Many of the nation's housing markets are stalling, report says
PNC Financial Services Group Inc. said total home loan production this year could be the lowest since the 1990s, and mortgage giant Freddie Mac declared that many of the nation's housing markets are stalling.
“It's going to be a real tough year in origination,” PNC CEO Bill Demchak said on Wednesday at an investor conference in New York.
“You're going to see it shake out a number of players at the margin because there is quite clearly much more capacity in the market right now than there is people who want mortgages.”
Freddie's “Multi-Market Market Index” (or MiMi), which sizes up homebuying activity and other factors, found that only 10 states and the District of Columbia fall in the “stable” range, as do four of the 50 metro areas included in the index — San Antonio, New Orleans, Austin and Houston. Pittsburgh was fifth, just outside the stable range.
The outlook for the rest of the housing market looks bleak.
“Less than half of the housing markets MiMi covers are showing an improving trend, whereas at this time last year, more than 90 percent of these same markets were headed in the right direction,” Frank Nothaft, Freddie's chief economist, said in a statement.
Wells Fargo & Co. and JPMorgan Chase & Co. are grappling for pieces of a shrinking mortgage market as demand for home loans declines and investors and cash buyers dominate some sales. First-quarter noninterest income from residential mortgages, which accounted for about a 10th of Pittsburgh-based PNC's noninterest earnings, fell 31 percent from a year earlier, the company said.
“It's never going to be a big driver of our earnings,” Demchak said about the nation's second-largest regional bank. “But it's an important product. If you tie that to where you think the future of retail goes and the need to have reasons for people to come visit you in physical space, mortgage has got to be part of that.”
Freddie's index draws from various data sources, including Freddie's own business with more than 2,000 mortgage lenders across the country, to assess the health of the single-family housing market.
Freddie labels a market “weak” when the MiMi value falls below a negative 2 or “elevated” when it ranks above 2. It does not factor in cash-only sales, which make up about 40 percent of home sales, or loans that do not meet Freddie Mac criteria. Pittsburgh's MiMi value was -2.23, an improvement from -2.56 a year ago.
The national value of the index stood at -3.06 points in March, with a three-month flat trend in housing activity. Freddie crunched numbers going back to 2001, and found that the all-time low was -4.49 in November 2010, during the depths of the housing crisis.
North Dakota was the highest-ranked “stable” state, with Wyoming, the District of Columbia, Alaska and Louisiana among the top of the list of 10 states that are considered to be in balance. Pennsylvania was 14th.
Bloomberg News and the Washington Post contributed to this report.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- High pollution levels found near Ohio gas wells
- Natrona Bottling Co. keeps soda pop operation focused on craft, taste
- Chevron puts $20M into educating, training Appalachian workers
- Large-scale batteries are integral in shift to renewable energy
- PPG Industries to buy Westmoreland Supply paint store chain
- Plastics, tech sectors crucial to cracker plants
- Allegheny Technologies reports $700,000 loss in 3Q
- Fannie Mae might take 3% down
- Streaming won’t mean the end of cable
- IBM to pay $1.5B to shed chip division
- Stocks on upswing