The pandemic outbreak sent shock waves throughout the U.S. economy in March and April with the housing sector not immune from the carnage. The Commerce Department reports that April Housing Starts plunged 30.2% from March to an annual rate of 891,000 units. It was the lowest level of starts since 2015 while the percentage loss was the lowest on record dating back to 1959. Starts fell 29.7% from a year ago while all four major U.S. regions saw big losses. Single-family starts declined by 25.4% monthly and 24.8% annually. Multi-family unit construction fell 40% monthly and 38% annually.
To support borrowers and mortgage servicers, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac have issued temporary guidance regarding the eligibility of borrowers who are in forbearance, or have recently ended their forbearance, looking to refinance or buy a new home. Borrowers are eligible to refinance or buy a new home if they are current on their mortgage (i.e. in forbearance but continued to make their mortgage payments or reinstated their mortgage). Borrowers are eligible to refinance or buy a new home three months after their forbearance ends and they have made three consecutive payments under their repayment plan, or payment deferral option or loan modification.
Fannie Mae says that given its low-interest rate forecast and incoming data, it has upgraded its refinance originations forecast by $119 billion to $1.5 trillion in 2020, a 51% jump from 2019. Mortgage rates could potentially fall below 3% by the start of 2021. Fannie Mae said that housing was a bright spot in the first quarter, with residential fixed investment posting the largest annualized gain since 2012, but disruptions from the coronavirus are now severely impacting the sector. Listings of single-family for-sale homes fell sharply year over year in April, as potential sellers delayed putting their homes on the market.