring and the federal government is preparing to take a hit to the nation’s largest mortgage servicing industry.
A report by the National Association of Realtors (NAR) and the Federal Housing Finance Agency (FHFA) says the number of mortgages for homeownership has fallen to its lowest level in nearly three years and that the rate of home price appreciation is slowing.
The NAR, a trade group representing the largest mortgage brokers, said last week that median home prices fell 5.1% in August from a year earlier.
But it said the average price for a one-bedroom home fell just 1.4% from a month earlier.
“The decline in home prices is slowing down the growth of home ownership,” said NAR Chief Economist Mark Zandi.
As the economy slows, the market for homes has been squeezed and people are searching for alternatives, Zandi said.
The NAR said mortgage rates are set to increase on average by 3.5% over the next three years, but it added that the average rate is still higher than it was a year ago.
In addition, the NAR and FHFA said the median price of a home was up 5.4%, from $245,000 a year and the average cost of a new home was down 8.3%.
The report said median home price growth was more than double the 3.6% growth rate over the same period in 2014.
Home sales are down from a peak of about 2.5 million homes in August, with the median sales price of new homes down 2.9% to $265,000, according to Zandi’s report.
On the flip side, mortgage rates were up 1.7% to 3.7%, the report said.
The FHF said it is continuing to monitor the housing market and that it has “robust mortgage-servicing capacity” to handle higher levels of new home sales.
While mortgage rates have fallen, the report also said that the number of loans outstanding has grown by 1.8 million from a previous month.
However, Zanda said that there are a lot of people in the market and more and more people are buying properties in anticipation of a downturn.
NAR Chief Financial Officer John Schaeffer said the report shows how much the mortgage market is “moving in the right direction” but said that even with that progress, there are still “challenges ahead” for homeowners and their families.
Zandi said that for the first time since he was first named the NARR chief economist in 2008, the group has seen the number grow more than the total number of mortgage loans outstanding.
At the end of 2016, the FHPA said that a total of 5.5 billion loans were outstanding, up from 4.7 billion at the end on the same month in 2015.
Meanwhile, the numbers for 2016 are down about 6% from 2015.