The American Enterprise Institute’s Housing Center released its monthly update to the AEI Housing Market Indicators on November 25, 2019.
This month’s main takeaways include:
- Slight credit tightening continues in August 2019:
- The Composite NMRI for purchase loans declined 0.3 ppt year-over-year (yoy), the third month for this trend
- This result has been led by Fannie and Freddie, but in August, FHA also declined 0.3 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
- VA no cash out refinance (NCO) loan counts have begun to rise again
- With rising mortgage rates in 2018, few VA loans cleared the economic benefits test enacted by Congress and Ginnie in early 2018
- Once rates started dropping in late 2018, loans now cleared test and lenders rushed to originate
- First-time buyers (FTB) accounted for 56.8% of agency purchase loans
- This is down 1.1 ppts from a year ago, with the largest declines coming from the GSEs and the VA
- FTB loans are also showing a pause in credit easing
- Home price appreciation (HPA) rate increasing and remains strongly bifurcated
- Prelim. numbers for Oct. 2019 indicate national HPA of 3.9% (yoy), up from 3.4% in Sept. 2019
- Prelim. HPA in the low price tier: 5.2% (yoy); prelim. HPA in the high price tier: 2.5% (yoy)
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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