Housing Recovery Unmoved by Rising Interest Rates

DSNews     BY:  KRISTA FRANKS-BROCK   January 23, 2014

Mortgage rates may be rising, but the housing market doesn’t seem to mind. In fact, several indicators have improved alongside rising rates, according to the HousingPulse Tracking Survey released by Campbell Surveys and Inside Mortgage Finance this week.

The lending atmosphere is becoming friendlier, especially to first-time buyers. Simultaneously, the average time on market for non-distressed properties and the average sales-to-list price ratio both improved year-over-year in December, according to the survey.

“Six months after the May-June 2013 rise in interest rates, the housing market is showing remarkable resilience,” said HousingPulse research director Thomas Popik.

“[U]nderwriting standards are getting a little looser” at Fannie Mae and Freddie Mac, as well, according to Campbell and Inside Mortgage Finance.

The average credit score for GSE loans in the fourth quarter was 743, down from 758 a year earlier. Loan-to-value ratios at the GSEs rose from 75 percent to 76 percent year-over-year in the fourth quarter.

Fannie Mae and Freddie Mac increased their share of the purchase market as well as their share of the first-time homebuyer sector. In fact, the GSEs posted survey highs in both categories, according to the four-year HousingPulse survey. The GSEs accounted to 19.2 percent of purchase loans originated over the last three months of 2013, up from 16.5 percent a year earlier. The GSEs’ share of the first-time buyer market reached 19.5 percent, up from 14.1 percent a year earlier.

Looking at the broader market, time on market over the last three months of the year averaged 9.7 weeks, a decline from 12.4 weeks recorded at the end of 2012. The average sales-to-list price ratio increased from 95.5 percent at the end of 2012 to 97.1 percent at the end of 2013.

“A year-over-year comparison of key metrics points to a housing market that was stronger at the end of 2013 than it was at the end of 2012,” Popik said.

The Housing Pulse Tracking Survey relies on input from 2,000 real estate agents each month and calculates its metrics on a three-month moving average.

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