HECM Volume Rebounds in June, but Leaves Predictions in Jeopardy

After falling from 11,660 HECMs endorsed in April to 8,396 HECMS endorsed in May, HECM volume increased slightly in June to 8,633 HECMs endorsed.  As the graph indicates, HECM volume for the year still looks like it is on track to be higher than last year.  However, one wonders if the number of HECMs endorsed will be as high as was previously thought. While the trend through April might have led one to believe that the industry would see a 144,000 HECM volume year, these trends show something more like 120,000.

Once again, the volume of HECMs is concentrated in the top few lenders, decreasing dramatically on down. Wells Fargo, the top lender, has endorsed more than twice as many loans as the number 2 lender, Bank of America. Many other lenders  have only endorsed one HECM last month.

The FHA’s complete HECM volume report for the month of June can be found here.

 

Calculating the Housing Market: April's Impact

A report released by the National Association of Home Builders (NAHB) indicates that the market sentiment index among US home builders has fallen by 1 (from 15 to 16) in their June survey. Many factors appear to support this fall:

- foreclosures have increased

- the home for sale:home sold period is now greater than 10 months, a large number for the housing industry

- mortgage rates have increased dramatically in recent weeks

- new home sales have increased

- housing prices are down 15% in April year over year

and, perhaps most importantly for those participating in the survey, home construction was down 13% in April vs. March.  Construction year over year was at less than half of the April 2008 levels.

It is therefore unsurrpising that home builders are not optimistic about the market right now, especially since new properties to continue to compete against old properties, and the depreciation occuring and difficulty of selling homes does not make building new properties a sure bet.