Office of the Chief Economist
1
Housing Contraction Ongoing,Mortgage Defaults Rising
Housing activity low
Single-family construction is lowest since 1945
Sales are near bottom; about a third are foreclosure sales
U.S. house price measures will likely decline through 2010
Low mortgage rates promote loan demand
Less purchase-money because of lower house prices, fewer sales
Refis account for 75% of applications over past three months
FHA volume up sharply
Refi volume pushes 2009 originations above last year
Mortgage defaults rise
Unemployment main trigger event for delinquency
House price declines add to foreclosure risk
Serious delinquency rates likely to rise further in 2009
Coastal areas, Great Lakes region will be hit hardest
Office of the Chief Economist
2
Low Interest Rates and Falling Home PricesHave Increased Housing Affordability
Source: National Association of Realtors Composite Housing Affordability Index – (% of medianpriced home affordable on median income with conventional mortgage and 20% down); FreddieMac Primary Mortgage Market Survey
®
5080110140170
1 9 7 1 1 9 7 3 1 9 7 5 1 9 7 7 1 9 7 9 1 9 8 1 1 9 8 3 1 9 8 5 1 9 8 7 1 9 8 9 1 9 9 1 1 9 9 3 1 9 9 5 1 9 9 7 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9
4.07.511.014.518.0
Index
Percent
NAR AffordabilityIndex
(left scale)
30-year FixedMortgage Rate
(right scale)
Index = 100 meansmedian income buysmedian priced home
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