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Inflation is Slowing, But Fully Quelling It Will Be Tough

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Limited Supply of Homes for Sale Boosts Prices, New Home Construction While the latest data on inflation has provided reason for optimism, less favorable base effects are likely to slow further progress in reducing annual inflation to the preferred 2-percent target, according to the July 2023 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. Given the low rate of productivity gains, wage growth appears to remain too high for inflation to near its target rate anytime soon, and so the ESR Group is forecasting another rate hike later this month and even tighter monetary policy through the end of the year. The ESR Group expects the Consumer Price Index, on an annual basis, to end the year around 3.1 percent, with the core index around 4.3 percent. Following an unusually large upward revision to first quarter 2023 gross domestic product, this month the ESR Group upgraded its expectations for economic growth in 2023 by a full percentage point to 1.1%. However, while noting that the probability of a “soft landing” may have increased of late, the ESR Group continues to expect a modest recession beginning in the fourth quarter of 2023 or the first quarter of 2024. An extremely limited number of existing homes available for sale continues to be the defining feature of today’s housing market, according to the ESR Group. While total home sales remain near the lowest annual level since 2009, this is not due to lack of demand. Rather, the ongoing lack of inventory, the extent of which exceeded the ESR Group’s earlier expectations, has resulted in significantly stronger home price appreciation than previously anticipated. Dynamics in the existing sales market have been highly supportive of new construction, though, and the ESR Group has significantly upgraded its single-family starts forecast. Still, given the ESR Group’s expectation of slowing economic activity through the end of the year and into 2024, it continues to anticipate slowing home price growth and a slower pace of starts in 2024. “The Fed’s policy tightening in an effort to quell inflation is probably close to finished, although their guidance is really more current than forward, and incoming data will be determinant,” said Doug Duncan, Senior Vice President and Chief Economist, Fannie Mae. “The decline in headline inflation is encouraging, but year-over-year measures will work against further progress in the second half of 2023. Thus, we expect the Federal Reserve will stick to ‘higher-for-longer’ policy after one or two more quarter-point increases, until they conclude that the core inflation rate is sustainably at their 2-percent target. Putting aside any temporary volatility, we expect mortgage rates to stay higher as well. While spreads have come in a bit recently, they remain well above longer-term levels and that means rates for consumers will likely stay elevated.” Duncan continued: “We began discussing our expectations of a supply shortage in late 2014, and it remains front and center in the housing market in 2023. The supply of existing homes is near the 2009 crisis low, and it’s showing no signs of easing. This puts the onus on homebuilders and can be seen in the construction data. There is uncertainty about the real financial capability of households enabling continued support for the economy and housing. Estimates of ‘excess saving’ vary widely in accordance with what is assumed to be a ‘normal’ saving rate. The recent difficulties in the banking sector have led to some credit constraint, usually a harbinger of slowdown in economic activity. As we noted in our April 2022 forecast, whether there is a mild recession (our base case) or a soft landing, the supply issues in housing will provide a downside cushion for economic activity. That is playing out quite close to forecast on existing homes, but new construction has been even more supportive than we expected.” Visit the Economic & Strategic Research site at fanniemae.com to read the full July 2023 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here. About Fannie MaeFannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

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U.S. Home Prices Rise For the First Time in Nearly Five Months

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Elevated mortgage rates are cutting into homebuyers’ budgets. But this week’s inflation report—which shows that consumer prices are cooling quickly—provides a glimmer of hope that mortgage rates could gradually start to come down. The median U.S. home-sale price rose 1.5% from a year earlier during the four weeks ending July 9, the first increase in nearly five months. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Average weekly mortgage rates are at their highest level since November 2022, bringing the typical homebuyer’s monthly payment to a near-record-high of $2,627. To look at the hit on affordability another way, a homebuyer on a $3,000 monthly budget can afford a $450,000 home with today’s average rate. That buyer has lost $30,000 in purchasing power since February, when they could have bought a $480,000 home with that month’s average rate of around 6%. The drop is more extreme when compared to a year ago, when a $3,000 monthly budget would have bought a $510,000 home at a rate of about 5.3%. Prices are rising despite relatively low demand because there are so few homes for sale. New listings are down 27% year over year, the biggest drop since the start of the pandemic, and the total number of homes on the market is down 14%, the biggest drop since March 2022. That’s mostly because potential sellers are locked in by low rates; nearly all homeowners have a rate below 6%. On the bright side, this week’s economic news provides a glimmer of hope for the housing market. The latest consumer-price index report shows that inflation cooled more than expected in June, largely because it has started reflecting months of cooling housing costs. “This month’s inflation report is likely to bring mortgage rates down a bit from their recent highs. It shows that the Fed’s interest-rate hikes are working and increases the chance they’ll only hike rates one more time this year,” said Redfin Economic Research Lead Chen Zhao. “Because elevated mortgage rates are responsible for both of today’s major homebuying challenges—high monthly housing payments and low inventory—any decline is welcome news for buyers. But even though rates will come down slightly, they’ll likely remain well above 6% until the Fed sees several more months of inflation readings closer to their target.” Leading indicators of homebuying activity: Key housing market takeaways for 400+ U.S. metro areas: Unless otherwise noted, this data covers the four-week period ending July 9. Redfin’s weekly housing market data goes back through 2015. For bullets that include metro-level breakdowns, Redfin analyzed the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy. To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-home-prices-rise-first-time-five-months Contacts Redfin Journalist Services:Kenneth Applewhaite, 206-588-6863press@redfin.com

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Anchor Loans Names Construction-Lending Veteran Jim Fraser as Chief Operating Officer

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Anchor Loans, the nation’s leading provider of financing to residential real estate developers, builders and entrepreneurs, announced that Jim Fraser has joined the company as Chief Operating Officer. In this role, Fraser will be responsible for the customer experience that Anchor delivers as well as the day-to-day operations of the company. He will also take the lead in expanding Anchor’s homebuilder and build-to-rent (BTR) finance programs.  Fraser joins Anchor from Built Technologies, Inc, a leading provider of construction-finance software, where he was Senior Vice President for Commercial Real Estate Lending Solutions. Prior to joining Built, he was an independent advisor to the platform’s co-founders and venture capital providers. Over his 30-year career, Fraser has held a number of senior positions in commercial and mortgage lending. He was Executive Vice President of Commercial Lending at Axos Bank where he was responsible for a $5-billion commercial lending and equipment leasing operation. Previously, he was a Senior Vice President at Banc of California where be managed a $500-million bridge/construction loan portfolio. For more than 10 years, Fraser headed IndyMac’s residential construction lending division with more than 400 employees in five regional centers. “Over the course of his career, Jim has consistently demonstrated his ability to build relationships, grow and manage sustainable businesses, and create value through all economic cycles,” said Rayman Mathoda, Anchor Loans’ Chief Executive Officer. “His deep experience within the construction and homebuilding sectors will further accelerate Anchor’s presence in those markets and particularly within the build to rent space which is experiencing significant growth. Playing a bigger role in financing this growing sector will require talented leadership and scalable operations. Bringing Jim on board gives Anchor a significant advantage in both of these critical areas. Having known Jim for almost 20 years at multiple phases of his career, I’m confident that he will be an excellent addition to our leadership team, helping advance our customer and people-focused culture so we can deliver an exceptional customer and employee experience – the best path to market leadership.”   “Anchor Loans is in a unique position to help residential developers navigate the intersection between the long-term need for housing and current credit market disruptions,” said Fraser. “This opportunity, the company’s 25-year heritage and Ray’s vision for the future are what attracted me to Anchor. I’m looking forward to working with Ray and the seasoned team at Anchor to develop new functions, processes and technology to accelerate production growth and build customer-centric operations.” Anchor Loans has experienced significant growth over the last several years, completing 2022 with a record $2 billion in originations. As part of its growth and expansion plans, Anchor has recently expanded both its senior leadership team and its national sales organization. About Anchor LoansAnchor Loans is the nation’s largest private direct lender to real estate investors offering a full range of fix and flip, ground-up construction and rental financing. For 25 years, Anchor Loans has built deep client relationships by being a reliable source of funding and delivering an outstanding customer experience, which is why repeat customers are its largest source of volume and referrals. To date, Anchor Loans has originated more than $13 billion in funding. For more information, please visit https://www.anchorloans.com SOURCE Anchor Loans

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Home Rents Continue to Rise in Q2 2023

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89% of U.S. Cities Experienced Year-Over-Year Rent Increases 36% of the cities analyzed experienced double-digit rent increases Rentometer has released their Q2 2023 Rent Report for three-bedroom (3-BR) houses that are single-family rentals (SFRs). Rentometer collects data for all residential asset classes, but this report is focused on SFR because they are one of, if not the most, active residential rental asset classes today. Rentometer’s president, Mike Lapsley, commented that “we have increased our coverage and monitoring of the SFR market as the activity and interest in this particular market has escalated over the last few years.” The Q2 ’23 report covers 508 cities that had at least 25 data points for Q2 ’22 and Q2 ’23. It includes an analysis of year-over-year change in average rent prices by city for the second quarter. Highlights from the report are as follows: Some notable markets with increasing average rents over the past year are Dallas, TX (+34%), Phoenix, AZ (+19%), and Atlanta, GA (+18%). Markets that had the largest decrease in average rents are Conyers, GA, Springfield, IL, Cypress, TX, and Apex, NC which all had rent prices decrease by -9%. Download the full report from Rentometer to view the complete list of updated rent data. About Rentometer, Inc.Rentometer collects, analyzes, and distributes multifamily and SFR rent price data throughout the U.S. Our rental data is proven to be valuable for our diverse customer base including real estate investors, property managers, agents, other real estate professionals, and renters as we deliver more than 20,000 reports on a daily basis. For more information, please contact us at info@rentometer.com or visit us at www.rentometer.com SOURCE Rentometer

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FORECLOSURE ACTIVITY IN FIRST HALF OF 2023 TICKS UPWARDS TOWARDS PRE-COVID LEVELS

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U.S. Foreclosure Starts Increase 15 Percent in First Six Months of 2023; Average Days to Complete a Foreclosure Hits Peak; June and Q2 2023 Foreclosure Activity Also Post Annual Increases ATTOM, a leading curator of land, property, and real estate data, released its Midyear 2023 U.S. Foreclosure Market Report, which shows there were a total of 185,580 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — in the first six months of 2023. That figure is up 13 percent from the same time period a year ago and up 185 percent from the same time period two years ago. “Similar to the first half of 2022, foreclosure activity across the United States maintained its upward trajectory, gradually approaching pre-pandemic levels in the first half of 2023,” stated Rob Barber, CEO for ATTOM. “Although overall foreclosure activity remains below historical norms, the notable surge in foreclosure starts indicates that we may continue to see a rise in foreclosure activity in the coming years.” States that saw the greatest increase in foreclosure activity compared to a year ago in the first half of 2023 included Maryland (up 100 percent); Oregon (up 99 percent); Alaska (up 95 percent); West Virginia (up 83 percent); and Arkansas (up 72 percent). Illinois, New Jersey, and Maryland post highest state foreclosure rates Nationwide, 0.13 percent of all housing units (one in every 752) had a foreclosure filing in the first half of 2023. States with the highest foreclosure rates in the first half of 2023 were Illinois (0.25 percent of housing units with a foreclosure filing); New Jersey (0.24 percent); Maryland (0.23 percent); Delaware (0.23 percent); and Ohio (0.20 percent). Other states with first-half foreclosure rates among the 10 highest nationwide were South Carolina (0.19 percent); Florida (0.19 percent); Nevada (0.19 percent); Indiana (0.18 percent); and Connecticut (0.16 percent). Highest metro foreclosure rates in Cleveland, Atlantic City, and Fayetteville Among the 223 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in the first half of 2023 were Cleveland, Ohio (0.33 percent of housing units with foreclosure filings); Atlantic City, New Jersey (0.33 percent); Fayetteville, North Carolina (0.30 percent); Columbia, South Carolina (0.29 percent); and Lakeland, Florida (0.29 percent). Other major metro areas with foreclosure rates ranking among the top 10 highest in the first half of 2023 were Chicago, Illinois (0.28 percent of housing units with a foreclosure filing); Jacksonville, Florida (0.26 percent); Florence, South Carolina (0.26 percent); Philadelphia, Pennsylvania (0.25 percent); and Elkhart, Indiana (0.25 percent). Foreclosure starts up 15 percent from last year A total of 135,065 U.S. properties started the foreclosure process in the first six months of 2023, up 15 percent from the first half of last year and up 36 percent from the first half of 2020. States that saw the greatest number of foreclosures starts in the first half of 2023 included California (14,217 foreclosure starts); Florida (13,837 foreclosure starts); Texas (13,419 foreclosure starts); New York (8,772 foreclosure starts); and Illinois (7,995 foreclosure starts). Bank repossessions climb in first half of 2023 from last year Lenders foreclosed (REO) on a total of 22,672 U.S. properties in the first six months of 2023, up 9 percent from the first half of 2022 and up 133 percent from the first half of 2021, but down 40 percent from the first half of 2020. States that posted the greatest number of REOs in the first half of 2023 included Michigan (2,423 REOs); Illinois (2,059 REOs); Pennsylvania (1,420 REOs); California (1,362 REOs); and New York (1,350 REOs).   Q2 2023 foreclosure activity below pre-recession averages in 78 percent of major markets There were a total of 97,608 U.S. properties with a foreclosure filings during the second quarter of 2023, up 2 percent from the previous quarter and up 8 percent from a year ago. The national foreclosure activity total in Q2 2023 was 65 percent below the pre-recession average of 278,912 per quarter from Q1 2006 to Q3 2007. Second quarter foreclosure activity was below pre-recession averages in 173 out 223 (78 percent) metropolitan statistical areas with a population of at least 200,000 and sufficient historical foreclosure data, including New York, Los Angeles, Chicago, Dallas, Houston, Miami, Atlanta, San Francisco, Riverside-San Bernardino, Phoenix, and Detroit. Metro areas with second quarter foreclosure activity above pre-recession averages included Honolulu, HI; Richmond, VA; Baltimore, MD; Virginia-Beach, VA; Albany, New York; and Montgomery, AL. Average time to foreclose hits all-time high Properties foreclosed in Q2 2023 had been in the foreclosure process an average of 1,212 days, the highest number of average days to foreclose since Q1 2018. That figure was up 28 percent from the previous quarter and up 28 percent from Q2 2022. States with the longest average foreclosure timelines for homes foreclosed in Q2 2023 were Michigan (2,601 days); Louisiana (2,252 days); New York (1,966 days); Hawaii (1,934 days); and Kentucky (1,921 days). States with the shortest average foreclosure timelines for homes foreclosed in Q2 2023 were Wyoming (104 days); Minnesota (145 days); Montana (160 days); Texas (162 days); and Missouri (170 days). June 2023 Foreclosure Activity High-Level Takeaways

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HouseCanary’s Latest Market Pulse Report Shows Resilience in Housing Market as Listed and Closed Prices Rose in June

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Both Listed and Closed Prices Experienced Positive Year-Over-Year Growth in June Persistent Year-Over-Year Decline in Net New Listing Volume Intensifies Inventory Challenges and Dampens Market Activity A Slower Pace of Rate Hikes by the Federal Reserve Is Anticipated Throughout the Second Half of 2023, Coinciding with Expectations of Subdued Market Activity HouseCanary, Inc. (“HouseCanary”), a national brokerage known for its real estate valuation accuracy, released its latest Market Pulse report, covering 22 listing-derived metrics and comparing data between June 2022 and June 2023. The Market Pulse Report is an ongoing review of proprietary data and insights from HouseCanary’s nationwide platform. Amidst a looming mild recession and increasing rates from the Federal Reserve, the housing market continues to grapple with challenges, including a year-over-year decline in inventory and a rise in removals. Additionally, although price cuts have been observed, they remain well below peak levels witnessed in September and October of 2022. However, in a notable development, both listed and closed prices experienced positive year-over-year growth in June. While list prices appear to have reached their peak during that month, closed prices continue to climb at a rapid pace. Heading into Q3 2023, it can be expected that market activity remains at relatively low levels, with the Federal Reserve continuing to increase rates at a slow pace. Jeremy Sicklick, Co-Founder and Chief Executive Officer of HouseCanary, commented: “In the face of a challenging economic landscape with declining inventory and rising removals, the housing market has shown remarkable resilience, as evidenced by the upward trajectory of listed and closed prices. Price cuts remain well below their peak levels from 2022, and it is promising to witness positive year-over-year growth in June. Looking ahead to the second half of the year and Q3, we anticipate continued subdued market activity and a slow pace of rate hikes by the Federal Reserve.” Key Takeaways: About HouseCanary Founded in 2013, national real estate brokerage HouseCanary empowers consumers, financial institutions, investors, and mortgage lenders, with industry-leading services including valuations, forecasts, and transactions. These clients trust HouseCanary to fuel acquisition, underwriting, portfolio management, and more. Learn more at www.housecanary.com.

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