Market Studies

The Pending Home Sales Index (PHSI) slipped 1.3 percent in July, the steepest decline this year, to 109.5, the National Association of Realtors reported Wednesday. Economists had expected the index for July would drop to 109.8, which would have been a 1.0 percent decline from June's 110.9. The June index was unchanged. NAR economist Lawrence Yun cited higher prices as affecting new contracts. ""Higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West,"" Yun offered as an explanation for the drop in the PHSI.

According to Mortgage Daily's Mortgage Employment Index, the number of mortgage layoffs surpassed the number of newly added jobs by nearly 3,000 in the second quarter. From April to June of this year, the mortgage industry experienced 9,950 job losses, while newly filled positions totaled 6,969, leading to a net 2,981 layoffs. The second quarter statistics are a significant letdown when compared to the first quarter of this year, when mortgage companies added a net 5,129 jobs, with layoffs at just 2,930, Mortgage Daily reported.

With declining refinance volumes, the industry can't seem to support the number of loan officers it has had on staff of late. Wells Fargo, for example, is reportedly cutting 2,300 production jobs. However, this glum news may have a silver lining, according to at least one industry executive. ""There's a huge opportunity for former loan originators taking their existing skill set and industry knowledge and applying them in specialty servicing,"" Patrick Norton, SVP of Fay Servicing, told DS News. Unlike refinancing, which experienced a recent boom and is now on the decline, Norton says specialty servicing will not likely see a decline any time soon.

According to Redfin, ""this July saw a healthy jump in homes sold throughout most of the 19 markets covered in this report,"" improving 3 percent month-over-month and 17.6 percent year-over-year from a rather disappointing July 2012. In fact, Redfin found July 2013 experienced the highest number of homes sold in the past four years, with the 19 markets together seeing about 94,000 sales. While sales numbers picked up, Redfin believes the gains won't last. At the same time, reports on home price growth and inventory were less positive in July.

Home prices rose again to their highest levels since September 2008 in June, increasing 2.2 percent, according to the Case-Shiller Home Price Indices released Tuesday. The 20-city index was up 12.1 percent from a year earlier, and the companion 10-city index was up 11.9 percent. Case-Shiller's national index, reported quarterly by Standard & Poor's, was up 7.1 percent in the second quarter to 146.32, its highest level since third quarter 2008. All 20 cities included in the survey improved both month-to-month and year-to-year. The two surveys have improved monthly and yearly for 13 consecutive months.

Nationally, NAR forecasts slight drops in vacancy rates across the office, retail, and industrial markets over the next year. Multifamily vacancies are expected to edge up very slightly, on the other hand. The apartment rental market is expected to see vacancy rates climb to 4.0 percent in Q3 2014 from 3.9 percent in the third quarter of this year, ""with construction rising to meet increased demand."" On that token, NAR expects average apartment rents to rise 4.0 percent both this year and the next.

The delinquency rate, which includes loans 30 days or more past due, slipped to 6.41 percent in July after increasing to 6.7 percent in June, LPS reported Monday. The decrease represents a monthly and yearly decline of 3.96 percent 8.76 percent, respectively. Foreclosure inventory also fell in July, dropping 2.82 percent, down from 3.46 percent in June. Compared to a year ago, the decrease is much steeper, at 30.76 percent. According to LPS, the foreclosure inventory rate is at the lowest level since February 2009.

As national home prices recover, Texas and Colorado are already busy setting new highs, data from Lender Processing Services, Inc. (LPS) revealed. In June, national home prices rose 8.4 percent year-over-year to $229,000, according to LPS' Home Price Index (HPI). When compared to the 2005 peak of $270,000, prices are still down 15.2 percent. However, Colorado and Texas moved ahead of the national trend and hit new highs of $256,000 and $182,000, respectively.

Homes are selling quickly with multiple offers and favorable prices, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey released Friday. The survey tracked time on market, number of offers, and sales-to-list-price ratio for non-distressed sales in July. California performed exceptionally well in all three categories, while parts of the Midwest underperformed. The average number of weeks a home spent on the market in the three-month period ending in July was 8.6 weeks, down from 9.2 weeks in May.

Tight lending standards may be keeping some prospective borrowers out of the market, but according to LendingTree, consumers overall are increasing their likelihood of getting approved for a home loan with higher credit scores and lower loan-to-value (LTV) ratios. Over the last year, average credit scores for prospective borrowers rose by more than 10 points, LendingTree revealed in a Q2 borrower health report. At the same time, average LTVs improved, falling 1.6 percent. According to the report, prospective borrowers in Washington D.C. have the strongest profile when it comes to qualifying for a home loan.