Market Studies

The government's key foreclosure prevention program has put 504,648 distressed homeowners into permanently modified loans since its launch in March 2009. Treasury released new numbers for the Home Affordable Modification Program (HAMP) Wednesday, and in addition to crossing the 500K threshold, the data show that servicers stepped up their use of the program. Permanent modifications in November rose 26 percent compared to October, and 20 percent more trial mods were started.

Home prices bounced back slightly during the month of October, according to data released by the Federal Housing Finance Agency (FHFA) Wednesday. FHFA's house price index is calculated using purchase prices of homes backing mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac. It showed that residential property values rose 0.7 percent on a seasonally adjusted basis from September to October, however, September's price change was revised downward.

Consumer demand for home mortgages fell sharply last week, as interest rates continued to edge up from six-month highs. The Mortgage Bankers Association (MBA) reported Wednesday that its measurement of total mortgage loan application volume plunged 18.6 percent for the week ending December 17. The steep drop was driven by a 24.6 percent decline in applications for mortgage refinancing, which have fallen for six straight weeks now.

Existing-home sales got back on an upward path in November, resuming a growth trend since bottoming in July, the National Association of Realtors (NAR) reported Wednesday. Sales of previously owned homes rose 5.6 percent last month. Distressed homes accounted for 33 percent of the month's total sales volume. Housing inventory at the end of November fell 4 percent to 3.71 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace.

The latest RE/MAX National Housing Report shows housing prices remaining relatively stable, with sales still experiencing some declines. The company's survey of 54 metropolitan areas revealed that November sales were 4.9 percent below October sales, and 25.9 percent below sales for November 2009. The average price drop was 1.7 percent from last November, however, 36 of the 54 metros posted price increases compared to their year-ago levels.

For every home loan held by Fannie Mae and Freddie Mac that was modified during the third quarter, 2.3 loans were foreclosed on during the same period. The GSEs initiated foreclosure on 339,000 home mortgages during the July to September timeframe. Loan modifications completed in the quarter totaled 146,500, with the majority of those completed through non-HAMP programs. The two companies approved 29,500 short sales during the third quarter.

Moody's Investors Service says its gauge of commercial property prices rose 1.3 percent from September to October, marking the second consecutive monthly increase recorded by the company. According to the Moody's/REAL Commercial Property Price Index released this week, as of the end of October, prices nationally were up 3.2 percent from their year-ago levels. Even with the recent gains, the index is down 34.4 percent from two years ago, illustrating just how steep commercial property values have plunged.

Rising mortgage rates pushed first-time homebuyers to buy properties in November, while investors lost their enthusiasm for distressed properties, according to a new report from Campbell Surveys. The research firm found first-time buyers' share of home purchases jumped from 34.4 percent in October to 37.2 percent last month as long-term rates began to climb from record lows set in early November. Meanwhile, investor activity continued a two-month decline.

California continued to feel the housing slump in November with a 12.4 percent decrease in sales from last year, according to statistics from MDA DataQuick. An estimated 31,403 new and resale houses and condos were sold statewide last month -- down 3.9 percent from October. The median price paid for a home in California during the month of November was $255,000. Foreclosure sales made up 37.8 percent of the existing homes sold last month.

Data released by NeighborWorks America Monday illustrates the value of foreclosure prevention counseling for distressed homeowners. The organization has found that a homeowner who works with a housing counselor is nearly two times more likely to avoid foreclosure than those who go it alone. Counseled borrowers also lower their monthly mortgage payments by nearly twice as much and are less likely to re-default after a mortgage modification.