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Single-family rent growth slowed in January, but prices came in 28% higher from pre-pandemic levels, pointing to spillover pressure from a tight sales market, according to Corelogic.Rent prices grew 2.6% on an annual basis in January, slowing by almost three percentage points from 5.5% to start 2023. Growth decelerated from a similar 2.8% mark in December.Across various price tiers, the pace of rent increases came in at a level between 2.8% and 3% in January as well, Corelogic found.But the year-over-year numbers don't fully reflect changes in the rental market since the beginning of the pandemic, said Molly Boesel, principal economist at Corelogic."While annual U.S. single-family rent growth was a moderate 2.6% in January, that increase built on years of above-trend annual gains," Boesel said in a press release. In the four years since February 2020, rents have risen overall by approximately 28%. Prices surged in part due to a sluggish purchase market characterized by limited inventory that is leading potential homebuyers to remain in their current units or look for single-family rentals, Corelogic said. "Furthermore, while rent growth is slowing, costs are still increasing across most of the country. The median rent on a three-bedroom property increased by over $100 in the past year and by more than $500 in the past three years," Boesel added.By comparison, average prices for existing-home sales maintained their climb upward at an even more rapid pace in late 2023, as buyers responded to what turned out to be a pullback in mortgage rates. Increased demand for homes helped drive prices up year-over-year by 5.5% in December, according to the Corelogic Case-Shiller home price index. The lowest and highest rental-price tiers, defined as properties charging 75% or less or 125% or more than local median values, mirrored the national spike. Rent growth in those tiers rose by 29.5% and 26.9%, respectively, since early 2024, Corelogic found. But all four rental-price levels slowed their pace of increase from a year ago. Last month, Corelogic predicted rent growth to range from 2% to 4% throughout 2024.Among 20 leading markets tracked by the real estate data and analytics provider, Honolulu recorded the highest year-over-year rise at 6%. Seattle and New York followed with prices accelerating by 5.2% and 5.1% compared with January 2023. Four cities registered annual rent declines, led by Miami and Austin, Texas, which saw similar drops of 2.4% and 2.3%. Rental costs in New Orleans and Minneapolish also fell by 1% and 0.9% in January. 

Mortgage and housing groups at deadline Friday were pressing for an extension to the National Flood Insurance Program set to expire just before midnight due to the latest budget impasse. By noon Friday, the House of Representatives had passed a spending bill in a vote of 286 to 134. Now the Senate must approve in order to prevent disruption.The Mortgage Bankers Association of National Association of Realtors are calling lawmakers to address the issue by passing the Further Consolidated Appropriations Act, 2024, which contains a provision extending the NFIP through the end of the 2024 fiscal year on Sept. 30."Importantly, that provision was carefully crafted to be retroactive, avoiding any disruption in flood insurance authorities should the House and Senate not meet tonight's statutory deadline," said Bob Broeksmit, the MBA's president and CEO, in a press statement.The National Association of Realtors also pulled for the House and Senate to agree on the bill, noting that short-term reauthorizations have been destabilizing and an interruption would be more so."NAR estimates that an extended NFIP lapse could threaten 1,300 property sales per day and the recovery of thousands of small businesses and homeowners," President Kevin Sears said in a press statement.The National Flood Insurance Program would ideally be reauthorized yearly, but instead it's gone through 29 reauthorizations since 2017, according to the Realtors association. The market also has endured several brief cessations in it due to government shutdowns."Short-term extensions and lapses exacerbate uncertainty in real estate markets," Sears said. "Without access to flood insurance, American families must rely on federal disaster aid, which is severely limited."Lack of flood insurance can disrupt originations and loan performance, with a lapse in the NFIP impeding issuance of first-time policies and renewals that come up during the period. Existing policies continue while Federal Emergency Management Agency funds remain available.The NFIP has bipartisan support but is a contentious item within the budget due to the scope of its expense amid rising disaster risk. Flood insurance costs have been a struggle for all stakeholders, including private industry and homeowners who may need it as a supplement to their regular policies.So while growth in the market for private flood insurance could help blunt the impact of a contemporary lapse, it's by no means immune to disruption itself. Private flood insurers have proved fickle when it comes to covering a higher risk market like Florida or Louisiana.Even states that previously have been less flood-prone like Vermont and Pennsylvania have been exposed to risks recently, with the latter recently establishing a legislatively mandated task force to address the issue.Mortgage companies have responsibilities associated with flood coverage and the enforcement penalties for not keeping up with them escalated this year, with Regions Financial paying a $3 million fine that was reportedly the largest imposed by the Federal Reserve last year.Flood insurance also is important to the industry in that it can buffer mortgage companies from risks they might otherwise not want to take on, a concern that recently manifested in Canada, where a lender withdrew from certain markets with exposures. Canada lacks a government flood insurance program but is considering the possibility of establishing one.

Federal Reserve Gov. Michelle Bowman said that regulators' pushing back some implementation dates and resolution of technical errors in its Community Reinvestment Act implementing regulations demonstrates that the final rule was "rushed."Bloomberg News Federal regulators have changed their recently finalized Community Reinvestment Act rule, pushing a key implementation date back for the new framework to 2026.The modification would give banks more time to prepare for changes under the updated framework. It also addresses oversights in the rule finalized last fall that would have subjected certain banks to broader assessment areas, only to have those requirements peeled back in 2026."This extension aligns these provisions with other substantive parts of the 2023 CRA final rule that are applicable on January 1, 2026," the Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said in a statement. "For example, all provisions about where banks are evaluated will now apply on the same date."The agencies also delayed changed requirements related to public requirements and made several other "technical, non-substantive" changes to the rule. The interim final rule will go into effect on April 1, the original date of applicability under the rule, but the public will have 45 days to comment on the amendments.Passed into law in 1977, the Community Reinvestment Act, or CRA, aimed to curb discriminatory practices and incentivize investment in underserved communities — largely those harmed by redlining practices that restricted credit availability to low-income and majority-minority neighborhoods. This is done by requiring banks to engage in a certain amount of reinvestment activity in areas around their branch locations.Last year, the Fed, FDIC and OCC — which are tasked with monitoring CRA compliance among the banks they supervise — updated their framework for doing so. The primary goal of these changes was to reflect the growth of mobile banking, which makes banks less reliant on physical locations for attracting deposits. Several banking groups are suing the agencies over the revised framework, claiming the revisions make compliance too complicated and arduous. They also argue that the changes to assessment areas are unlawful.Federal Reserve Gov. Michelle Bowman, who voted against the rule that finalized the CRA reforms in October, said the fact that regulators are making adjustments to the rule less than six months after approving it stands as proof that the changes were "rushed" and poorly executed."As I noted at that time, the CRA final rule is unnecessarily complex and extraordinarily lengthy," Bowman said in a statement issued Thursday. "In my view, the appropriate approach to address the changes considered by these amendments, and the other more substantive issues with the final rule, would have been a re-proposal."The primary issue addressed by this week's changes center on banks currently deemed "large." The framework requires these banks to expand their assessment areas — geography that can reasonably be served by a bank's branches, deposit-taking ATMs and main office — to include whole counties, rather than key parts, by April 1. But, the new framework also includes a change to which banks are deemed large, which goes into effect in 2026. Because of this, some banks would be categorized as "intermediate" and would again be able to have partial-county assessment areas. The second change pushes back changes to the public disclosure portion of the framework, which requires banks to maintain a readily available file — either printed or digital — that lists bank's branches, services and performance in helping meet community credit needs. Implementation of these changes would also be delayed until 2026.The "technical" changes include clarifying the applicability date of public notice provisions, spell out inflation adjustments to asset-size thresholds, update cross-references in the framework, and various errors in the rule's instructions. Bowman said these changes are appropriate and will help avoid issues, but the amendments could be too little, too late."While the interim final rule is helpful in that it aligns the requirements for these banks to January 1, 2026, and gives other 'large' banks more time to comply with the requirement to redefine full county assessment areas, it is unrealistic to expect that banks have not already expended significant resources to comply with this new requirement," she said. "Banks do not wait until a week before a new rule becomes effective to ensure that they are in compliance."

The Community Home Lenders of America sent a letter to housing officials challenging verification of employment report charges by Equifax, raising questions about whether they are excessive fees in the mortgage process. The CHLA represented the current cost of each verification done through Equifax's The Work Number product as ranges from $55 to $70, in line with a starting price of $66.45 listed on the company's website. Since it is required during the underwriting process as well as just prior to closing, the cost for a mortgage with two applicants as borrowers can reach $280. Those expenses are passed along to the consumer, the letter sent to Federal Housing Finance Agency Director Sandra Thompson and Federal Housing Commissioner Julia Gordon said.Furthermore, The Work Number has what the CHLA estimates is a 60% mortgage market share for VOEs, "and is used in the overwhelming majority of loans in which income verification is done electronically through a third party service provider," according to the  letter.Finally, the letter alleged the cost meets many of the characteristics that the Consumer Financial Protection Bureau blog posting on excessive fees expounded on. In an interview discussing that posting, Scott Olson, the CHLA's executive director, saluted the blog's sentiment, declaring the group was "thrilled" that the bureau was taking the topic head on.Alternatives to The Work Number exist in the marketplace, including Truv, which just received conditional approval by Fannie Mae for its Day 1 Certainty representations and warranty program. It previously was approved by Freddie Mac's asset and income modeler offering in Loan Product Advisor.Also Fannie recently joined Freddie in approving the use of consumer-authorized digital banking validations as a means of verifying employment and other borrower data in circumstances where it provides sufficient proof. Fannie approval is conditional, and it will make this available for opt-in use starting on March 29.In an interview, Truv co-founder and CEO Kirill Klokov praised The Work Number, which was created by Talx and acquired by Equifax, for taking on this burden from employers."If you talk to any Work Number customers, they say, 'they solve a real problem, but the prices are very high,'" Klokov said. And those end up getting passed on to consumers, especially because mortgage lender margins remain very thin.Truv uses an open finance platform to obtain the information using borrower permissions to share the data, Klokov explained."It cuts costs because we don't have the middle man in between us, the borrower and their data," he said.Truv's costs are 60% to 80% lower than The Work Number, Klokov said, and it allows for multiple pulls within 90 days for a single fee.Competition is the answer to the fee issue, he said."If you want to solve the problem today, then there are alternatives that are as good or better than The Work Number," Klokov said. "You just need to try it and give it a shot."Truv uses a different process than The Work Number, he continued, but "consumers should be in control of their data. They should make a decision who to share the data with."Equifax had not returned a response to inquiries at press time.

The Congressional Budget Office has settled the debate over the Federal Home Loan banks' public subsidy. There is one, and it totals in the billions of dollars every year. That needs to change, writes Cornelius Hurley.mehaniq41 - stock.adobe.com "Corporate welfare" and a "gravy train" for bankers is how one current regulator and one former regulator described the Federal Home Loan Bank System at a recent public meeting.The Congressional Budget Office is not prone to such rhetorical flourishes. Yet, in a recent report CBO, in its trademark nonpartisan and analytical style, validated these characterizations of the $1.2 trillion government sponsored enterprise. The report, "The Role of the Federal Home Loan Banks in the Financial System," adds color, context and cold, hard facts to our understanding of an enterprise that has long been shrouded in obscurity.Every member of Congress, whether her priority is budgetary restraint, housing, or both, ought to heed the CBO report. To begin with, CBO settles the long-running dispute over whether the Home Loan banks are subsidized by U.S. taxpayers. CBO's conclusion: They are. Taxpayers subsidize the Home Loan banks at the rate of $7.3 billion per year according to CBO. The subsidy takes the form of the banks borrowing large amounts in the global bond markets using the implied taxpayer guaranty and their exemption from paying federal, state and local taxes.CBO goes on to answer the important question: What do the taxpayers get in return for this massive annual subsidy? CBO's conclusion: very little. According to CBO, the Home Loan banks' only return to the taxpayers was their $355 million expenditures for affordable housing. That is, 4.8% of their annual taxpayer subsidy, or less than $1 for every $20 of taxpayer funding.Of course, these findings raise the question: Where did the rest of the taxpayers' subsidy go? CBO concludes that it went to the Home Loan banks themselves, and to their member banks and insurance companies in the form of low-cost funds and robust dividends.But there is more to the CBO story.CBO's headline subsidy number of $7.3 billion underestimates the current taxpayer subsidy. However, CBO provides a handy reference guide to adjust the taxpayer subsidy for the Home Loan banks' most recent year. The annual taxpayer subsidy based on actual 2023 data reported by the Home Loan banks is not $7.3 billion, it is $10.9 billion according to my application of CBO's methodology.CBO euphemistically refers to the difference between the subsidy and the public benefit as a "pass through" to the banks. That is an annual $10.1 billion pass through! It is unfortunate that this is where CBO's report ends, because it is that $10.1 billion annual pass through, that contains the "waste, fraud and abuse" that characterizes the Home Loan banks.It is wasteful, for example, for the banks to use taxpayer supported money to hire phalanxes of lobbyists, lawyers, public relations experts and consultants. These highly paid foot soldiers do not serve the public interest, even though they are subsidized by the taxpayers. They maneuver unchallenged in the public, legislative and regulatory arenas, promoting only the interests of the Home Loan banks as profit-seeking enterprises. This is how Fannie Mae and Freddie Mac operated before they were placed in conservatorships.For years, the Home Loan banks have insisted falsely that they "receive no taxpayer assistance" — language that was only recently removed from the Federal Home Loan Bank System's website. The latest combined annual report for the eleven Home Loan banks fails to mention the word "taxpayer" on any of its 279 pages.The CBO report lays this issue to rest. Taxpayer assistance is the sine qua non of the Home Loan banks.Money market mutual funds that buy most of the Home Loan banks' debt recognize that this claim is poppycock; otherwise, they would not touch the banks' debt. Regrettably, the Home Loan banks believe their own falsehoods, or at least they do when it comes to setting their own executive compensation. Executive pay at the Home Loan banks emulates the private sector rather than the public taxpayer-supported sector of which they are part.This should all sound familiar. It is the same false claim that Fannie and Freddie made before they were bailed out by the taxpayers. One difference between Fannie and Freddie and the Home Loan banks is that Fannie and Freddie had erstwhile competitors. The Home Loan banks have none.Therefore, it is abusive for the Federal Home Loan Bank of New York and the other ten banks to spend in the neighborhood of $3 million to compensate their CEOs. The role of a Home Loan bank CEO is that of a government official. The job is simply to prudently distribute government-supported funds to the members by way of low-cost advances. The more he or she makes, the less is available for housing and community development.Contrast that limited responsibility with the CEO of the Federal Reserve Bank of New York. His institution plays a central daily role in the global capital markets and serves as fiscal agent for the Treasury Department. He sits on the pivotal Federal Open Market Committee, setting the monetary policy of the nation. For this he makes less than 25% of what his counterpart at the Federal Home Loan Bank of New York makes.Multiply the wasteful use of these taxpayer resources by eleven (the number of Home Loan banks), including eleven C-suites of overpaid executives, and you have some idea of the level of abuse involved.It is abusive to borrow funds at rates kept artificially low by a public subsidy, and to use those funds to pay dividends to the Home Loan banks' members at a rate of 9.75%. Such is the case at the New York bank, with the others following close behind.It is abusive for the Home Loan banks to distribute tens of billions in taxpayer-supported funds to failing banks such as Silicon Valley Bank ($15 billion), First Republic Bank ($28 billion) and Signature Bank ($11 billion).The CBO report unmasks this abuse by pointing out that losses on these loans do not magically disappear when the borrowing bank fails, as the Home Loan banks have suggested. Rather, the losses are passed on to the Federal Deposit Insurance Corp. via another part of the taxpayer subsidy enjoyed by the Home Loan banks, known as the "super lien." And who stands behind the underfunded FDIC? You guessed it: the taxpayer.Similarly, it is abusive to use cheap taxpayer-supported funds to prop up New York Community Bank ($13.3 billion) while Steve Mnuchin and his investors look for a payoff. If anything, as Bagehot says, such advances should be at "penalty rates."Any wonder why the banking industry is so protective of the taxpayer-funded Home Loan banks?Imagine a charity that gives just $1 of every $20 that it raises to its stated cause and the rest it gives to insiders. No one would contribute to such a charity.And yet, we as taxpayers seem to tolerate this misappropriation of taxpayer resources. Why?It comes down to two things: money and influence. The Home Loan banks have benefited from a docile Congress and regulators who, for the most part, have preferred to look the other way rather than confront the realities brought before us by CBO's report.About a year ago, I interviewed Federal Housing Finance Agency Director Sandra Thompson, who regulates the Home Loan banks. She said then, "The status quo is unacceptable." That understatement was a month before Silicon Valley Bank, et al. nearly crushed the banking system. She followed her admonition with some modest and well-reasoned recommendations for reform. Those recommendations are imperiled by money and influence.One can be certain that the Home Loan banks and their members are rooting for an election this November that will allow a new administration to dismiss Ms. Thompson on day one. Also, on their wish-list is another do-nothing Congress that will bend to their money and influence.CBO's report, however, will transcend administrations. It will still be there as an inconvenient truth confronting the 119th Congress when it convenes on January 3, 2025. It will also confront whoever heads the Agency after Inauguration Day, January 20, 2025.

Vectors trended downward for home flippers in 2023, with both return on investment and activity cooling off at a pace not seen in at least 15 years, a new report says.Gross profits for fix-and-flip transactions came in at $66,000 last year and represented an ROI of 27.5% when compared to the original purchase price, according to property data and analytics provider Attom. The 2023 number fell 5.8% from $70,100 in 2023, while profit margins narrowed from 28.1% and 35.7% in the preceding two years to their smallest since 2007. Margins exclude any carrying costs from renovations or taxes and interest, all of which could make up 20% to 33% of resale price and eliminate returns in some cases, Attom said."In 2023, the landscape for home flipping across the U.S. became increasingly challenging," said Attom CEO Rob Barber, in a press release.ROI fell for the sixth time in seven years, with median prices of homes investors put back on the market dropping 4.4% annually from $320,000 to $306,000 in 2023. By comparison, the median value of their investment purchases dipped only 4% from $249,900 to $240,000. Along with weaker profits, overall activity also experienced its steepest annual plunge since 2008 at 29.3%. A total of 308,922 single-family homes and condo units were flipped last year, down from 436,807 in 2022. As a share of total home sales, fix-and-flip properties also contracted on a year-over-year basis to 8.1% from 8.6%."The sharp decline in the number of home flips likely reflected a combination of a tight supply of homes for sale as well as dwindling returns. Either way, it will take some significant reworking of the financials for home flipping fortunes to turn back around," Barber added.Among the largest markets with populations greater than one million, investors saw the weakest ROIs in Texas. In Austin, fix-and-flip businesses actually took a loss of $18,640 on the median transaction. Just above Austin at the bottom were San Antonio, where investors gained only $12,289, followed by Dallas and Houston at $14,817 and $16,932. Phoenix landed one notch above the four Lone Star State cities with a median gross profit of $25,000.On the other end of the scale, California investors saw the greatest returns of a resold home. San Jose topped the list at a median $275,250, followed by its neighbor, San Francisco with $170,000. Boston, New York and San Diego rounded out the top five at $158,000, $154,750 and $153,000.Despite elevated rates in 2023, loan financing for investor purchase transactions grew to 36.5% of total volume. The share increased from 35.7% and 36.2% the prior two years. Investors paid in cash 63.5% of the time last year, slightly lower than 64.3% and 63.8% in the two previous years. Of the total volume of properties eventually flipped in 2023, 10.8% were financed with Federal Housing Administration-backed mortgages, often used by buyers to purchase a first home. The share climbed up from 8.3% in 2022. 

Rocket Mortgage President Tim Birkmeier announced his retirement Thursday, the latest leadership move at the massive Detroit firm in the past year. The 28-year veteran of the company held the president role since January 2022, dropping last year a dual title as chief revenue officer he held since 2017. His retirement effective date was unclear; Rocket Cos. said it has no plans to replace his position at this time. "It was absolutely inspiring to take part in an amazing growth story of a great North American company," wrote Birkmeier in a LinkedIn post Thursday, thanking longtime Rocket executives and touting the future of the firm. Birkmeier's departure follows other executive changes at Rocket Cos., including the hiring of new Chief Marketing Officer Jonathan Mildenhall in January and fintech executive Varun Krishna's naming as CEO of both Rocket Cos. and Rocket Mortgage last summer. Other recent moves include Rocket Mortgage's promotion of Austin Niemiec to chief revenue officer last January, while Mike Fawaz took his place in helming Rocket Pro TPO. Birkmeier began his career at the firm, then Rock Financial, in 1996 as a mortgage banker, according to the company. By 2009 he was vice president of mortgage banking. He was promoted from that position to chief revenue officer in 2017. As president, Birkmeier was responsible for, among other tasks, overseeing Rocket Mortgage's business partnerships. He also oversaw Rocket Connections, a business for contact center services, and Rocket Mortgage Canada. The company leader's appointment as president came toward the end of the pandemic refinance boom and amid huge origination volumes for the lender. Rocket, like other industry competitors, has seen its performance dip with soaring mortgage rates. In the most recent reporting period, Rocket posted a $233 million net loss in the fourth quarter, but an adjusted net loss of just $6 million.

The rising cost of homeowners insurance has been a growing concern in the mortgage industry as it can affect consumers' ability to qualify for financing and the performance of their loans; but restrictions on credit-based pricing are mitigating it in some states, a new study finds.People in states that don't have the pricing restrictions are paying more based on average premiums across a range of four credit tiers, according to a report by Matic Insurance.Even people with relatively high FICO scores between 740-799 pay less with an average of  $1,176 in premiums in states with restrictions as compared to $1,423 in jurisdictions that don't have such rules.Consumers with scores in the 670-740 range pay $1,244 as opposed to $1,516, respectively. The cost for those with 580-669 scores is $1,426 vs. $1,708. The average premium for those with scores below 580 is $1,350 compared to $1,919.These findings reflect data collected between June 1, 2022 and March 1, 2024 and are interesting when compared to some other earlier studies examining how credit-based pricing affected premiums.A 2017 study by the Arkansas Insurance Department found that credit-based pricing lowered premiums for the majority, or 56.6%, of consumers in 2016. It raised premiums for 16.5% and had a neutral impact on the balance.Eight states currently have restrictions: California, Hawaii, Maryland, Michigan, Massachusetts, Oregon, Nevada and Utah, according to the National Association of Insurance Commissioners. Nevada's pandemic-era restriction is temporary and set to end in May.Some of the states have an outright ban on negative credit-based pricing. Others disallow the use of credit scores in determining whether someone qualifies for coverage, according to an Experian report.While credit-related restrictions can provide a price break for consumers, at a time when insurance carriers have left some markets, citing unmanageable risks and costs, that industry's opposition to them is a concern. Some insurance entities have filed lawsuits against the rules.The National Association of Mutual Insurance Companies challenged Nevada's temporary ban. But the state's supreme court allowed it to stand in a decision issued early last year.Outcomes of legal challenges have been mixed.A court in Washington state overturned restrictions that previously existed there in August 2022.The Matic study also found consumers across credit score bands have been agreeing to higher deductibles in order to offset the rising cost of home insurance, and found for those with lower credit scores, there's been more of an increase in the amount.The difference in the average deductible for people with credit scores in the 580-669 range between Jan. 1, 2023 and March 1, 2024 was $315 higher than from Jan. 1, 2022 to March 1, 2023. For 670-740 scores it was $299 higher. FICOs in the 740-799 band were up by $262.Matic is a digital insurance marketplace that works with more than 40 home and auto insurance companies. It works with a group of distribution partners that includes banks, mortgage originators and servicers.

Mortgage rates finally reacted to the recent hotter-than-expected inflation reports this week, with the average for the 30-year loan rising 13 basis points, Freddie Mac said.The 30-year fixed rate averaged 6.87% for the March 21 report, up from 6.74% the prior week and 6.42% at the same time last year, the Freddie Mac Primary Mortgage Market Survey found.Meanwhile, the 15-year FRM rose 5 basis points week to week to 6.21% from 6.16%. A year ago, the rate was 5.68%."After decreasing for a couple of weeks, mortgage rates are once again on the upswing," said Sam Khater, Freddie Mac's chief economist, in a press release. "As the spring home buying season gets underway, existing home inventory has increased slightly and new home construction has picked up."While the 10-year Treasury yield, one of the benchmarks used to price mortgage loans, was virtually flat compared with its closing price seven days earlier at 4.29% as of noon on March 21, it was about 20 basis points higher than two weeks ago, prior to the release of the Consumer Price Index report that showed inflation running higher than expected.The yield also remained elevated even with commentary by Federal Reserve Chairman Jerome Powell following this week's Federal Open Market Committee meeting that kept short-term rates at current levels.Zillow's rate tracker put the 30-year FRM at 6.59%, up 4 basis points from the previous week's average of 6.55%."Mortgage rates increased this week ahead of the Fed's latest Summary of Economic Projections, as investors worried the FOMC forecast would reveal more stubborn inflation and fewer rate cuts this year," said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement sent out on Wednesday night. "The committee expects stronger real [gross domestic product] and less disinflation in 2024 compared to its December forecast."Divounguy added Powell's comments reassured the markets about the Fed's direction, and noted that it caused the 10-year yield to decline 2 basis points on the day Wednesday and 7 basis points since Monday to close at 4.27%. But it regained those 2 basis points on Thursday morning.As Divounguy has said in the past, the 10-year yield is a measure of expectations regarding future inflation and economic growth."And according to the latest Fed projections, long-dated yields aren't expected to ease much," Divounguy said. "Expect more rate volatility ahead as the Fed and investors wait for more conclusive evidence of a return to low, stable and more predictable inflation."Earlier this week, Fannie Mae updated its economic forecast and now expects rates to remain over 6% through the end of 2025.The core Personal Consumption Expenditures price index data release next week will likely cause more mortgage repricing activity, Divounguy said.Other indicators are also positive even in the current environment, Khater said."Despite elevated rates, homebuilders are displaying renewed confidence in the housing market, focusing on the fact that there is a good amount of pent-up demand, an ongoing supply shortage and expectations that the Federal Reserve will cut rates later in the year," Khater said.Taking a more pessimistic view is Jack Macdowell, chief investment officer at the Palisades Group, an alternative investment manager."Mortgage rates remain too high to entice homeowners with an average interest rate of 3.8% to sell their homes," Macdowell said in a Thursday morning statement after the existing home sales report came out. "This disparity creates a situation where there is pent-up demand (due to the higher prevailing rates discouraging new buyers) and pent-up deferred sales (since current homeowners with lower rates are less inclined to sell, keeping supply low)."And inventory is likely to remain low for some time to come, Macdowell said.

Sales of previously owned U.S. homes surged in February to the fastest pace in a year as the number of listings jumped, suggesting buyers and sellers are coming to grips with higher mortgage rates.Contract closings increased 9.5% from a month earlier to a 4.38 million annualized rate, according to National Association of Realtors data released Thursday. The pace exceeded all estimates in a Bloomberg survey of economists.The figures indicate the resale market is breaking out of a protracted slump due to high mortgage rates that discouraged homeowners from moving and giving up a lower rate that they had locked in in the past few years.But homeowners may be accepting that mortgage rates are settling into a new normal and can't delay moving any longer, NAR Chief Economist Lawrence Yun said on a call with reporters. That led more to list their properties last month, driving up inventory to the highest for any February since 2020."Additional housing supply is helping to satisfy market demand," Yun said in a statement. "Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices."Mortgage rates will probably decline later this year when the Federal Reserve is expected to cut interest rates. Chair Jerome Powell said Wednesday that the central bank still expects inflation to ease, and policymakers reiterated their forecast for three rate cuts in 2024.Inventory risingThe number of previously owned homes for sale climbed to about 1.07 million last month, and Yun said he expects that will continue to go up. At the current sales pace, selling all the properties on the market would take 2.9 months, the lowest in about a year. Realtors see anything below five months of supply as indicative of a tight market.Even with greater inventory, strong demand put upward pressure on prices. The median selling price advanced 5.7% to $384,500 from a year ago, the highest for any February in data back to 1999. Yun noted 20% of homes sold above list price, pointing to the prevalence of multiple offers.Cash sales represented a third of total transactions. Investors or second-home buyers, who often purchase with cash and are therefore less sensitive to mortgage rates, made up 21% of the market.Existing-home sales account for the majority of purchases and are based on contract closings. Data on new-home sales, which reflect contract signings, are due next week.Separate data released Thursday showed initial applications for U.S. unemployment benefits held near historically low levels last week.Digging deeperSales rose in three of four regions, led by a 16.4% surge in the West. Sales of single-family homes were the highest in a year, while condominiums and co-ops transactions also advanced.First-time buyers made up 26% of purchases in February, matching the lowest on record. Properties remained on the market for 38 days, up from 36 days in January. Distressed sales made up 3% of all transactions, which Yun said is more in line with the pre-pandemic rate.Sales were up 0.7% from a year earlier on an unadjusted basis.