facebook
twitter
rss
account
search
search
 

Weaker Home Sales Seen in 2012

June 4, 2012 at 7:54 AM   |   Comments

Record low mortgage rates are failing to generate stimulate mortgage applications for home purchases, which are down 3.9 percent below last year's level. As a result, last week the Mortgage Bankers Association lowered its 2012 estimate for home sales.

MBA is lowered its purchase originations forecast for 2012 from $415 billion to $409 billion, as a result of sagging applications and lower expectations for home sales. The association now predicts existing home sales for the year will reach 4.6 million, an increase of less than one percent from 2011. Despite a 5.5 percent drop in April pending home sales, the National Association of Realtors upgraded its sales forecast last week, to a total 4.66 million units in 2012, slightly higher than the MBA. There were 4.26 million sales in 2011.forecast has been upgraded, with existing-home sales expected to reach this year, compared with

The Realtors blamed strict standards imposed by lenders for depressing sales, noting that if lending were normal, their 2013 outlook for existing-home sales, which is currently 4.92 million units, would improve to 5.3 million.

At the same time that the MBA lowered its target for purchase mortgages, it raised its forecast for refinancing applications, which resulted in an overall mortgage origination forecast for 2012 by higher almost $200 billion. MBA now expects that mortgage originations will reach $1.28 trillion in 2012, up from $1.26 trillion in 2011. The refinance estimate for 2012 reflects an upward revision of $188 billion from MBA's April forecast, driven by an increase in the pace of refinance applications and originations. Refinance originations are now expected to total $870 billion in 2012, an almost identical amount to 2011.

"Scenarios we have consistently highlighted that could drive rates down and refis up have materialized, primarily due to market turmoil in Europe," said Mike Fratantoni, MBA's Vice President of Research. "Deterioration of the debt situation in Spain and Greece and a new regime in France that is a weaker proponent of European austerity, along with slower economic growth globally, have driven the US Ten Year Treasury yield down. Thus, we are projecting lower U.S. mortgage rates for the rest of the year and raising our refinance forecast as a result."

Last week MBA reported that mortgage applications decreased 1.3 percent from the previous week. Its seasonally adjusted Purchase Index decreased 0.6 percent from one week earlier. The unadjusted Purchase Index decreased 1.8 percent compared with the previous week and was 3.9 percent lower than the same week one year ago.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
Most Popular
1
Led Zeppelin loses first round in 'Stairway to Heaven' plagiarism lawsuit Led Zeppelin loses first round in 'Stairway to Heaven' plagiarism lawsuit
2
Marijuana decriminalized in Philadelphia Marijuana decriminalized in Philadelphia
3
Tesla could face sales ban in Michigan Tesla could face sales ban in Michigan
4
Ricki Lake, husband Christian Evans reportedly split Ricki Lake, husband Christian Evans reportedly split
5
Piglet born with 'elephant trunk' in China Piglet born with 'elephant trunk' in China
Trending News
Around the Web
x
Feedback