Housing data surprised everyone last week. Existing home sales in February rose 5.1% on expectations of a decline of -0.9%.
February new home sales increased 4.7% on estimates that called for a -2.9% decline. A substantial portion of the sales were from first time homebuyers and distressed properties.
While low interest rates and increased affordability are encouraging developments, the housing sector continues to face high levels of inventory, tight credit conditions and the deleveraging of consumers.
The Mortgage Bankers Association last week asked federal banking regulators to cut the capital requirement on warehouse lines of credit by as much as 80% to alleviate the funding crisis facing non-depositories that we explained was causing delays and major back-ups in closing loans. If this is accomplished, it will significantly help the mortgage industry.