After months of reports of slowing home price momentum and forecasts of a lagging housing market, we are pleased to report an increased volume of existing home sales as reported by the National Association of REALTORS®.
The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, reported rising prices for homes connected with Fannie Mae and Freddie Mac mortgages. Here are the details.
Pedal to the Metal: Existing Home Sales Achieve Fastest Rate in a Year
September sales of previously owned homes reached a seasonally adjusted annual rate of 5.17 million sales against expectations of 5.10 million sales and August's reading of 5.05 million sales.
The National Association of REALTORS® reported that the national reading for sales of previously owned homes rose by 2.40 percent to a seasonally-adjusted annual rate of 5.17 million sales.
Analysts had expected September's reading for existing home sales to reach 5.10 million based on August's reading of 5.05 million existing homes sold.
Three of four regions posted month-to-month gains in existing home sales for September; only the Midwest showed a decline. Overall, September's sales pace for existing homes was 1.70 percent lower year-over-year.
Steady home prices and lower mortgage rates contributed to a higher pace of existing home sales, but obstacles remain. Lawrence Yun, chief economist for the National Association of REALTORS® said that September's reading for existing home sales reflected ongoing economic uncertainty; he said that labor markets will need to strengthen in order to maintain the pace of existing home sales.
Mr. Yun also said that restoration of more "normal" lending standards would allow more first-time and moderate income buyers to qualify for mortgage loans and could potentially increase home sales by 10 percent.
FHFA: Home Prices Rise, Mortgage Credit Standards May Ease
FHFA reported that home prices of properties connected with Fannie Mae and Freddie Mac mortgages rose by 0.5 percent in August as compared to a month-to-month revised increase of 0.20 percent in July. August's reading represents a year-over-year increase of 4.80 percent as compared to July's year-over-year increase of 4.60 percent.
In related news, FHFA Director Mel Watt hinted at some welcome news during a meeting on October 21 in Las Vegas.
Strict mortgage requirements are frequently cited as a cause of lukewarm home sales, but there is some hope that mortgage credit requirements may return to pre-housing bubble standards. Mr. Watt said that the agency is working on relaxing certain rules affecting how and when mortgage lenders are required to repurchase loans that they've sold to Fannie Mae and Freddie Mac.
These changes are designed to clarify FHFA regulations and to narrow the criteria for when repurchasing loans is required. Lenders have been using strict mortgage approval standards as a protection against Fannie and Freddie requests to repurchase loans categorized as "early defaults."