The Federal Housing Finance Agency announced that mortgage financing giants Fannie Mae and Freddie Mac will continue to offer forbearance indefinitely to qualifying multifamily property owners as part of their ongoing COVID-19 protection.

This marks the fourth extension the FHFA has made to the programs. The latest were set to expire Sept. 30.

“Given the uncertain nature of this pandemic, the FHFA is taking further action to protect renters, property owners, and the mortgage market,” says Sandra L. Thompson, acting director of the FHFA.

Property owners with Fannie Mae– or Freddie Mac–backed multifamily mortgages can enter a new or modified forbearance if they experience a financial hardship due to the pandemic’s impact on their business operations. Property owners must inform tenants in writing about tenant protections available during the forbearance and repayment periods. They also must agree not to evict tenants for nonpayment of rent while the property is in forbearance.

Additional tenant protections are in place when the repayment period starts.

National Association of REALTORS®
Reprinted with permission

U.S. needs to put attention on rental, first-time buyer markets.

Just as the for-sale market is starting to moderate, the rental market is heating up, which will put added pressure on people trying to save for their first home. Rental listings are attracting multiple offers, and apartment vacancy rates are approaching record lows. Consequently, rents are set to soar.

The reason is twofold. First, the jobs market is improving. Despite a disappointing August employment report, 85% of the 21 million jobs slashed during the first month of the pandemic lockdown have been recovered. Job openings have reached an all-time high of 10 million, and those who might have been sleeping in the basement of their parents’ house are emerging in search of housing.

The second reason for strong rental demand is that many potential first-time buyers are priced out. The median existing-home sales price was up 25% year-over-year in June, though this is partly because high-end sales are up. The S&P CoreLogic Case-Shiller Index, a constant quality home price index, was up by 18% over the same period. The gain has been a boon for owners but is causing serious anxiety for nonowners. Even near-record-low interest rates can’t compensate. It’s no surprise, then, that the number of mortgage applications to buy a home has been falling, along with the share of sales to first-time home buyers.

Mortgage rates may further squeeze renters next year. The Federal Reserve will soon slow the pace of buying mortgage-backed securities and will certainly raise its benchmark interest rate next year, which may drive rates up to near 4% by the end of 2022. One bit of good news: Fannie Mae will soon consider rental payment history in qualifying borrowers. That will enlarge the pool of eligible buyers. But to ensure that housing costs remain manageable, America needs more homes, both for ownership and for rent. New construction alone won’t fill the need. Rehabbing dilapidated homes and repurposing commercial buildings into residential units—is essential. There is a massive housing shortage. All hands must be on deck to get the supply up.

Inventory Starts to Tick Up

In July, NAR reported a 2.6-month supply of homes for sale, up from 2.5 months in June. Months’ supply represents the number of months it would take for the current inventory to sell at the current sales pace.

National Association of REALTORS®
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Existing-home sales rebounded in September as buyers may have felt a sense of pressure as mortgage rates started to inch up. Existing-home sales rose by 7% in September compared to August. All major regions of the country posted increases last month, the National Association of REALTORS® reported Thursday.

“Some improvement in supply during prior months helped nudge up sales in September,” says Lawrence Yun, NAR’s chief economist. “Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year.” The 30-year fixed-rate mortgage averaged 2.90% in September, but rates are rising.

Despite last month’s uptick, total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—were down by 2.3% in September compared to a year ago.

Home prices continue to rise as inventories remain constrained. Housing inventory is down 13% compared to a year ago. Unsold inventory is at a 2.4-month supply at the current sales pace, NAR reports.

But a turnaround could be coming. “As mortgage forbearance programs end, and as home builders ramp up production—despite the supply-chain material issues—we are likely to see more homes on the market as soon as 2022,” Yun says.

Here’s a closer look at NAR’s latest existing-home sales report:

Home prices: The median existing-home price for all housing types in September was $352,800, up 13.3% compared to a year ago. Prices rose in every region last month.

Days on the market: Eighty-six percent of homes sold in September were on the market for less than a month. Properties typically remained on the market for 17 days last month, down from 21 days a year ago.

First-time buyers: First-time buyers comprised 28% of sales in September, down from 31% in September 2020. “First-time buyers are hit particularly hard by the historically high home prices as they largely do not have the savings required to buy a home or equity to offset such a purchase,” Yun says.

All-cash sales: All-cash transactions made up 23% of transactions in September, up from 18% in September 2020. Individual investors or second-home buyers, who account for the bulk of cash sales, purchased 13% of homes in September, up from 12% in September 2020.

Distressed sales: Foreclosures and short sales represented less than 1% of sales in September, matching a year ago. Read more: NAR: No Need to Panic Over Foreclosure Spike

Regional Breakdown

Here’s how existing-home sales fared across the country in September:

• Northeast: Existing-home sales increased by 5.5% last month, posting an annual rate of 770,000, an 8.3% increase compared to a year ago. Median price: $387,200, up 9.2% from a year ago.
• Midwest: Existing-home sales increased by 5.1% to an annual rate of 1.44 million in September, a 2.7% drop from a year ago. Median price: $265,300, up 9.1% from a year ago.
• South: Existing-home sales rose 8.6% in September, reaching an annual rate of 2.77 million, unchanged from a year ago. Median price: $307,500, a 14.8% rise from one year ago.
• West: Existing-home sales increased by 6.5%, registering an annual rate of 1.31 million in September, down 3% compared to a year ago. Median price: $506,300, up 8.3% from September 2020.

National Association of REALTORS®
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Freddie Mac announced a new program to help renters build up their credit profiles and help make them more creditworthy. The initiative provides a means for owners or managers of multifamily properties to report on-time rental payments to the three major credit bureaus. The move aims to help a portion of the more than 45 million U.S. adults who have no credit score.

Less than 10% of renters currently see their on-time rental payment history reflected in their credit scores. That could be preventing some from accessing credit or qualifying for some of the best rates.

“Rent payments are often the single largest monthly line item in a family’s budget, but paying your rent on time does not show up in a credit report like a mortgage payment,” says Michael DeVito, CEO of Freddie Mac. “That puts the 44 million households who rent at a significant disadvantage when they seek financing for a home, a car, or even an education. While there remains more to do, this is a meaningful step in addressing this age-old problem.”

Freddie Mac’s initiative uses technology from Esusu Financial Inc. to allow multifamily operators to report on-time rental payment data from property management software platforms to the three credit bureaus. It will automatically unenroll renters when missed payments occur, which could then hamper credit profiles, Freddie Mac reports.

“At present, the most common way for rents to be reported to the credit bureaus is when there is a missed payment that has gone to a collections agency,” says Alexis Sofyanos, senior director of Equity in Multifamily Housing at Freddie Mac. “Freddie Mac wants to flip that script, so that renters who pay their rent on time and in full each month get credit for doing so, while also putting in safeguards for the most vulnerable.”

Freddie Mac announced it also will provide closing cost credits on multifamily loans for owners of rental properties who agree to report on-time rental payments through the Esusu platform.

National Association of REALTORS®
Reprinted with permission

Mortgage rates are expected to continue to rise after the Federal Reserve’s announcement Wednesday that it would taper its purchases of bonds and mortgage-backed securities. Will those anticipated higher rates price out more home buyers? While some would-be buyers may back off, analysts say, that would allow more persistent buyers to push through.

Higher mortgage rates—pushing above 3% for the 30-year fixed-rate mortgage—could help lessen the competition. “That could make home buying less expensive if buyers aren’t spending as much on their homes and engaging in crazy bidding wars—possibly a welcome lifeline for many first-time buyers who’ve been barred from homeownership by record-high prices,” realtor.com® reports.

The median price for an existing-home has posted double-digit annual gains. In September, the existing-home sale price rose to a median of $352,800, up 13.3% compared to a year earlier, the National Association of REALTORS® reports.

NAR has predicted the 30-year fixed-rate mortgage will likely average 3.6% by mid-2022.

“It’s going to be less affordable a year from now than where we are today,” Leonard Kiefer, deputy chief economist at Freddie Mac, told realtor.com®.

During the first week of January, the 30-year fixed-rate mortgage bottomed out at a 2.65% average. The 30-year fixed-rate mortgage averaged 3.14% for the week ending Oct. 28, Freddie Mac reports.

Realtor.com® offers the following example: A $380,000 home with a 2.65% mortgage rate would have a payment of about $1,225 a month on a 30-year loan, assuming a 20% down payment. At a 3.14% rate, the payment will rise by about $80 a month. Over the 30-year loan, owners could pay nearly $29,000 more.

However, mortgage rates averaging 3% are still historically low. Also, higher mortgage rates may cause some of the competition in the housing market to cool. “Prospective home buyers should actually be praying for rates to start creeping up,” Katie Gatti, a personal finance consultant and the founder of Money with Katie blog, told realtor.com®. Price increases would then likely moderate as well.

National Association of REALTORS®
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Offering slight relief to home buyers this week, the 30-year fixed-rate mortgage fell to a 3.09% average. But rates may rise again soon.

Housing analysts largely expect mortgage rates to increase in the following months due to the Federal Reserve’s announcement this week that it will slowly reduce its monthly bond purchases.

“While mortgage rates fell after several weeks on the rise, we expect future upticks due to strong economic data and as the Federal Reserve pulls back on its stimulus,” says Sam Khater, Freddie Mac’s chief economist. “That said, the housing market remains favorable for consumers, as rates remain below pre-pandemic levels and continue to support sustainable purchase and refinance opportunities.”

The National Association of REALTORS® forecasts the 30-year fixed-rate mortgage to average 3.5% by the second quarter of 2022.

Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 4:

• 30-year fixed-rate mortgages: averaged 3.09%, with an average 0.7 points, falling from last week’s 3.14% average. Last year at this time, 30-year rates averaged 2.78%.
• 15-year fixed-rate mortgages: averaged 2.35%, with an average 0.6 points, decreasing from last week’s 2.37% average. A year ago, 15-year rates averaged 2.32%.
• 5-year Treasury-indexed hybrid adjustable-rate mortgages: averaged 2.54%, with an average 0.3 points, dropping from last week’s 2.56% average. A year ago, 5-year ARMs averaged 2.89%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.

National Association of REALTORS®
Reprinted with permission

Homeowners are keeping up with their mortgage payments or arranging for loan modifications with their service providers. But housing analysts say that while the real estate market still faces pandemic-related fears about a wave of delinquencies, higher home prices are helping to alleviate some of those concerns.

The overall delinquency rate fell to the lowest level since the onset of the pandemic, CoreLogic, a real estate data firm, reports. “However, the decrease in delinquencies masks the serious financial challenges that a part of the borrower population has experienced,” Molly Boesel, economist at CoreLogic, writes for CoreLogic Insights. “In the months prior to the pandemic, only one in five delinquent loans had missed six or more payments. In August 2021 one in two borrowers with missed payments were behind six or more months. Fortunately, large increases in home prices [have] given most borrowers a large home equity cushion, making foreclosure far less likely.”

The nation’s overall delinquency rate was 4% in August, which reflects homeowners in some stage of delinquency, considered to be 30 days or more past due on their mortgage payments, according to CoreLogic. That is a decrease of 2.6% from August 2020. Delinquencies, however, are still slightly above the early pre-pandemic rate in 2020 of 3.6%.

All states posted annual decreases in their delinquency rates in August as the employment rate continues to improve across the country. The states with the highest delinquency rates include Louisiana, Mississippi, New York, New Jersey, and Maryland, according to CoreLogic.

National Association of REALTORS®
Reprinted with permission