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Coming from behind?
By Jeff Walton & Kelly Guest
September 23, 2024
Those who put their money on 50 won the week. The Federal Reserve announced its first rate cut since 2020 on Wednesday, and Chair Jay Powell responded to a question about whether the size of the cut indicated that they waited too long to change policy saying, "We don’t think we’re behind. We think this is timely, but I think you can take this as a sign of our commitment not to get behind."
Excitement stirred up by the 50 bps rate cut may be dampened by Fannie Mae's ESR group, who threw a wet blanket over its home sales forecast. Their September commentary says they expect 2024 home sales to pace the slowest since 1995, when many were still wearing plaid and listening to grunge. And, NMN's Brad Finkelstein piles on with an article titled, "Why mortgage rates might rise after Fed cut."
Newly-named NAR CEO Nykia Wright has probably had better weeks: Agents in Alabama want the ability of opt out of the trade association behemoth and the requirement to be members of national, state and local boards. The letter from the Alabama Association of Realtors to Wright says in part, "…there is a growing and vocal desire for greater choice and flexibility in deciding where members spend their hard-earned membership and dues dollars. While this decision carries risks, we feel it is necessary for the REALTOR® organization to adapt to the rapidly changing real estate landscape." At a time when NAR has agreed to shell out millions in settlements and will levy a special assessment on members in 2025 for its Consumer Advertising Campaign, it'll be interesting to see if the association lets them (and their dues) secede without a fight.
CHATTER
Itchy trigger fingers: MBA backs legislation to curb trigger lead abuse
MBA President and CEO Bob Broeksmit, CMB, applauds amendment to holster trigger leads, saying “MBA has led a diverse set of coalition partners to help advance needed reforms that would curb trigger lead abuses while preserving their use in appropriately limited circumstances during a real estate transaction." A Republican and a Democrat added the provision as part of their managers’ amendment to the Senate’s Fiscal Year 2025 National Defense Authorization Act (NDAA). HousingWire reports a whole group of industry groups also back the bill.
Will bank M&As slow down under new FDIC rules?
FDIC's Board of Directors approved a final Statement of Policy on Bank Merger Transactions (Final SOP) Tuesday. Industry watchers describe it as "steeper regulatory scrutiny."
HUD taps Zillow to help disadvantaged communities and first-time homebuyers
HUD launches a new partnership with Zillow to "help attract the next generation of homebuyers." Originally launched in June 2023, the “Let’s Make Home the Goal” campaign has reached nearly 5 million diverse, prospective homebuyers in 15 media markets. The Zillow alliance hopes to reach more than 8 million potential homeowners across 42 media markets.
NAR Realtor Benefits Partner Curbio agrees to $7.5M settlement with DC AG
The agreement settles the AG's allegations that "the pre-sale home renovation company that allows owners to defer payment until after their home is sold—systematically deceived DC homeowners, trapped them in unconscionable contracts, and performed overpriced, substandard work that took months or years longer than promised." The company is still listed on NAR's site as a partner.
PENNYMAC & UWM follow Rocket: Release 2025 Conforming Loan Limits
Pennymac Correspondent announced they’re raising Conventional loan limits to $795,000 for all commitment types, effective 09/17/2024, just a week or so after Rocket TPO said they're raising theirs to $802,650. Official loan limit changes will come after the FHFA makes its announcement in November. Not to be outdone, UWM came out with an $803,500 limit for one-unit conventional and Department of Veterans Affairs-backed mortgage locks.
HW reports "amicable" settlement to Keller Williams profit-sharing suits.
HUD & DOJ reach $15M redlining settlement with OceanFirst Bank
The conciliation agreement settles redlining and discrimination complaint involving the New Brunswick, NJ area.
Atlas Merchant Capital announces strategic partnership with A&D Mortgage
The JV will purchase mortgage loans originated and serviced by A&D and other lenders with the goal of securitizing them, while investing across a range of securities in the sponsored transactions.
Fathom Realty agrees to $2.95M settlement related to Sitzer/Burnett commission suit, will adopt NAR practice changes
HW's Brooklee Han follows the head-spinning addition of plaintiffs to the Davis suit and other related developments, NextHome joining the list of firms to settle, and the giant payday sought by plaintiffs' attorneys.
CA AG litigating to free homeowners from NTRAPs
The CA Dept of Real Estate supported the state's attorney general's injunction against MV Realty. The firm must stop recording, remove any existing liens, and suspend enforcement against homeowners who signed the company's Homeowner Benefit Agreements. Right-to-list agreements, AKA "Non-Title Recorded Agreements for Personal Service" (NTRAPs) are banned in 30 states.
NY & MN Dems Propose $30B SOCIAL HOUSING AUTHORITY; Seek to Expand HUD
Under the legislation, a new social housing authority would function as both a bank and developer for resident-owned coops, community land trusts, public housing and other market alternatives.
MBA Endorses ROAD to Housing Act
MBA’s President and CEO Bob Broeksmit, CMB, released a statement on the “ROAD to Housing Act,” a broad housing bill recently introduced by Senator Tim Scott (R-SC) and 7 of his Senate Banking Committee colleagues: “MBA continues to be a fierce proponent for legislative reforms that increase housing supply and affordability. [ ]”
MOVING & SHAKING
Former Rocket Pro TPO SVP Chris Behrns jumped ship to join Better.com as Sr. Sales Manager/Site Leader.
Opendoor adds former Fannie Mae Pres David Benson to its BOD.
Huntington National Bank named Mike Maeser regional president in Minnesota.
loanDepot brought Navy vet Bryan Bergjans on as National Director of Military Growth and Strategy.
Appraisal Institute Cindy Chance was ousted from the nation's largest appraiser trade org.
MARKET/INDUSTRY
MORTGAGE RATES CONTINUE TO TUMBLE: FREDDIE 9-19-24
Mortgage rates continued declining towards the 6% mark, reviving purchase and refinance demand for many consumers. While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market. Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but rates will likely fall further, sparking more housing activity.
IN HIS LATEST "MASTER THE MARKETS" SEGMENT, Bill Bodnar explains why mortgage rates bottomed after the Fed rate cut, previews upcoming "Fed-speak," and the difference "different data" might make as we move into the final quarter of the year.
MBA’s FRATANTONI on 50 bps cut:
“Mortgage rates likely had this cut – and this expected rate path – priced in, and lower mortgage rates, now close to 6%, have resulted in much more refinance and some additional purchase activity in recent weeks. We do expect that if mortgage rates remain near these levels, it will support a stronger than typical fall housing market and suggest that next spring could see a real rebound in activity.”
MORTGAGE APPLICATIONS INCREASED 14.2% FROM ONE WEEK EARLIER: MBA weekly survey for week ending 9-13-24.
The Market Composite Index increased 14.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 26% compared with the previous week.
The Refinance Index increased 24% from the previous week and was 127% higher than the same week one year ago.
The seasonally adjusted Purchase Index increased 5% from one week earlier. The unadjusted Purchase Index increased 15% compared with the previous week and was 0.4% lower than the same week one year ago.
“Application activity was up significantly last week…[ ]. Refinance applications were up 24% – more than double last year’s pace, with both conventional and government activity jumping to the fastest pace of refinancing since 2022.” - Joel Kan, MBA’s Vice President and Deputy Chief Economist.
New home apps up 4.4% YoY in August, but flat MoM.
DOUBLE DOWNER: NAR August EHS
Existing-home sales retreated 2.5% in August to a seasonally adjusted annual rate of 3.86 million. Sales slid 4.2% from one year ago.
The median existing-home sales price rose 3.1% from August 2023 to $416,700, the 14th consecutive month of year-over-year price increases.
The inventory of unsold existing homes improved by 0.7% from the previous month to 1.35 million at the end of August, or the equivalent of 4.2 months’ supply at the current monthly sales pace.
“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months. The home-buying process, from the initial search to getting the house keys, typically takes several months.” - NAR Chief Economist Lawrence Yun
UPSTARTS: Census Bureau August housing numbers out
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,475,000. This is 4.9% above the revised July rate of 1,406,000, but is 6.5% below the August 2023 rate of 1,578,000.
Single-family authorizations in August were at a rate of 967,000; this is 2.8% above the revised July figure of 941,000.
NOT EXACTLY EXHUBERANT: NAHB/Wells Fargo Builder Survey
Builder confidence in the market for newly built single-family homes was 41 in September, up two points from a reading of 39 in August. This breaks a string of four consecutive monthly declines.
All three HMI indices were up in September:
Current sales conditions rose one point to 45 (readings >50 indicate higher confidence).
Sales expectations in the next six months increased four points to 53.
Traffic of prospective buyers posted a two-point gain to 27.
The latest HMI survey also revealed that the share of builders cutting prices dropped in September for the first time since April, down one point to 32%.
The average price reduction was 5%, the first time it has been below 6% since July 2022.
Meanwhile, the Use of sales incentives fell to 61% in September, down from 64% in August.
MARKET UNRESPONSIVE: Fannie's ESR revises home sales forecast down again
"Despite a meaningful pullback in mortgage rates over the past few months, home purchase activity continues to be unresponsive [ ]. We now expect 2024 total home sales to be 4.7 million (previously 4.8 million), down 0.3%from their 2023 total; notably, we also expect 2024 existing home sales to fall to the slowest annual pace since 1995. We forecast sales to then pick up by 9.8% in 2025 to a pace of 5.1 million units; with the majority of that increase coming in the second half of 2025 if mortgage rates decline sufficiently to end 2025 at 5.7%, as we currently project."
JOIN THE CLUB: Misery loves company?
Real estate industry software company Lone Wolf launches "Buyer's Agent Club" initiative in response to "the recent industry shift regarding agent compensation." The company says the goal is to "empower agents with the tools, resources, and knowledge needed to navigate the evolving real estate landscape."