Market Studies

Housing starts and permits jumped in September to their highest levels since July 2008, Census Bureau and Department of Housing and Urban Development reported jointly Wednesday. Housing starts jumped 15.0 percent from August to a seasonally adjusted annual rate of 872,000, while permits improved 11.6 percent to 894,000.

The default rate for first mortgages now stands at a post-recession low, and the default rate for second mortgages is at the lowest level in its more than 8-year history, according to data from the S&P/Experian Consumer Credit Default Indices. The first mortgage default rate fell to 1.36 percent in September, down from 1.40 percent in August and 1.99 percent in September 2011. The second mortgage default rate bottomed to 0.64 percent, down from 0.72 percent in August 2012 and 1.32 percent a year ago.

The California Association of Realtors (C.A.R.) continued to report a shortage of inventory in September, which is limiting home sales but seems to be pushing up home prices. According to C.A.R., the median home price in California is now at the highest level in more than four years.

Fitch Ratings is predicting a continued recovery into 2012, according to a recent report titled U.S. Homebuilding and Construction: The Chalk Line. A slowly growing economy combined with ""somewhat diminished distressed home sales competition, less competitive rental cost alternatives, and new home inventories at historically low levels"" led the ratings agency to predict growth for housing starts and home sales into 2012, with further moderate improvements into 2013.

After jumping 11 points in three months, builder confidence inched up one point in October to 41, remaining at its highest level since June 2006, the National Association of Home Builders (NAHB) reported Tuesday, matching economist expectations. The October boost was due entirely to a surge in homebuyer traffic in October, as other elements of the index were flat from September.

Even though the number of foreclosure filings has risen dramatically in recent months in some parts of the country--specifically in judicial states--the ratings agency DBRS expects the total number of foreclosure filings to show evidence of a steady decline in 2013 when compared to 2012. This is due to ""the record number of servicers that are using short sales as their primary loss mitigation tool to prevent delinquent loans from entering foreclosure,"" the agency's analysts said in a research note issued Monday.

A significant increase in home prices helped push Deloitte's Consumer Spending Index up in September, the company reported. The index, which tracks consumer cash flow as an indicator of future consumer spending, rose to 3.53 from 3.27 in August. A substantial 10.5 percent bump in housing prices accounted for much of the overall increase.

August data from HOPE NOW revealed mortgage servicers gave an estimated 75,968 homeowners permanent loan modifications during the month. In July, total loan modifications was higher at 82,679. HOPE NOW also reported the industry has seen 5.75 million loan modifications since 2007. Of those modifications, about 4.68 million were proprietary loan modifications, while more than 1 million were from HAMP.

Citigroup reported a net income of $468 million, or $0.15 per share, for the third quarter of 2012, down from $3.8 billion in the same quarter a year ago. Citi reported the third quarter results included a pre-tax loss of $4.7 billion after Citi decided to sell off its remaining stake in Morgan Stanley Smith Barney (MSSB) to Morgan Stanley.

Increased mortgage-related revenue pushed both Wells Fargo and JPMorgan Chase to record quarterly profits in 3Q 2012, the banks reported. JPMorgan posted a record net income of $5.7 billion, with net revenue at $24.9 billion. Wells Fargo reported record net income of $4.9 billion for the quarter, up approximately $800 million from 3Q 2011.