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The Office of Economic Policy

HOUSING DASHBOARD
March 16, 2016
Recent housing market indicators suggest that housing activity continues to strengthen. Solid
residential investment in 2015Q4 contributed 0.3 percentage point to GDP growth, and
available indicators suggest that residential investment is on track to boost GDP growth by a
similar amount in 2016Q1.
Meanwhile, home price appreciation has moderated—from a double-digit pace in late 2013
and early 2014 to a more sustainable mid-single-digit pace now. This moderation occurs as
high home values, in some areas, challenge affordability for potential homebuyers. However,
access to credit continues to slowly expand to reach borrowers with lower credit quality. In
addition, home price valuations look to be somewhat elevated relative to pre-bubble norms.
Although some mortgage borrowers continue to struggle in the wake of the crisis, delinquency
and foreclosure rates are closing in on their pre-crisis ranges. The number of distressed sales
also continues to drop.

Housing Market Flash

March 2016

Housing Market Flash
Wednesday, March 16, 2016

Pre-bubble
norm
(2000-2002
Current
average) Trough
level
Single-family homes
New

921

Sales
Existing

(thousands)

Inventory of homes
available for sale
(thousands)

New
Existing

4,779
311
1,836

Housing starts

1,289

Building permits

1,257

CoreLogic HPI

115.7

Construction activity
(thousands)

270
Feb-11
3,060
Jul-10
142
Jul-12
1,550
Dec-15
353
Mar-09
337
Jan-09

494
Jan-16
4,860
Jan-16
238
Jan-16
1,620
Jan-16
822
Feb-16
731
Feb-16

(index, Jan 2000 = 100)

Inflation-Adjusted

111.6

187.2

127

(NAR, index=100 when median family income qualifies
for 80% LTV mortgage on a median priced home)

12.1%
7.2%
17
thousands

-39
thousands

12.0%
8.4%

101.9

136.7

Improved
Improved
Weakened
Improved
Improved

-46.4%
1.7%
-73
thousands

-216
thousands

-36.2%
-41.9%

171

6.3%

Improved

61.7%

Jan-16

101.1

5.1%

Improved

Jan-16

Nov-11

CoreLogic HPI
Housing affordability

137.3
Nov-11

Prices

Current 12-month
average versus yearearlier value

Current level
versus prebubble norm
(2000-2002
average)

Improved

-1.9%

22.5%
35.1%

Weakened

Jul-06

Jan-16

8
Jan-09

58
Mar-16

point(s)

117
Oct-08

155
Feb-16

point(s)

Sentiment
59

Homebuilder
(NAHB, over 50 means majority view conditions
positively)

Home-buying conditions

152

(Reuters/Umich, index = good time - bad time + 100)

6

-1
Improved

point(s)

Improved

point(s)

Improved

thousands

1

3

Demographics
Household formation

1113

(thousands)

Homeownership rate
(percent)

67.7

100
461
2008-Q4 2015-Q4

290
thousands

-653

63.5
63.7
-0.8
-4
2015-Q2 2015-Q4 percentage point(s) Weakened percentage point(s)

1

Housing’s Importance to the Economy
Residential investment continues to
support GDP growth. Residential
investment rose at an annual rate of
8 percent in 2015Q4, adding 0.3 percentage

Percent

10.0

March 2016

Residential Investment's Contribution to
Real GDP

8.0
6.0

point to real GDP growth, matching the

4.0

average contribution over the last four

2.0

quarters. Data through February suggest
that residential investment is on track to
make a contribution at least that large in
2016Q1.

0.0
-2.0
-4.0
-6.0

GDP (% Change, Annual Rate)
Residential Investment's Contribution

-8.0
-10.0
'00

'02

'04

'06

'08

'10

'12

'14

Source: Bureau of Economic Analysis

Employment in residential construction
continues to recover. Over the past year,
it has increased by 12,900 jobs per month,
compared with 14,000 jobs per month in
the year-earlier period. The level of
employment remains relatively low:
residential construction employment
totaled just over 2.5 million workers in

Employment in Residential Construction

Millions

Percent

4.0

4.0

Number Employed (left scale)
Share of Total Private Employment (right scale)

3.5

3.5

3.0

3.0

2.5

2.5

2.0

2.0

1.5

1.5

2015Q4, accounting for roughly 2.1 percent
of total private payroll employment,
compared with around 2.6 percent in the
early 2000s.

'02
'04
'06
'08
'10
'12
'14
'16
Note: Includes those employed directly in residential construction as well as related
specialty trades.
Source: Bureau of Labor Statistics

Trillions

Household Real Estate and Net Equity

25

Housing wealth is nearing its earlier
peak. The value of household real estate
reached $22.0 trillion in 2015Q4, up from a
low of $16.2 trillion in 2011Q4. The current
level is close to its 2006Q4 peak, but the
sustainable level is higher than in 2006
because of population-driven growth in the

Percent

Market Value of Real Estate (left scale)
Net Equity (left scale)
Equity's Share of Value (right scale)

75

20

65

15

55

10

45

5

35

housing stock and overall inflation.
0

25
'00

'02

'04

Source: Federal Reserve Board

2

'06

'08

'12

'14

'16

Housing Starts and Inventories

March 2016

New residential construction activity
continues on its gradual upward

Starts and Permits

Millions

2.0

trajectory despite some recent volatility.
Single-family starts (light blue line) and
permits (dark blue line) increased in

1.5

February. In the multifamily sector,

1.3

construction activity is back in the range

1.0

seen before the crisis, but the rapid rise in

0.8

rents suggests that construction activity is

0.5

not yet fully meeting demand.

Single-Family Starts

1.8

0.3

Single-Family Permits
Multifamily Starts
Multifamily Permits

0.0
'00

'02

'04

Source: U.S. Census Bureau

Builder confidence was unchanged in

'08

'10

'12

'14

'16

Builder Confidence

Index

March but has declined from its 10-year

'06

80

high in October. The National Association

70

of Homebuilders index has recorded

60

readings above 50 (meaning a majority of

50

builders view the market positively) for the
last 21 months. All three of the index’s

40

components—sales expectations over the

30

next six months, current sales, and buyer

20

traffic—are above their 2014 averages.

10
0

'00

The inventory of homes for sale remains

'04

'06

'08

'10

'12

'14

Unsold Homes

Millions
Millions

well below historical averages. The stock
of existing homes for sale (dark blue line)

'02

'16

Source: National Association of Homebuilders

Thousands

4.5

was at 1.82 million units at the end of

3.5

which was the lowest level since December

Existing (left scale)

4.0

January, up from 1.76 million in December,

700

3.0

1999. The stock of new homes for sale
(light blue line) was at 238,000. At the

500

Series average

2.5

current sales pace, there is 4.0-month

1.5

for new homes, the available inventory is
equivalent to a 5.8-month supply.

400
300

Series average

2.0

supply of existing homes available for sale;

600

200

New (right scale)
100

1.0

0
'02

'04

'06

'08

'10

'12

Source: National Association of Realtors and U.S. Census Bureau

3

'14

'16

Underpinnings of Housing Demand

March 2016

Interest Rate of 30 Year Fixed-Rate Mortgages

Percent

Mortgage interest rates remain very low
by historical standards. The average
interest rate on new 30-year fixed-rate
conventional mortgages settled at 3.68
percent in the week ending March 10. The
current rate is only 37 basis points higher
than the lowest rate recorded in 2012.

9
8
7
6
5
4
3

'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: Freddie Mac

The National Association of Realtors
Housing Affordability Index suggests
that housing remains affordable for the
typical family. The index rebounded to a
ten-month high in January after declining
for the first time in five months in
December. Affordability has diminished
considerably since 2013 as home prices
have risen. (Note that the index assumes a
20 percent down payment; interest rates
would be higher and affordability would be

Home Affordability

Index
240

Record Affordability
Index = 214.5

220
200
180
160
140
120

Historic Average
(data since 1971)

100
80
'00

lower for a family that made a smaller down

'02

'04

'06

'08

'10

'12

'14

'16

Source: National Association of Realtors

payment).

Attitudes Towards Buying
Households remain positive about home
buying conditions. The University of
Michigan Consumer Survey’s “Good Time to
Buy” Index remained higher than the longterm average in February. Low interest rates
continue to be the main factor cited when
respondents were asked why home-buying
conditions are good.

Index (Good minus Bad plus 100)
180
170

160
150
140
Long-Run Average
(data since 1986)

130
120
110

100
'00

'02

'04

'06

'08

Source: University of Michigan Consumer Survey

4

'10

'12

'14

'16

Underpinnings of Housing Demand
Senior loan officers at banks report
easing of mortgage lending standards in
recent quarters. The last six quarters mark

FRB Senior Loan Officer Opinion Survey
on Mortgage Lending

100

the first period of sustained easing since the

Net Percent of Banks Reporting
Tightening Standards

80

period of dramatic tightening during the

March 2016

60

financial crisis. (Note that the level of the

40

line shown corresponds to the change in

20

lending standards, with values below 0
representing an easing of lending standards
and values above 0 representing a
tightening).

Tightening

0
-20

Easing

-40
90

94

98

02

08

10

14

Mortgage Originations by Credit Score

Despite the easing, lending is still restrained,

Billions of dollars

and riskier borrowers continue to have very

<620

1,000

limited access to mortgage credit. Mortgage
originations have risen, on net, over the past year,

660-719

720-779

780+

800

but the pick-up has been driven largely by

620-659

600

borrowers with credit scores above 780.

400

Originations by borrowers with credits scores

200

below 780 are well below pre-crisis levels. Almost
no mortgages are being extended to borrower

0
'03

with FICO scores below 660.

'04

'05

'06

'07

'08

'09

Source: FRBNY Consumer Credit Panel/Equifax
Note: Credit Score is Equifax Riskscore 3.0;

'10

'11

'12

'13

'14

'15

Credit Score at Mortgage Origination
800

The median FICO score of newly originated
mortgages has fallen slightly in recent quarters to

750

around 750, but it is still up from roughly 700 in the

700

early 2000s. At the 10th percentile, the FICO

Score

650

median
25th percentile
10th percentile

score for new mortgages was down to 642 by the

600

end of 2015, compared with less than 600 in the

550

early 2000s.

500
'00

'02

'04

'06

'08

'10

'12

Source: FRBNY Consumer Credit Panel/Equifax
Note: Credit Score is Equifax Riskscore 3.0; mortgages include first-liens only.

5

'14

Household Formation
Household formation fell sharply in
2015Q4. In the year ending in December,
just 191,000 households were formed. The

March 2016
Household Formation

Millions
3.0
2.5

explanation for the decline is unclear.
Between mid-2006 and 2014Q3, the rate of

1.5

household formation averaged roughly half

Historic Average
(data since 1956)

2.0

1.0

its historical average of 1.2 million per year.
Household formation surged at the end of
2014 and remained above its historical
average through 2015Q3.

0.5
0.0
-0.5
'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: U.S. Census Bureau, Treasury calculation

The proportion of young adults who are
working has seen a partial recovery. The
employment-to-population ratio for

Employment-to-Population Ratio
Ages 25-34

Percent
84
82

individuals ages 25-34 has reversed more

80

than half of the decline that occurred

78

during the recession. The strengthening

76

labor market should support household

74

formation going forward.

72
70
'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: Bureau of Labor Statistics

Growth in Rents vs. Overall Inflation
Year-over-year percent change

Higher rents are an obstacle to young
adults establishing their own households.
The supply of rental housing appears to

7.5

5.0

CPI-U: Rent of
Primary Residence

have not risen as fast as demand and, as a
result, rents have been increasing rapidly.

2.5

They outpaced overall inflation by
2.7 percentage points over the year ending

0.0

in February.

CPI-U: All Items
-2.5
'00
Source: BLS

6

'02

'04

'06

'08

'10

'12

'14

'16

Homeownership

March 2016

The homeownership rate edged up in
2015Q4. The homeownership rate was
63.7 percent in 2015Q4, up from a low of
63.5 percent in 2015Q2. The

Homeownership Rate
Percent
70
68

homeownership rate may stagnate in
coming quarters as household formation
continues to recover because newly formed
households are more likely to rent before
purchasing a home.

66
64
62

60
'80

'85

'90

'95

'00

'05

'10

'15

Source: U.S. Census Bureau

First-time home buyers account for
around half of purchase mortgage
originations. The share of newly originated
mortgages going to first-time buyers was
50.7 percent in January, about the same as
its year-earlier value.

Percent

Share of Mortgages Accounted by
First-time Buyers

55.0

53.0

51.0

49.0

47.0
'13

'14

'15

'16

Source: American Enterprise Institute

Primary Reasons for Renting among
Young Renters who Prefer to Own

87 percent of households headed by
young adults that are renting say that
they would prefer to own if they could

Cannot qualify
for a mortgage

35

afford it. Of those households, the most
commonly cited reasons for not owning are
lack of downpayment (59 percent) and not
being able to qualify for a mortgage to buy

Cannot afford
downpayment

59

a home (35 percent).
0

10

20

30
40
Percent

50

60

70

Source: Report on Economic Well-Being of U.S. Households in 2014, Federal Reserve Board

7

Home Sales
New single-family home sales dropped
sharply in January. At an annual rate of
494,000 in January, they were 1.7 percent

March 2016
New-Single Family Home Sales

Thousands
1600
1400

lower than their average level in 2015. New

1200

single-family home sales averaged 503,000

1000

units for all of 2015, the best annual

800

performance since 2007. Still, the current

600

pace of sales is still only about half the level

400

seen prior to the boom in the early 2000s.

200
0

'02

'04

'06

'08

'10

'12

'14

'16

Source: U.S. Census Bureau

Sales of existing single-family homes
bounced back in December and January
following declines in the previous two
months, which were due in part to new

Millions

Existing Single-Family Home Sales

7

6

mortgage disclosure requirements. The
new requirements have reportedly
increased the amount of time it takes to
close on a sale. Existing single-family home
sales averaged 4.63 million units in 2015, up

5

4

3

6.6 percent from 2014, and the highest
annual total since 2006.

2

'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: National Association of Realtors

The National Association of Realtors
index of pending sales of existing homes

Pending Existing Home Sales
Index, 2002: Jan = 100

130

dropped in January but was slightly

120

above its level of a year ago. The index is

110

a leading indicator of existing home sales

100

which are recorded at the closing of the
sale. The National Association of Realtors
is projecting that existing home sales will
rise 2.5 percent in 2016.

90
80
70
60
'02

'04

'06

'08

'10

'12

Source: National Association of Realtors, Treasury Calculation

8

'14

'16

Home Prices

March 2016
Changes in Home Prices

24

12-month percent change

After rising at a high single-digit to
16

low-double-digit pace in late 2013 and
early 2014, the pace of home price

8

appreciation has eased. Home prices are

0

now growing at a more sustainable midsingle-digit pace.

20-City Case-Shiller

-8

FHFA Purchase-Only
CoreLogic

-16
-24

Zillow

'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: Standard and Poors, FHFA, CoreLogic, Zillow

Home prices remain below their precrisis peaks. Most measures for the nation
as a whole are currently around early 2005
levels. The FHFA Purchase-Only Home Price
Index is the only one that has surpassed its
pre-recession peak. Forecasters generally
believe that home price appreciation will
remain moderate going forward.
Participants in the 2016Q1
Pulsenomics/Zillow home price survey
expect home prices to rise 3.7 percent over

Home Prices
Index, January 2000 =100

220

20-City Case-Shiller
FHFA Purchase-Only
CoreLogic
Zillow

200
180
160
140
120
100

'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: Standard and Poors, FHFA, CoreLogic, Zillow

the four quarters of 2016.

Price-to-Rent Ratio

Percent
2.0

The ratio of home prices to rents, a
common way to assess whether home

1.8

prices are overvalued, remains well

1.6

below its pre-crisis peak. That said, the

1.4

substantial appreciation of home prices

1.2

since late 2012 has pushed up this ratio,
and it is now noticeably above its pre-crisis
range.

1.0
0.8
'84

'87

'90

'93

'96

'99

'02

'05

'08

'11

Source: Ratio of CoreLogic National Home Price Index to CPI Owner's Equivalent
Rent. Both Indexes set to 100 in January 1983.

9

'14

Mortgage Originations

March 2016

Applications for home purchase

Mortgage Applications
Index, 2000:Jan 7 = 100

mortgages have been volatile of late.

3000

The Fed rate hike and new mortgage

210

Purchase (right scale)

180

2500

disclosure requirements may have caused
fluctuations in recent months. Purchase

150

2000
Refinance (left scale)

applications remain well below pre-crisis

120

1500

levels. Refinancing activity has been very

90
1000

low since mid-2013 as most borrowers who
have been able to refinance have already

60

500

done so.

30

0

0
'00

'03

'06

'09

'12

'15

Source: Mortgage Bankers Association

New mortgage originations have
increased over the past year but
remain low by pre-crisis standards.
New mortgage originations rose to
$437 billion in 2015Q4, up from a low of
$354 billion in 2014Q4. The low level of
mortgage originations stands in contrast
to the pattern of some other forms of

New Originated Installment Loan Balances
Billions

Billions

250

900

Auto Loan (Left Axis)
200

700
Mortgage (Right Axis)

150

400
300

200

50

originations, which have been increasing
briskly along with sales and now stand
near the top of their historical range.

100
0

0
'04

'06

70 percent of new mortgages were backed
by the FHA, VA, or GSEs in the first three
quarters of 2015 (dark blue and light blue
portions of bars). While bank portfolio
lending has increased noticeably, the
private-label mortgage-backed securities
market has experienced essentially no
recovery since collapsing in late 2007.

'10

'12

'14

Mortgage Originations by Investor

backed by the government has fallen since
higher than pre-crisis levels. About

'08

Source: Federal Reserve Bank of New York

The share of new mortgage originations
its 2009 high, but remains significantly

600
500

100

household credit, including auto loan

800

GSE securitization

FHA/VA securitization

PLS securitization

Portfolio

Share, percent

100%
80%
60%
40%
20%

0%
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 2015
Q1-3

Source: Inside Mortgage Finance and Urban Institute

10

Delinquencies, Foreclosures and Distressed Sales

March 2016

Foreclosure and Delinquency Rates
Mortgage foreclosure and delinquency
rates continue to normalize. The share of
homes in foreclosure declined to 1.6 percent
of outstanding loans in 2015Q4. The rate of
mortgages in default (90+ days delinquent
or in foreclosure) fell to 3.4 percent in

Percent

12

Percent of loans 90 days or
more delinquent or in
foreclosure

10

8
6

2015Q4, compared with a pre-crisis average

4

of around 2 percent.

Percent of loans in
foreclosure

2

Percent of loans 90 or
more days delinquent

0
'00

'02

'04

'06

'08

'10

'12

'14

Source: Mortgage Bankers Association and Haver Analytics

Re-Default Rate 24 Months after Modification

Re-default rates for borrowers who have
received a mortgage modification have

80

Percent

Fannie Mae
Government-Guaranteed
Portfolio Loans

run significantly lower for mortgages that
were modified more recently. Mortgages

Freddie Mac
Private
Overall

60

that were modified in 2013 (24 months ago)
had re-default rates that were between 32

40

and 55 percentage points lower than those
modified in 2008.

20

0
'08

'09

'10

Source: OCC Mortgage Metrics Report for Q1-2015

'11

'12

'13

Distressed Sales as a Percent of Total Sales

The share of sales represented by REO sales
has trended down over the past 3 years. In
December 2015, REO sales fell to about
7 percent of total sales. The share associated

Percent
35

Short Sales Share

REO Sales Share

30
25

with short sales has been moving sideways at

20

around 3 percent in recent quarters.

15
10
5
0
'06

'07

Source: CoreLogic

11

'08

'09

'10

'11

'12

'13

'14

'15

Negative Equity

March 2016

Rising home prices have greatly reduced the

Share of Loans that are Underwater by
Loan-to-Value Ratio

Percent
30

number of underwater borrowers. The share of
mortgage loans with negative equity was 8.6
percent in 2015Q4, down from 10.3 percent in

100-105

25

105-125

125+

20

2015Q1. The number of homes now underwater

15

stands at 4.3 million, a 64 percent drop since the
2011 peak. Mortgages that are very underwater,

10

with negative equity exceeding 25 percent, have

5

declined and are now 37 percent of all underwater

0

mortgages.

'10

'11

'12

'13

'14

'15

Source: CoreLogic Equity Report, 2015 Q4

Amount of Negative Equity
Billions of dollars
800

The aggregate amount of negative equity
continues to fall. Since 2010Q1, aggregate
negative equity has fallen from over $800 billion
to around $300 billion in 2015Q4.

600

400

200

0

'10

'11

'12

'13

'14

'15

Negative Equity Share in Top 5 States

Negative equity rates are still very high in
some states. Around 20 percent of mortgaged

20.0

18.7

18.0

17.1

16.0

residential properties in Nevada and Florida still
have negative equity. However, these rates have

14.0

12.0

fallen by more than half in these two states since

14.6

14.0

10.0

13.5

8.0

the beginning of 2013.

6.0

4.0
2.0
0.0
NV

12

FL

IL

AZ

RI

State Detail

March 2016
Serious Delinquencies for 25 Highest-Rate States:
Q4 2015
Percent, since Q1 2000

Serious delinquencies have fallen across the
country but the degree of improvement varies

25

Q4 2015 value

by state. They remain near peak levels in some

Minimum since Q1 2000

Maximum since Q1 2000

20

states, particularly in judicial foreclosure states
such as New Jersey and New York. However,

15

serious delinquencies are down nearly 75 percent
from their peak in Florida, a judicial state that

10

passed a law in June 2013 speeding up the

5

foreclosure process. Serious delinquencies have

0

NJ
NY
ME
FL
MS
DE
RI
CT
MD
NV
PA
IL
OH
DC
NM
IN
MA
HI
LA
OK
KY
AL
VT
SC

also fallen markedly in hard-hit areas with flexible

Source: Mortgage Bankers Association/Haver

foreclosure laws, such as Nevada.

Foreclosure Inventories by State as
a Percent of All Mortgage Homes
Foreclosure inventories have
declined in many states but
remain relatively high in others.
Judicial foreclosure is an important
factor: 12 of 23 states that employ
the practice have noticeably
elevated rates (darker red). Other
states with high inventories, like
Nevada, are still struggling
economically.

Source: CoreLogic Market Pulse, data as of December 2015

13


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102