TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/57493
THE LATEST ANALYTICS Employment Gains Best Housing Improvement Forward economic momentum only has slight impact on the country's housing markets as the U.S. continues its broad recovery. A still-brittle economic recovery picked up steam to start the year as the private sector added 243,000 jobs, driving unemployment figures to lows not seen in three years. The Labor Department said that the national unemployment rate fell to 8.3 percent, signaling the lowest seen since early 2009. Manufacturing, business servic- es, hospitality, and leisure helped drive the surge, while construc- tion emerged as the only housing- related sector to create any steam for the pickup in January. Construction added 21,000 jobs from December, with gains for nonresidential construction and specialty trade contractors. Financial services lost some 5,000 jobs from December by comparison. Real estate services picked up 3,500 jobs, while rental and leasing services slid by 1,600. Federal Reserve chairman Ben Bernanke continues to frame a weak housing recovery as a stumbling block for the broader economy. Testifying before lawmak- ers recently, he said that high negative equity creates a disin- centive for homeowners to buy new homes or refinance their mortgages at a time for histori- cally low interest rates. "Housing is still extremely depressed," says Nigel Gault, chief U.S. economist with IHS Global Insight. "There have been some signs of improvement in multifamily construction and not much so far in single-family, so we're still at very low levels of construction activity." He adds that debt crises in Europe and job losses at the nation's biggest banks mean that the "financial services sector is still going to remain troublesome for some time. If the eurozone economy stabilizes, it will in turn stabilize global financial markets, but for the moment I think [the sector] will lose more jobs." Earlier in the year, Citigroup announced plans to exit the mortgage brokerage channel. Bloomberg News quoted spokes- man Mark Rodgers as saying that the decision may implicate 300 or more jobs at the company. The move follows departures by other banks from the mort- gage origination and servicing industry during the fall of 2011. Consumers Call for Home Pricing Recovery In a January survey from the GSEs, an estimated 30 percent of borrowers anticipate an increase in home pricing this year. M ore Americans expect that home prices will recover during the course of 2012, just as they believe that mortgage rates will remain at all-time lows, and more think the economy will enter an upswing. Mortgage giant Fannie Mae said in a January National Housing Survey that 28 percent of Americans believe that home prices will rise over the next year by 1 percent, up from 2 percent the previous month. Of the survey respondents, 8 percent said that interest rates for mortgage loans will de- cline in 2012, down 2 percent from December. Unchanged from the end of 2011, 71 percent said that it is a good time to buy a home, com- pared with 10 percent who said that it is a good time to sell. Americans largely stayed the course in their desires to own homes. While 30 percent wanted to rent their next homes, 64 percent said they still wanted to make home purchases. "Consumer sentiment has continued to rebound to the level witnessed around a year ago since hitting a setback last summer. The strengthening employment picture . . . provides encouragement that the improving trend in consumer confidence will continue and will at some point be reflected in a firming up of con- sumer spending," Doug Duncan, VP and chief economist with Fannie Mae, said in a statement. He added that the "rebound may be slow in coming as consumers still seem to be dele- veraging and aren't yet fully confident of their household finances." Duncan said that the Fed's decision to keep interest rates low until 2014 played a role in fewer expectations for higher rates in the next 12 months. "If the employment market continues to strengthen, it is unlikely that the Fed will be able to keep its low-interest pledge for long, and a more meaningful housing recovery may not be far behind if consumers are faced with the prospect of rising mortgage rates and home prices amid increased job security," he said. Thirty percent of Americans said that the economy is on the right track—an 8-percent increase from December. The number for those who believe it is on the wrong track fell to 63 percent by comparison. THE M REPORT | 59 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET