The Fed's favorite house price indicator from First American CoreLogic’s LoanPerformance ... From LoanPerformance: On a month-over-month basis ... national home prices declined by -0.7 percent in October 2009 compared to September 2009. ... "We are continuing to see improvements in the year-over-year home price change as prices have remained relatively stable since April," said Mark Fleming, chief economist for First American CoreLogic. "The crutches of government support for the housing market have stimulated demand and restricted supply in 2009. How these government supports are removed in 2010 will be critical to the continued stability of the housing market." Prices are now falling again. It might take a month or two for this to show up in the Case-Shiller index because it is an average over three months. Click on graph for larger image in new window. This graph shows the national LoanPerformance data since 1976. January 2000 = 100. The index is off 7.9% over the last year, and off 30.1% from the peak. The index has declined for two consecutive months (-0.16% in September and -0.68% in October). I'll have some comparisons to Case-Shiller later, but it appears house prices are now falling again.

From Bloomberg: The Moody’s/REAL Commercial Property Price Indices fell 1.5 percent in October from September, according to data compiled by Bloomberg. Prices fell 36 percent from a year ago and are 44 percent below the peak in October 2007. Here is a comparison of the and the Case-Shiller composite 20 index. Notes: Beware of the "Real" in the title - this index is not inflation adjusted. Moody's CRE price index is a repeat sales index like Case-Shiller - but there are far fewer commercial sales - and that can impact prices. Click on graph for larger image in new window. CRE prices only go back to December 2000. The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes). CRE prices peaked in late 2007 and have fallen 44% from the peak and are now back to September 2002 levels. The pace of the price declines has slowed. Notices that CRE trails residential (this is usually true for activity, but also for prices here), and that CRE prices fall quicker than residential (residential prices tend to be sticky).

The U.S. housing market continued to deteriorate in the third quarter as even the most credit-worthy borrowers increasingly fell behind on their mortgages.

Some mortgage companies are beginning to relax their down-payment requirements, in a sign of confidence in the housing market.

From virtual offices to the REALTORS Property Resource (TM), TheClozing.com offers up the hottest real estate technology trends coming in the new year.

The outlook going into year end has been positive, as indicated by movements in the ABS and CDS markets. Fears surrounding Dubai have subsided for the most part, and the Dow Jones Industrial average rose towards 10,500. Additionally, 5Y CDS spreads on financials have tightened, particularly Citigroup, in reaction to news that they will be repaying TARP loans. The Markit Structured Finance Indices and single name ABS have had a positive December at the synthetic and the cash level with the exception of synthetic home equity, which has widened slightly this month.

From the Chicago Fed: Led by improvements in production-related and employment-related indicators, the Chicago Fed National Activity Index increased to –0.32 in November, up sharply from –1.02 in October. ... The index’s three-month moving average, CFNAI-MA3, increased to –0.77 in November from –0.87 in October. November’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The level of activity, however, remained in a range that has historically been consistent with the early stages of a recovery following a recession. Click on table for larger image in new window. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. According to the Chicago Fed: "When the economy is coming out of a recession, the CFNAI-MA3 moves significantly into positive territory a few months after the official NBER date of the trough. Specifically, after the onset of a recession, when the index first crosses +0.20, the recession has ended according to the NBER business cycle measures. ... The critical question is: how early does the CFNAI-MA3 reveal this turning point? For four of the last five recessions, this happened within five months of the business cycle trough." Although improved in November, the Chicago Fed National Activity Index is still negative. According to Chicago Fed, it is still early to call the official recession over.

From the WSJ: Earlier this month, MGIC removed New Orleans, Dover, Del., Akron, Ohio, and four other areas in Ohio from its list of restricted markets. ... Under the looser requirements, a borrower with a credit score of 680 or higher in New Orleans, for instance, can finance up to 95% of a home's value. Before the change, a borrower who wanted to finance that much of a home's value would have needed a credit score of at least 700. In September, Genworth Financial Inc. winnowed its list of declining and distressed markets to five states: Arizona, California, Florida, Michigan and Nevada. The changes are small. As the article notes, this is due to slightly improved markets and an attempt to regain market share from the FHA. I wonder if this is related - just two weeks ago: (ht jb) Mortgage insurance giant MGIC Investment Corp. (MTG) announced, Thursday, that the Office of the Commissioner of Insurance for the State of Wisconsin approved the company’s revised business plan and agreed to waive minimum regulatory capital requirements until Dec. 31, 2011.

Fed Chairman Ben Bernanke ’s this week that he refinanced his own mortgage earlier this year piqued our interest. He said in the interview that he went into a conventional 30-year fixed rate mortgage a couple of months ago. Why did he refinance? What kind of mortgage was he in? The interview suggested his mortgage costs were exploding. Were they? Fed Chairman Ben Bernanke. (Getty Images) We did a little digging of public records and learned more. The Fed chairman was in an adjustable rate mortgage with a rate that started at 4.125% in 2004 and adjusted after five years to a rate that would be 2.25 percentage points above one-year Libor, which as of the first reset date in June was a little more than one and a half percent. That suggest his costs wouldn’t be exploding now, as the interview suggested. In fact, they’d be going down. He probably just meant the initial five year term was up. Locking into a fixed rate mortgage looks like a sensible thing for any homeowner to do with long rates at historic lows now. Of course, Mr. Bernanke isn’t any homeowner. One has to wonder what the decision to refinance implies about his beliefs about where rates are going in the future. Refinancing suggests he sees them going up eventually. But that shouldn’t be too big a surprise to people given that short-rates, at zero, can’t go any lower and given that Mr. Bernanke has been talking about the Fed’s exit strategy and a recovery for months. Does it say anything about the timing of eventual rate hikes or the magnitude? Very doubtful. On another note, the records show he put about 20% down on the $839,000 Capitol Hill home he bought in 2004. The fact that he borrowed the other 80%, or $671,200, supports his often-repeated point that he isn’t another one of those deep-pocketed Wall Street fat cats. It’s also worth noting that a floating rate mortgage might have made sense at the time for personal reasons in addition to financial ones. He was still a Fed governor and didn’t have an inkling...

Did you know that first-time home buyers made up more than 50% of total buyers in October/November 2009?

First American CoreLogic Click to see First American CoreLogic’s report. Lots of people talk about the “shadow inventory” of housing, but it’s proving very hard to measure, as a report Thursday from shows. For starters, there is no standard definition of this shadowy term, so I’ll propose a fuzzy one: The shadow inventory consists of homes that aren’t yet listed for sale but are likely to hit the market over the next year or so. The biggest part of this potential supply is homes headed toward foreclosure or already in that process but not yet owned by a bank or loan investor. Then there are homes owned by a bank but not yet listed for sale. And, finally, homes owned by ordinary people waiting for the market to firm up before they schedule an open house and bake chocolate-chip cookies. Why bother with all this shadow boxing? Without a clear idea of the likely supply, it’s hard even to begin assessing how residential real estate will fare in 2010. On Thursday, First American released a report estimating that the “pending supply” of homes totals 1.7 million units, up from 1.1 million a year earlier. (To put that in perspective: About 3.6 million homes were listed for sale at the end of October, and annual sales of new and previously occupied homes are likely to total about 5.5 million in 2009, according to Tom Lawler, a housing economist.) First American told me that its 1.7 million total includes 215,000 homes that are owned by banks or investors but aren’t yet listed for sale. Such homes are known as REO, for “real estate owned.” The rest are homes with delinquent mortgages that First American believes will end up as REO. (The firm doesn’t estimate how many non-delinquent homeowners are just waiting to put their homes on the market — for the good reason that it would be impossible to calculate that.) To me, First American’s estimate looks too low. One reason: First American is working only with its database of mortgage loans, covering about 45 million of the estimated...

Many additional foreclosures are expected over the next year, which could affect pricing at the lower end of the housing market.

From a by John Mauldin: Frank Veneroso noticed something unusual in the latest Federal Reserve Flow of Funds report. They changed their methodology for analyzing housing prices to a model more like the Case-Shiller index, which most believe to be more accurate. That meant they deducted another $2 trillion from household net worth than in the previous quarter. They just caught up with reality, so no big news there. But there is some big news if you look closely. About one-third of the homes in the US have no mortgages. Typically, these are nicer homes, as the "rich" have paid off their homes. So you can estimate that to be somewhere between 35-40% of the total value of US homes. Writes Frank: "So now the flow of funds accounts tell us that the total value of residential real estate is $16.53 trillion. The share owned by households with a mortgage is probably $10 trillion to $11 trillion. Total mortgage household debt now stands at $10.3 trillion. In effect, for all households with a mortgage taken in the aggregate, their loan-to-value ratio is now close to 100% and perhaps close to half of them have a zero to negative equity." On the first point it does appear the Fed is now using the Case-Shiller index for the Flow of Funds report, as opposed to the FHFA index. This change happened in the Q3 Flow of Funds report. The second point is probably a little inaccurate. According to the most recent American Community Survey, approximately 31.7% of homeowners have no mortgage. Although the "rich" frequently have no mortgage, homeowners without mortgages tend to own less expensive homes than homeowners with mortgages. Click on graph for larger image in new window. This graph is based on the American Community Survey data for , and for . The median value (not average) of homes without a mortgage is $148,100, and the median for homes with a mortgage is $214,400. My estimate is that homeowners without mortgages own about 26% of all household real estate...