Mortgage Banker's Association predicts mortgage originations will decrease to $1.32 trillion in 2016 from $1.45 trillion in 2015, a 9% decline

The Mortgage Bankers Association announced today that it expects to see $905 billion in purchase mortgage originations during 2016, a ten percent increase from 2015.  In contrast, MBA anticipates refinance originations will decrease by one-third, resulting in refinance mortgage originations of $415 billion.  On net, mortgage originations will decrease to $1.32 trillion in 2016 from $1.45 trillion in 2015.

For 2017, MBA is forecasting purchase originations of $978 billion and refinance originations of $331 billion for a total of $1.31 trillion.

"We are projecting that home purchase originations will increase in 2016 as the US housing market continues on its path towards more typical levels of turnover based on steadily rising demand and improvements in the supply of homes for sale and under construction.  Despite bumps in the road from energy and export sectors, the job market is near full employment, with other measures of employment under-utilization continuing to improve," said Michael Fratantoni, MBA's Chief Economist and Senior Vice President for Research and Industry Technology.  "We are forecasting that strong household formation, improving wages and a more liquid housing market will drive home sales and purchase originations in the coming years.

"Our projection for overall economic growth is 2.3 percent in 2016 and 2017 and 2 percent over the longer term, which will be driven mainly by consumer spending as households continue to buy durable goods, such as cars and appliances.  The housing sector will contribute more to the economy than it has in recent years.  We are forecasting a 17 percent increase in single family starts in 2016 and a further increase of 15 percent in 2017.  Weaker growth abroad will mean fewer US exports, which will be a drag on growth over the next couple of years.  Recurring flights to quality, a demand for safe assets from investors abroad, will keep longer-term rates lower than the domestic growth environment would warrant.

"Coincident with a strengthening economy, we expect the Federal Reserve will begin to slowly raise short-term rates at the end of 2015.  At some point after liftoff, the Fed will begin to allow their holdings of MBS and Treasury securities to run off, likely beginning in late 2016.  Even with these actions, we expect that the 10-Year Treasury rate will stay below three percent through the end of 2016, and 30-year mortgage rates will stay below 5 percent.

"We forecast that monthly job growth will average 150,000 per month in 2016, down from about 200,000 per month in 2015, and that the unemployment rate will decrease to 4.8 percent by the end of 2016, returning to 5.0 percent in 2017 and 2018. The slight rebound will be driven by an increase in labor force participation rates to more typical levels.

"Refinance activity will continue to decline as there are few remaining households that can benefit from an interest rate reduction and because rates will gradually begin to rise from historic lows in the coming years.  Home equity products may see an increase in demand as home prices continue to increase at a decelerating rate," Fratantoni said.

MBA upwardly revised its estimate of originations for 2014 to $1.26 trillion from $1.12 trillion, to reflect the most recent data reported in the 2014 Home Mortgage Disclosure Act (HMDA) data release.

This graph shows the ups and downs since 2000

The Nashville region resumed double-digit gains in home closings last month, but the higher sales amid declining inventory officially pushed the market to where sellers now have the upper hand in negotiations.

Overall, 3,122 residential properties changed hands during September, a 19 percent jump from a year ago and the first double-digit gain posted this year, according to the Greater Nashville Association of Realtors.

The inventory of 9,924 single-family homes at the end of last month equates to a 3.9 month supply that's just below the four to six months range where neither buyer nor seller has an advantage. That's the lowest level since the 3.87 month supply in June more than eight years ago.

"The seller's in a better position because there are fewer choices," said Richard Exton, an appraiser with Nashville-based Manier and Exton.

http://www.tennessean.com/story/money/2014/10/08/nashville-area-home-sales-post-years-first-double-digit-monthly-gain/16922777/

Annual Nashville home sales top 30,000 for first time since 2007

At year-end, 2,032 sales were pending, up 9.4 percent from the same time last year, but down 7 percent from November 2013. That signals that January sales should be better than January 2013 sales numbers, said Richard Exton, an appraiser at Manier and Exton in Nashville.

Historically, January and February are the slowest sales months. But both closings and inventory increase going into the spring as more houses are put on the market.

The median price of a single-family home rose nearly 6 percent for December from a year ago to $198,838; it was up nearly 2 percent from November. Last year, prices continued to rise month-over-month reflecting the decline in inventory, Exton added.

Inventory of single-family homes declined nearly 10 percent from a year ago and 12 percent from November to 8,228. That’s a four-month supply, which is around the tipping point of the level where neither the buyer nor the seller has an advantage.

“It would be reasonable to expect some of the decrease in the inventory is due to owners taking their properties off the market for the holiday season and inventories are likely to rise moving forward, pushing the months of supply up,” Exton added.

http://www.tennessean.com/interactive/article/20140108/BUSINESS/301090027/Annual-Nashville-home-sales-top-30-000-first-time-since-2007

Nashville unemployment rate posts big drop from 6.7% to 5.8%

Eric Snyder

Managing Editor-Nashville Business Journal

Davidson County's unemployment rate dropped to 5.8 percent in November, according to new data from the Tennessee Department of Labor and Workforce Development, down from 6.7 percent in October.

The new data shows that unemployment decreased in 93 counties in November, increased in one and remained flat in one.

Davidson County posted the eighth-lowest unemployment rate in the state in November, and the lowest of the state's major metropolitan areas. Williamson County posted the state's lowest unemployment rate, at 5 percent, down from 5.7 percent in October.

Around the region, Cheatham County's unemployment rate dropped to 5.5 percent, down from 6.3 percent in October; Maury County's rate dropped to 8 percent, down from 9 percent; Montgomery County's rate fell to 7.8 percent, down from 8.6 percent; Robert County's rate fell to 5.7 percent, down from 6.4 percent; Rutherford County's rate fell to 5.6 percent, down from 6.4 percent; and Wilson County's rate fell to 5.4 percent, down from 6.6 percent.

Tennessee's statewide unemployment rate for November was 8.1 percent, down from 8.5 percent in October. November's national unemployment rate was 7 percent, down from 7.3 percent.

http://www.bizjournals.com/nashville/blog/2013/12/nashville-unemployment-rate-posts-big.html?ana=twt via @nashvillebiz

In its housing outlook for 2014, Forbes has ranked the Nashville metropolitan statistical area as the fourth-best U.S. market in which to buy a home next year, noting a growing local economy and housing prices that are still under-valued despite a recent uptick.

http://www.forbes.com/sites/erincarlyle/2013/12/26/best-buy-cities-where-to-invest-in-2014/

U.S. growth revised higher, economy on firmer footing, GDP grew at 4.1%

(Reuters) - The U.S. economy grew at its fastest pace in almost two years in the third quarter, the government said on Friday as it revised its estimates of business and consumer spending higher.The broad revisions hinted at some underlying strength, which could help the economy better absorb the blow from an anticipated cutback in inventory accumulation this quarter.

The Federal Reserve on Wednesday gave the economy a vote of confidence, announcing it would reduce its $85 billion monthly bond purchases by $10 billion starting in January.

Gross domestic product grew at a 4.1 percent annual rate instead of the 3.6 percent pace reported earlier this month, the Commerce Department said in its third estimate.

That was the quickest pace since the fourth quarter of 2011 and an acceleration from the April-June quarter's a 2.5 percent.

Economists had expected third-quarter GDP growth would be unrevised at a 3.6 percent rate.
"This is a fairly solid report, said Ryan Sweet, senior economist at Moody's Analytics in West Chester, Pennsylvania, adding that the mix of factors in the report was more positive than expected.

http://reut.rs/19h8yuo via @reuters

The Greater Nashville Association of Realtors posted their month sales figures today (http://gnar.org/news/septhomesales).  Sales are up, inventories are down, and pricing is up compared to September 2012.  Pending sales were up compared to 9/2012.  This indicates that October sale will exceed 10/2012.  It is significant to note that the difference in the number of pending sales between 2012 and 2013 has been declining most months this year.  This it likely to translate in to a flat market as we head into 2014.

Here are the year to date sale through the end of the third quarter for the past 4 years:

Sales though 3rd quarter
2013	Res	20254
	Condo	2660
2012	Res	16489
	Condo	2216
2011	Res	13200
	Condo	1685
2010	Res	13532
	Condo	1943

GNAR does not report Median Price by Quarter.  This is a better indicator of overall market pricing trends as opposed to comparisons of month to month or month to the same month in the previous year.  This is due to the larger data sample available for a quarterly analysis.

An analysis of median price by quarter show significant price gains in comparison of year over year and prior quarter.  Basic economic theory is in play here.  Supply is down, demand is up, pricing is move forward.

Median Price by Quarter
2012	1st	Res	$162,050		2013	1st	Res	$169,900
		Condo	$139,900				Condo	$146,434
	2nd	Res	$175,000			2nd	Res	$195,500
		Condo	$153,500				Condo	$163,000
	3rd	Res	$177,000			3rd	Res	$198,000
		Condo	$149,900				Condo	$162,250
	4th	Res	$180,635
		Condo	$151,950