Nearly Halfway Through 2023, Mortgage Industry Data is Mixed
Written By: Joel Palmer, Op-Ed Writer
Mortgage underwriters and processors have been dealing with fewer originations with higher home values, according to several sources of industry data.
U.S. house prices rose 4.3 percent between the first quarters of last year and this year, according to the Federal Housing Finance Agency (FHFA) House Price Index.
According to the index, house prices rose in 78 of the top 100 metropolitan areas and in 43 states over the last four quarters. The Miami, Florida area experienced the highest increase at 14.1 percent. The five states with the highest annual appreciation were South Carolina, 9.5 percent; North Carolina, 9.4 percent; Maine, 8.9 percent; Vermont, 8.8 percent; and Arkansas, 8.8 percent.
Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.
This hasn’t been the case everywhere. On the West Coast, home prices fell 2.4 percent on an annual basis, led by the San Francisco market at a 10.1 percent decline. States experiencing the largest declines in home values were Utah, -4.3 percent; Nevada, -3.6 percent; California, -2.9 percent; Washington, -2.6 percent; and District of Columbia, -2.3 percent.
The continuing rise in values is largely influenced by the ongoing lack of inventory, which has kept purchase loans down; and higher mortgage rates, which have reduced demand for refinance loans.
According to ATTOM, a curator of land, property, and real estate data, recently reported that first-quarter mortgage originations were the lowest since 2000. The 1.25 million mortgages secured by residential property was down 19 percent from the fourth quarter of 2022 and 56 percent from the same period a year ago. The first quarter of 2023 also represented the eighth consecutive quarterly decline in originations.
ATTOM reported that the ongoing sharp decline in residential lending resulted from another round of downturns in both refinance and purchase loan activity as well as the second straight quarterly drop-off in home-equity lending.
On the bright side, new home sales picked up in April, according to Fannie Mae. New single-family home sales rose 4.1 percent in April. On a year-over-year basis, April marked the first annual gain in new home sales since February 2022. The months’ supply of units for sale declined three-tenths to 7.6, its lowest level since March 2022, as the faster sales rate outpaced the 0.2 percent gain in new homes for sale, which sits at 433,000 units.
It is a lack of inventory in both existing and newly constructed homes that has influenced a rise in home values across most of the country, despite rising mortgage rates, according to research firm Black Knight. The company notes that the current cycle of a scarcity in homes for sale is now in its 10th year.
Fannie Mae has also noted the demand for new homes, though it expects sales to soften later this year as it continues to predict a recession at some point, which it has forecasted since April 2022.
Fannie economists still believe a recession is more a question of when than if, but said certain economic conditions suggest a possible “soft landing” when that occurs.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
