Bob Broeksmit outlines MBA priorities under Trump administration

Against the backdrop of a new presidential administration and a new Congress, Mortgage Bankers Association President and CEO Bob Broeksmit laid out the trade group’s priorities during the opening session of the MBA’s IMB25 conference Monday. First on the list? A smooth exit from conservatorship for Fannie Mae and Freddie Mac.“We can’t let the best housing finance system in the world be damaged by a hasty exit that doesn’t thoroughly think through all the consequences,” Broeksmit said during the session. “That does not make MBA anti-exit-from-conservatorship.”Indeed, Broeksmit outlined how 16 years of conservatorship have created inefficiencies at the GSEs, blunted their competitiveness and made it hard to recruit and retain top talent. But he also cautioned against us-versus-them thinking.“At MBA, we envision a new era at in our relationship with Fannie and Freddie. We welcome the strengthening of our partnership. Lenders of all sizes and servicing firms can and should be partners with the GSEs to sustain a housing finance system that is stable and liquid and enables homeownership and the creation of generational wealth,” Broeksmit said.Here are the details of MBA’s priorities:Releasing the GSEs from conservatorshipBroeksmit said the MBA identified four overarching principles it believes should frame the release of Fannie and Freddie:An explicit backstop. “Without it, global investors’ confidence buying, holding and selling GSE mortgage-backed securities could be jeopardized, which would greatly impact liquidity in the market and drive rates up even higher than they are today.”A level playing field. FHFA must ensure “that pricing and underwriting does not vary for a lender based on size, business model or charter.”The bright line between primary and secondary market functions. This must be “clearly defined and rigorously enforced by FHFA.”Regulatory enhancements at FHFA. FHFA should be granted “the necessary powers and responsibilities to regulate the GSE rate of return and market conduct, often viewed as utility style authorities.“We are ready to work with the Trump administration and members of the 119th Congress, launching a new era of home finance — one in which the GSEs are no longer in conservatorship, but one in which the American housing finance system remains the envy of the world,” Broeksmit said.Extending tax provisionsThe MBA will work with Congress on the extension of tax provisions that are set to expire by the end of this year. These include:Preservation of the deferred tax treatment of mortgage servicing rights.Preserving the Section 199A pass-through deductionPreserving and possibly expanding the capital engagement exclusion for the sale of primary residences.Expanding and improving the Low Income Housing Tax Credit and supporting other housing supply-related tax credits.Supporting provisions like 1031 exchanges.Broeksmit said that MBA is closely watching the various proposals to pay for tax cuts. Spending more than the government takes in means issuing a lot of Treasury obligations, which increases the supply of fixed income instruments — and that could drive up mortgage rates.There’s also a concern that fiscal hawks in Congress will see a ready-made solution in the GSEs. “The specific thing that we have to be on guard for is not having GSE release be rushed because there’s some pot of money at the end of the rainbow that’ll help pay for tax cuts,” Broeksmit said.Guarantee fees could be another tempting source of income for Congress, Broeksmit said. “Some of you remember many years ago, there was a one-month payroll tax holiday that was paid for with a 10 year, 10 basis point increase to Fannie and Freddie g-fees, and the minute a few years fall off of that 10 years, the Congress has shown its willingness to extend it.”Trigger leadsThe MBA will continue its advocacy for a trigger leads bill that will “build on the momentum we achieved in the last Congress and complete the push for enactment of legislation to curve the use of use of trigger leads while preserving their use in appropriately limited circumstances.,” Broeksmit said. Significant effort pushed the trigger lead through the Senate in late December but the legislation got stuck in the house as the term ended.Credit scoresBroeksmit said “addressing the many unanswered questions and roadblocks that our members have regarding the transition of FICO 10 T and VantageScore 4.0 as well as a bi-merge option,” are on the top of the list of MBA priorities.Specifically, Broeksmit said that in the current credit scoring process, “the government bestows the market position by requiring it for government backed loans, and then the entities that produce these services raise prices in a way that has no bearing that we can see on the cost of providing them. That’s an inappropriate use of a market benefit bestowed by the government, and it’s costing your businesses and your borrowers millions of dollars in extra expenses.”Regulation and affordabilityBroeksmit lauded President Trump’s promises to cut unnecessary regulation to decrease costs for lenders and consumers.“The availability and affordability of housing was one of the top issues on the minds of voters in the 2024 election. President Trump campaigned on lowering costs for Americans and we appreciate housing supply and affordability were included in an executive order on this issue. We will support efforts to cut unnecessary regulatory red tape and pursue federal housing program enhancements that make renting and homeownership more attainable and sustainable.”

Why new-home sales are disappointing, despite beating estimates

Today’s new home sales report beat market expectations, just like last week’s existing home sales report. However, a detailed analysis of the data explains why housing permits continue to remain at recession-level figures. Builders are struggling to get clarity on how many homes they can sell in this rate environment in the future. Without more clarity on mortgage rates, substantial growth in housing permits is unlikely.From Census: New Home Sales: Sales of new single-family houses in December 2024 were at a seasonally adjusted annual rate of 698,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.6 percent (±19.7 percent)* above the revised November rate of 674,000 and is 6.7 percent (±16.2 percent)* above the December 2023 estimate of 654,000.The charts below provide an overview of the key data lines we observed today. My initial impression is that sales are not plummeting as they did in 2022, but are also not experiencing significant growth. We are maintaining a steady level, with the best results appearing when mortgage rates approach 6%. Beneath the headline sales figures, there are underlying trends that merit attention. Also, the sales for the last three months were revised negatively.For sale Inventory and months’ supply: The seasonally-adjusted estimate of new houses for sale at the end of December was 494,000. This represents a supply of 8.5 months at the current sales rate.This month, the monthly supply data decreased, but the key point is that there are currently 118,000 completed units available for sale from builders. Additionally, there are 268,000 homes currently under construction. Furthermore, there remains a record high of 108,000 homes that builders have not yet started constructing, all while mortgage rates remain above 7%.Unsurprisingly, the builder’s confidence index, which looks ahead six months, has experienced its largest month-to-month decline in some time. None of this bodes well for housing permits to grow meaningfully. If you’re wondering why construction labor might be at risk in 2025, supply is piling up and mortgage rates are still above 7%. Not all builders have significant profit margins to buy down mortgage rates to sell their homes, so it’s a prudent business decision for them to remain cautious.Today’s home sales report was disappointing if you’re looking for clarity on when we’ll see housing permits grow again. Although the headline figures beat expectations, there were negative revisions and increased inventory. Additionally, builder confidence has declined as mortgage rates have stayed above 7%. Could things improve? A decline in mortgage rates just toward 6% would make it much easier for homebuilders in America. Rates below 6% could lead to increased housing construction and more permits being issued. In the current environment, some are concerned that rates will head back to 7.50% and above where the builders struggled last year. That isn’t my line of thinking, as my peak mortgage rate forecast is at 7.25% for this year, but you can understand why some builders are getting spooked by rates this high in 2025. For now, the Federal Reserve isn’t overly concerned. However, as illustrated in the chart above, whenever residential construction workers begin to lose their jobs, a recession is typically not far behind. This would not be a positive outcome for the U.S. While housing permits are still low, this is the current reality we face.

Will we see home prices decline in 2025?

Recently, we’ve shared that the inventory of unsold homes is growing. In recent weeks, home sales also faltered in the face of 7% mortgage rates. Now we’re noticing some signals in the data that national home prices could turn negative this spring, showing year-over-year home-price declines for the first time since early 2023. There are already plenty of markets nationwide where the inventory of unsold homes has built up over the past few years and home prices have ticked down. But nationally, home prices are still higher year over year, and some places like New York state had significant home-price gains in 2024 due to persistently tight inventory.Today, the weekly Altos Research-tracked active market data shows signals for this spring that more markets are softening and fewer are pushing higher. Therefore, average price growth across the country may turn negative compared to a year prior. There are many ways to measure home prices and even more signals about future sale prices. I think it’s important to note that almost all these metrics have been showing flatter home-price appreciation. After a little burst of strength a few months ago, many of the home-price metrics have gradually flattened from a year prior. Now some of them are sliding below the year prior, which is driven by relentlessly high mortgage rates. Let’s take a look at the data for the third week of January 2025.Home prices are downThe median price of all homes in the U.S. this week is $421,000. If you want to buy a home, this is what’s available. What’s notable is that this home-price metric is now 0.7% below the same time last year. It’s important to note how unusual this is over the long term. This is one signal of national home prices declining from last year. This market is at a standstill as long as mortgage rates are above 7%. We see it in demand for homes and supply growth, and we also see the impact of higher mortgage rates on home prices.By the end of January each year, you can already see the trajectory that home prices will take for the full year. In 2022, it was the end of the post-pandemic boom and buyers were rushing to get a home before mortgage rates climbed, so there was steep price appreciation in the first half of the year. Home prices climbed weekly and were 10% to 15% more expensive than the year prior.In 2023, the spring slope was much less steep. Following that, 2024 started a bit higher still. But by June, prices peaked for the year while remaining below the June 2022 peak. In 2025, the price appreciation curve is flatter still. Even though the best new inventory hits the market each week, these are being priced fractionally cheaper than last year. Home sellers and listing agents know where demand is for homes. They also understand the affordability crunch that buyers face and therefore they’re pricing the listings a little lower than last year at this time.  Meanwhile, the median price of the new contracts pending this week came in at $384,700, which was a slight jump from last week. The median price paid for newly pending home sales has been averaging just 2% more than a year ago. This measure is still showing barely positive home-price gains, while the active listings are negative. Keep in mind that not all the home-price measures are negative. Some are still showing positive home-price changes compared to last year. There is nothing in any of January’s home-price data to show any growing momentum. It is negative. Here’s one bright spot — 2025 is the third year of flattish home-price changes. Over the past few years — and hopefully over the next few years — incomes are climbing faster than home prices. When that happens, affordability improves. This market is slowly improving affordability across the country. At some point in the future, the cost of money drops, and that will be a dramatic benefit for affordability.Price reductions are more commonLet’s use the percentage of homes on the market with price reductions as an indicator for future sale prices. Right now, 33% of the active listings have taken a price cut from the original list price. At this time last year, it was 31%. More sellers are facing an absence of buyer demand, prompting them to reduce their asking price.In 2023, this number was 33.9%. The weakest pricing moment of the past three years was the fourth quarter of 2022. By January 2023, price cuts were still elevated. But at that moment, we were surprised at how quickly the market was recovering. It was declining by 80 or 90 basis points (bps) per week compared to 50 bps now. By the end of February, we’ll have the most price reductions of any February in many years.These are homes that are on the market now, with no offers. They’ll take a price cut and hopefully get an offer in February. That deal closes in March, and by April, you should be hearing the headlines that reflect the weakness we can see in the active market data.  And when we look at the supply data, supply of active inventory is continuing to grow. That says that these pricing trends are poised to continue.New listings are up from last weekOn the supply side, there were 51,000 unsold new listings this week. That’s 13% more than last year at this time. There were 4% more sellers, including the immediate sales. That growing supply pattern is healthy, if we also have more buyers. But with high costs and no signs of decline, buyers are waiting. Also, we’re finally returning to normal levels of sellers and unsold inventory following the pandemic. We want to see this curve grow each week by the peak in June. I don’t expect us to see 100,000 new listings in a given week this year, like we did in the previous decade, but we may hit 80,000. More sellers means more selection for buyers. It also means less upward pressure on home prices, which we’re seeing now. More sellers implies improvement on affordability — especially over time.Inventory climbs for third straight weekThere are now 637,000 single-family homes unsold on the market, up 0.7% from last week and 26.5% more than a year ago. This year, we may already be past the low point of inventory for the year. Weeks ago, we counted 624,000 homes on the market. We’re at 637,000 now.Most years experience a few down weeks with less inventory before the spring season really kicks off in February. So far this year, we’ve only had up weeks. That is, inventory is building earlier in the season. This is a function of slightly more sellers and still fewer buyers. Homebuyers are waiting. Pending homes sales remain stagnantAlthough the fourth quarter showcased improvement in sales volume, these December sales gains are gone. There were 52,000 new contracts pending this week. Last year saw 56,000 sales started during the same week of January. That’s 7% fewer sales compared to last year.There are 266,000 single-family homes in the contract pending stage, which is 3.5% fewer than last year. Last week, pending sales were down 2% year over year. The data for condominiums is even weaker. Our immediate gauge of demand was 7% fewer than last year, and we’ve been averaging 9% fewer sales over the past few weeks. In the fourth quarter, sales were coming in above the year prior. Mortgage rates rose over 7% in December and so we are now seeing the slowdown in buyer demand. We see it in prices and weekly offers.Mike Simonsen is the founder of Altos Research and will be a featured speaker at the Housing Economic Summit in Dallas on Feb. 26. Learn more here.