A secondary mortgage market model that includes some level of government participation is necessary to ensure affordable and available home mortgages. That is the message the National Association of Realtors® delivered during a House Financial Services Subcommittee hearing today.

“Fannie Mae and Freddie Mac serve an important role in expanding homeownership and providing a solid foundation for our nation’s housing financial system,” said Realtor® Frances Martinez Myers, who spoke on behalf of NAR. “Unlike private secondary market investors, Fannie and Freddie remain active in housing markets during downturns, using their federal ties to facilitate mortgage finance and support homeownership opportunities for all qualified borrowers.”

By providing capital for mortgage finance during disruptive and down markets, these government-sponsored enterprises are vital to the success of the nation’s housing system. “As the market turmoil reached its peak in late 2008, it became apparent that the role of the GSEs, even in conservatorship, was of utmost importance to the viability of the housing market, as private mortgage capital effectively fled the marketplace,” Martinez Myers said. CONTINUED »

National Association of Realtors

Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.

Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”

The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008. CONTINUED »

The general economic downturn, complicated by a severe credit crunch in commercial real estate, is dampening commercial real estate activity. In addition, a forward-looking index shows the forecast for commercial real estate sectors will remain weak for the remainder of the year, according to the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said commercial real estate has been hit by a double whammy. “Significant job losses have reduced the demand for commercial space, while a lack of credit has stalled transactions and refinancing activity,” he said. “It is critical for the Federal Reserve to increase liquidity by purchasing commercial mortgage-backed securities. Because commercial real estate always lags an overall economic recovery, it will take some time for the commercial real estate market to rebound.”

The Commercial Leading Indicator for Brokerage Activity1 fell 4.8 percent to an index of 103.5 in the first quarter from a downwardly revised reading of 108.7 in the fourth quarter, and is 12.9 percent below the 118.8 recorded in the first quarter of 2008. NAR’s track of the commercial leading indicator dates back to 1990. CONTINUED »

Smart growth, the impact of military base development, flood and natural disaster insurance, and widespread pine beetle infestation were just a few of the breadth of issues that Realtors® shared during the national town hall meeting at the Land Use, Property Rights and Environment Forum today. The forum was part of the weeklong Realtors® Midyear Legislative Meetings & Trade Expo here this week.

“Land use and environmental issues related to housing and development affect our global community,” said National Association of Realtors® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Realtors® care about improving communities and engage public policymakers head-on to address these challenges. Growth patterns, economic development and quality-of-life issues are inextricably linked to the success of communities and their residents.”

The environmental impact on affordable property insurance is top-of-mind for many Realtors® and their clients. Several forum participants reported that insurance companies in various states, including Florida, Louisiana and Minnesota, are imposing mandatory deductibles as a certain percentage of a home’s value. The Realtors® in attendance agreed that the availability and affordability of homeowners insurance affects communities across the country, not just residents in coastal regions or other areas susceptible to natural disasters. CONTINUED »

National Association of Realtors

Historically high housing affordability and low mortgage interest rates, combined with buyer opportunities in the distressed sales market, have increased home sales in many areas of the country.

“There has never been a better time to buy,” said National Association of Realtors® Chief Economist Lawrence Yun, who presented NAR’s economic outlook today at the Economic Issues and Residential Real Estate Business Trends Forum. Yun commented on a convergence of favorable buying conditions while emphasizing how important it is for home buyers to stay within their budgets.

“Housing affordability is at an all-time high, mortgage rates are historically low, and interest rates are the lowest they’ve been since the days of Eisenhower,” said Yun.

The forum was part of the weeklong Realtors® Midyear Legislative Meetings & Trade Expo. During a national real estate summit here earlier in the week, Shaun Donovan, U.S. Secretary of the Department of Housing and Urban Development, announced that the Federal Housing Administration is going to permit its lenders to allow qualified home buyers to use the $8,000 tax credit as a downpayment.

“Now that buyers will be able to use the $8,000 tax credit as a downpayment, we should see additional buyers enter the market,” said Yun.

While he doesn’t anticipate an immediate pickup in the coming months, Yun believes early summer will be a critical indicator of how home buyers are responding to the $8,000 tax credit. “The home buying process takes time,” said Yun. “This summer will gauge the success of the first-time home buyer tax credit.”

Evidence of recovery is already demonstrated in California, where home sales are rising much faster than anticipated; some areas in the state are seeing a 70 to 80 percent increase in sales. Yun attributes this extraordinary surge to buyers who may have been sitting on the fence but are now taking advantage of the great opportunities for fear of being left out of current deals in the market.

According to Yun, many first-time buyers are attracted to deeply discounted and distressed home prices. Nationally, about half of all recent transactions have been distressed sales. Fifteen to 20 percent have been short sales and 30 to 35 percent have been foreclosures. Yun says while these statistics are unfortunate the situation along with current home buying incentives have created an impressive window of opportunity for potential home buyers.

“The stimulus and falling inventory levels will help stabilize prices,” said Yun. “My projection is home sales will be 10 to 20 percent higher the second half of this year than last year and we will come out of this recession in 2010.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

National Association of Realtors

Home buyers must be protected against mortgage lending abuses while being assured of access to affordable mortgages. Toward this end, the National Association of Realtors® today expressed its support of H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009.

“Realtors® have a strong stake in preventing abusive lending for many reasons. Beyond the devastating impact on individuals and families, abusive lending erodes confidence in the nation’s housing system, and entire communities are harmed whenever abusive lending strips equity from homeowners,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.

As consumer abuse in mortgage lending increased in the earlier part of this decade, Realtors® established a set of “Responsible Lending Principles” in 2005 with the goal of protecting consumers in the housing market. “After years of sharing our Responsible Lending Principles with Congress, NAR is extremely pleased that H.R. 1728, which embodies these principles, is set to be voted on this week,” McMillan said.

In a letter to Congress, NAR expressed strong support for H.R. 1728, including measures to ensure that all mortgage originators act in good faith and that all parties in a real estate transaction are treated honestly. “We ask members of Congress to indicate their support of consumers and the housing market by voting in favor of this important legislation,” said McMillan.

“On behalf of our members and consumers nationwide, NAR is committed to ending abusive and predatory lending practices and will continue to advocate sound, responsible legislation. We urge quick passage of this bill and swift implementation of penalties to those who dare to act dishonestly,” McMillan said.

National Association of Realtors

Existing-home sales eased in March but first-time buyers are responding to low mortgage interest rates and tax credits, according to the National Association of Realtors.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 3.0 percent to a seasonally adjusted annual rate1 of 4.57 million units in March from a downwardly revised level of 4.71 million in February, and were 7.1 percent lower than the 4.92 million-unit pace in March 2008.

Lawrence Yun, NAR chief economist, said the market appears to be stabilizing with modest monthly ups and downs, and that first-time buyers are driving the market. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers, which we also see in a parallel member survey,” he said. “Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans.”

Although prices rose from February to March, the national median existing-home price2 for all housing types was $175,200, down 12.4 percent from March 2008. The price increase from February to March was 4.2 percent, which is much higher than the typical 1.8 percent seasonal increase between those two months. Distressed properties, which accounted for just over half of all transactions in March, typically are selling for 20 percent less than traditional homes. CONTINUED »