The American Enterprise Institute’s Housing Center released its monthly update to the AEI Housing Market Indicators on January 6th, 2020.
This month’s main takeaways include:
- Credit tightening continues in September 2019:
- The Composite NMRI for purchase loans declined 0.3 ppt year-over-year (yoy), the fourth month for this trend
- This result has been led by Fannie and Freddie, but in Sept., FHA also declined 0.5 ppt yoy
- Credit tightening has been even larger for first-time buyers, with a decline of 0.4 ppt yoy
- The decline in the share of agency loans with a DTI > 43 has been most pronounced
- Tracking the progress on housing finance reform under Treasury’s September 2019 report pursuant to the Presidential Memo from 2019:
- FHFA should evaluate its “support for cash-out refinancings, investor loans, vacation home loans, [and] higher principal balance loans”
- Each month we will track the progress of Housing Finance Reform in regards to the GSEs’ core mission, and the progress being made on the steps outlined in the Treasury report
- Bottom line: the GSEs have taken some steps in the right direction, but lots of work remains
- Agency volume was up 70% in Sep. 2019 yoy, primarily due to higher refi volume
- Compared to a year ago, no-cash out refi volume up 622% and cash out volume up 64%
- Rate of home price appreciation (HPA) increasing as housing boom continues:
- Prelim. numbers for Nov. 2019 indicate national HPA of 4.2% (yoy), up from 3.9% in Oct. 2019
- Prelim. HPA in the low price tier: 5.0% (yoy); prelim. HPA in the high price tier: 4.4% (yoy)
- From a year ago, months’ supply has increased at all price points, but inventories remain historically tight, especially at the lower end
- Therefore, the strong seller’s market will continue even though today’s 25 quarters of quiescence in the housing market constitute the second longest housing boom since 1976
The AEI Housing Market Indicators provide accurate and timely metrics for the housing market. These include Mortgage Risk/Leverage (with a particular focus on agency first-time buyer volume and risk), house prices and appreciation trends, housing sales (new and existing sales whether institutionally financed, cash, and other-financed), and inventory levels. Since the housing market is influenced by many different factors, all need to be considered together to better understand market trends.
Please find materials from our monthly call below. If you would like to receive invitations to our monthly update calls, please email Neil.Filosa@aei.org. For data on mortgage risk, please use our Mortgage Risk Index Interactive.
Audio Recording
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