Market Studies

National home prices continued to post strong annual gains into February, while quarterly increases stabilized, Clear Capital reported Tuesday. Home prices in February were up 6.1 percent year-over-year, the strongest yearly growth since August 2010 when the home buyer tax credit influenced demand, according to Clear Capital's Home Data Index (HDI). ""While February's yearly growth of 6.1% is encouraging, let's keep in mind this rate of growth is measured against the market's bottom, which we reported in our March 2012 Market Report,"" said Dr. Alex Villacorta, director of research and analytics at Clear Capital.

Increased profits at home improvement outlets underscore Fitch Ratings' view that the housing recovery is in its early stages, the ratings agency said. Fitch pointed to ""solid 4Q12 results"" released by Home Depot (which saw a 4.6 percent rise in same-store sales last year) and Lowe's (which reported a 1.4 percent increase in same-store sales). Fitch projects the two retailers will generate same-store sales growth of 2-4 percent, reflecting ""a slightly faster growth rate in sales channels serving professionals.""

Employment in the mortgage industry reached a post-crisis high in 2012, according to data from Mortgage Daily's Mortgage Employment Index. The index showed a gain of 2,571 jobs during last year's fourth quarter, making it the sixth straight quarter to post an increase. However, job growth wasn't as strong as the third quarter, which saw 2,926 mortgage jobs created. For the entire year, the mortgage industry gained 8,978 new jobs, more than twice what was gained in 2011 (4,320).

As the private sector struggles with regulatory uncertainty, Fannie Mae and Freddie Mac will continue to maintain their dominant role in the housing market, according to a report from Fitch Ratings. Since the GSEs act as key players in the market's fragile recovery, political motivation for far-reaching GSE reform has been limited, the rating agency explained. Although regulators and politicians have emphasized the need for the private sector capital to enter the mortgage market, Fitch said ""results have been disappointing.""

The housing market is seeing prices appreciate at a normal pace, with further growth expected in the next five years, according to Fiserv Inc. From Q3 2011 to Q3 2012, home prices rose by 3.6 percent, the Fiserv Case-Shiller Indexes revealed. Furthermore, Fiserv predicts a 0.6 percent increase in home prices from Q3 2012 to Q3 2013. The gains are expected to continue into the next 5 years, with prices projected to grow at an annualized rate of 3.3 percent from Q3 2012 to the Q3 2017. When excluding gains from the 2009 and 2010 home buyer tax credits, Fiserv noted 2012 was the first positive year for home prices and home sales volumes.

Mortgage debt for U.S. households was roughly unchanged quarter-over-quarter, according to the Federal Reserve Bank of New York's Household Debt and Credit report. Mortgage debt stood at $8.03 trillion in Q4, making up the largest component of household debt. At the same time, overall consumer debt increased by $31 billion to $11.34 trillion, a slight 0.3 percent increase from the third quarter.

Redfin's latest survey shows a shortage of inventory and rising prices--both of which naturally benefit sellers--are creating frustration for buyers trying to get in on the ground floor of the housing recovery. According to Redfin's findings, 79 percent of buyers who responded to the survey now believe home prices will increase in their neighborhood over the next year, up from 71 percent in Q4 2012. The share of buyers who believe prices will rise ""a lot"" more than doubled, increasing to 22 percent from 10 percent previously.

The sad fact of the budget sequestration being played out in Washington is how avoidable it was. The sadder fact is that however temporary it might prove to be--and that appears from a distance to be more of a wish than a forecast--it will affect real people, and not well. The effects of sequestration go beyond the impact of jobs loss because defense or other contractors are not hired or because federal workers are furloughed. The effects will put even more homeowners at risk of delinquency, or worse, foreclosure, just at a time when the housing sector is recovering.

The volume of underperforming CMBS loans in the hands of special servicers fell to the lowest level since 2009, Fitch Ratings reported. At the end of 2012, the volume of specially serviced CMBS loans decreased to $70.6 billion after peaking at $91.7 billion in 2010, according to the rating agency. Fitch attributed the decrease to a significant drop in the number of loans transferred to special servicing in 2012 and the high number of loan resolutions.

While some read recent home price gains as a sign of an improving market, Radar Logic warns the recent gains are ""unsustainable"" and may actually be dampening market recovery. Radar Logic attributes recent house price gains to anomalous factors it considers temporary, including low interest rates and elevated investor demand. ""None of these drivers are likely to last, particularly as housing prices increase,"" RadarLogic stated in its December RPX Monthly Housing Market Report.