skip to main navigation skip to secondary navigation skip to content
Board of Governors of the Federal Reserve System
skip to content
Federal Reserve Board of Governors

Accessible Version


House prices are rising

Figure 1. Prices of Existing Homes

Series: FHFA, Core Logic, 20-city S&P/Case-Shiller, and Zillow indexes
Horizon: 2005-2013 (February and March)
Description: Data are monthly. Index peaks are normalized to 100.

The Zillow, FHFA, Core Logic, and 20-city S&P/Case-Shiller indexes all start the series in 2005 at close to 90. All four of the indexes increase over the course of the year; Zillow and FHFA end 2005 a bit below 100 and Core Logic and S&P/Case-Shiller end 2005 at about 100. All four indexes stay at about the same levels through 2006 before starting a pronounced decline in early 2007, decreasing steadily until 2009 when Zillow and FHFA are a bit above 80 and Core Logic and S&P/Case-Shiller are around 70. The four indexes stay at about these levels until starting to increase at the start of 2012. The upward trend continues as the FHFA index reaches a little less than 90 in February 2013, the Zillow index reaches about 80 in March 2013, and the Core Logic and S&P/Case-Shiller indexes reach about 75 by February 2013.

Source: For FHFA, Federal Housing Finance Agency; for Core Logic, staff calculations based on data provided by Core Logic; for S&P/Case-Shiller, Standard & Poor's, Capital IQ Platform; for Zillow, Zillow.

Construction is starting to pick up

Figure 2. Single-Family Starts and Adjusted Permits

Millions of units

Period Single-Family Starts Single-Family Adjusted Permits
January 1999 1.35 1.30
February 1999 1.32 1.34
March 1999 1.35 1.30
April 1999 1.22 1.26
May 1999 1.31 1.30
June 1999 1.27 1.33
July 1999 1.31 1.33
August 1999 1.27 1.27
September 1999 1.29 1.26
October 1999 1.31 1.25
November 1999 1.32 1.27
December 1999 1.38 1.33
January 2000 1.27 1.30
February 2000 1.26 1.27
March 2000 1.31 1.31
April 2000 1.28 1.27
May 2000 1.23 1.23
June 2000 1.20 1.19
July 2000 1.14 1.20
August 2000 1.23 1.21
September 2000 1.20 1.24
October 2000 1.24 1.25
November 2000 1.21 1.24
December 2000 1.23 1.22
January 2001 1.28 1.28
February 2001 1.28 1.30
March 2001 1.22 1.27
April 2001 1.31 1.30
May 2001 1.29 1.29
June 2001 1.30 1.31
July 2001 1.30 1.28
August 2001 1.29 1.29
September 2001 1.24 1.23
October 2001 1.24 1.22
November 2001 1.24 1.28
December 2001 1.29 1.27
January 2002 1.31 1.31
February 2002 1.49 1.41
March 2002 1.28 1.33
April 2002 1.28 1.32
May 2002 1.39 1.31
June 2002 1.36 1.35
July 2002 1.33 1.35
August 2002 1.25 1.34
September 2002 1.45 1.44
October 2002 1.37 1.42
November 2002 1.40 1.43
December 2002 1.46 1.48
January 2003 1.54 1.45
February 2003 1.30 1.40
March 2003 1.40 1.42
April 2003 1.37 1.42
May 2003 1.39 1.42
June 2003 1.51 1.51
July 2003 1.54 1.53
August 2003 1.48 1.56
September 2003 1.56 1.58
October 2003 1.63 1.61
November 2003 1.69 1.57
December 2003 1.65 1.63
January 2004 1.56 1.57
February 2004 1.48 1.60
March 2004 1.63 1.68
April 2004 1.65 1.64
May 2004 1.65 1.70
June 2004 1.53 1.66
July 2004 1.68 1.64
August 2004 1.69 1.64
September 2004 1.56 1.63
October 2004 1.66 1.63
November 2004 1.46 1.59
December 2004 1.71 1.65
January 2005 1.74 1.68
February 2005 1.79 1.66
March 2005 1.58 1.61
April 2005 1.66 1.69
May 2005 1.71 1.68
June 2005 1.72 1.71
July 2005 1.72 1.75
August 2005 1.73 1.74
September 2005 1.79 1.84
October 2005 1.74 1.77
November 2005 1.81 1.75
December 2005 1.63 1.69
January 2006 1.82 1.71
February 2006 1.80 1.65
March 2006 1.60 1.59
April 2006 1.51 1.52
May 2006 1.57 1.47
June 2006 1.45 1.43
July 2006 1.42 1.34
August 2006 1.36 1.31
September 2006 1.38 1.25
October 2006 1.21 1.19
November 2006 1.29 1.19
December 2006 1.25 1.23
January 2007 1.13 1.19
February 2007 1.19 1.16
March 2007 1.20 1.18
April 2007 1.20 1.08
May 2007 1.13 1.06
June 2007 1.13 1.03
July 2007 1.04 1.00
August 2007 0.96 0.94
September 2007 0.94 0.90
October 2007 0.88 0.84
November 2007 0.83 0.81
December 2007 0.81 0.78
January 2008 0.77 0.73
February 2008 0.72 0.68
March 2008 0.73 0.67
April 2008 0.68 0.68
May 2008 0.68 0.65
June 2008 0.65 0.63
July 2008 0.62 0.58
August 2008 0.61 0.56
September 2008 0.54 0.54
October 2008 0.54 0.49
November 2008 0.46 0.43
December 2008 0.40 0.37
January 2009 0.36 0.35
February 2009 0.36 0.39
March 2009 0.35 0.38
April 2009 0.39 0.40
May 2009 0.41 0.44
June 2009 0.48 0.48
July 2009 0.51 0.51
August 2009 0.49 0.50
September 2009 0.51 0.50
October 2009 0.48 0.48
November 2009 0.50 0.50
December 2009 0.48 0.52
January 2010 0.51 0.52
February 2010 0.53 0.52
March 2010 0.54 0.55
April 2010 0.57 0.49
May 2010 0.46 0.45
June 2010 0.45 0.44
July 2010 0.43 0.42
August 2010 0.42 0.41
September 2010 0.45 0.42
October 2010 0.44 0.42
November 2010 0.45 0.43
December 2010 0.43 0.46
January 2011 0.43 0.43
February 2011 0.39 0.39
March 2011 0.43 0.41
April 2011 0.41 0.42
May 2011 0.41 0.42
June 2011 0.44 0.43
July 2011 0.43 0.43
August 2011 0.42 0.44
September 2011 0.42 0.44
October 2011 0.44 0.45
November 2011 0.46 0.46
December 2011 0.52 0.47
January 2012 0.51 0.46
February 2012 0.47 0.49
March 2012 0.48 0.47
April 2012 0.50 0.48
May 2012 0.51 0.50
June 2012 0.53 0.51
July 2012 0.51 0.52
August 2012 0.54 0.52
September 2012 0.59 0.56
October 2012 0.59 0.57
November 2012 0.57 0.58
December 2012 0.62 0.58
January 2013 0.62 0.59
February 2013 0.65 0.61
March 2013 0.62 0.61

Note: Adjusted permits equal permit issuance plus total starts outside of permit-issuing areas. Seasonally adjusted annual rate.

Source: Census Bureau.

Builders and homebuyers are more optimistic

Figure 3. Builders' Ratings of New Home Sales and Realtors Confidence Index

Period Builders' Ratings (Percent) Traffic of Buyers (Diffusion index)
January 2005 49.32 67.86
February 2005 50.20 67.48
March 2005 50.42 68.06
April 2005 47.98 69.40
May 2005 51.42 72.29
June 2005 54.02 68.74
July 2005 52.19 72.06
August 2005 49.99 70.59
September 2005 47.49 71.72
October 2005 46.14 72.28
November 2005 33.41 56.55
December 2005 26.96 65.40
January 2006 24.59 63.06
February 2006 18.91 56.68
March 2006 12.86 54.06
April 2006 6.37 53.50
May 2006 -1.50 49.09
June 2006 -8.53 50.64
July 2006 -13.39 48.66
August 2006 -24.83 47.39
September 2006 -33.63 46.52
October 2006 -32.31 46.28
November 2006 -29.67 39.45
December 2006 -30.43 40.10
January 2007 -26.71 38.66
February 2007 -22.16 38.68
March 2007 -31.84 36.66
April 2007 -37.67 35.50
May 2007 -41.72 36.59
June 2007 -44.81 38.24
July 2007 -51.89 37.06
August 2007 -53.41 34.99
September 2007 -58.18 36.92
October 2007 -61.50 36.68
November 2007 -57.04 35.15
December 2007 -57.22 29.20
January 2008 -58.73 30.76
February 2008 -60.17 27.48
March 2008 -63.99 29.16
April 2008 -67.64 23.80
May 2008 -70.04 28.29
June 2008 -68.72 28.74
July 2008 -69.55 29.56
August 2008 -68.55 33.49
September 2008 -65.90 32.12
October 2008 -70.77 33.18
November 2008 -77.69 33.25
December 2008 -78.87 31.90
January 2009 -82.39 31.76
February 2009 -84.28 32.48
March 2009 -89.44 32.76
April 2009 -79.89 37.70
May 2009 -75.51 37.89
June 2009 -73.12 40.54
July 2009 -69.46 38.76
August 2009 -68.15 44.79
September 2009 -63.82 44.82
October 2009 -65.82 45.38
November 2009 -65.61 45.15
December 2009 -65.28 44.00
January 2010 -66.78 40.76
February 2010 -66.58 36.98
March 2010 -70.63 35.76
April 2010 -63.02 34.10
May 2010 -56.09 31.19
June 2010 -65.47 24.54
July 2010 -70.66 23.96
August 2010 -71.97 24.19
September 2010 -71.92 26.72
October 2010 -69.76 29.88
November 2010 -68.28 32.15
December 2010 -67.15 33.60
January 2011 -68.20 30.16
February 2011 -70.21 29.28
March 2011 -69.92 31.06
April 2011 -71.39 30.70
May 2011 -70.58 31.29
June 2011 -71.93 30.14
July 2011 -68.90 31.76
August 2011 -67.66 32.29
September 2011 -69.96 34.12
October 2011 -63.35 39.38
November 2011 -60.80 39.95
December 2011 -57.92 42.50
January 2012 -52.98 43.94
February 2012 -46.86 47.11
March 2012 -45.57 48.93
April 2012 -45.67 48.98
May 2012 -34.88 48.94
June 2012 -32.72 51.93
July 2012 -24.89 52.68
August 2012 -21.42 55.35
September 2012 -16.75 57.47
October 2012 -17.03 60.50
November 2012 -11.11 60.54
December 2012 -10.87 63.09
January 2013 -7.03 63.05
February 2013 -1.35 60.52
March 2013 -1.43 63.00
April 2013 2.30 ND

Note: The data on traffic of buyers are seasonally adjusted by the Board's staff.

ND No data  Return to table

Source: For traffic of buyers, National Association of Realtors, Realtors Confidence Index; for builders' ratings, National Association of Home Builders, Builders Economic Council Survey, Housing Market Index.

Homeowners are more optimistic about house prices

Figure 4. Home Price Expectations

Period Percent
March 2007 2.5
April 2007 1.5
May 2007 1.5
June 2007 1.5
July 2007 1.8
August 2007 0.7
September 2007 0.5
October 2007 0.7
November 2007 0.1
December 2007 -0.2
January 2008 -0.3
February 2008 -1.0
March 2008 -0.4
April 2008 -1.0
May 2008 -0.7
June 2008 -1.0
July 2008 -0.4
August 2008 -0.3
September 2008 0.0
October 2008 -1.0
November 2008 -1.1
December 2008 -1.2
January 2009 -1.9
February 2009 -1.9
March 2009 -1.9
April 2009 -1.5
May 2009 -0.5
June 2009 -0.5
July 2009 -0.8
August 2009 0.2
September 2009 0.6
October 2009 0.3
November 2009 -0.2
December 2009 0.2
January 2010 0.0
February 2010 -0.4
March 2010 0.0
April 2010 -0.3
May 2010 0.0
June 2010 0.0
July 2010 -0.6
August 2010 -0.4
September 2010 -0.9
October 2010 -0.7
November 2010 -0.3
December 2010 -0.1
January 2011 -0.6
February 2011 -0.2
March 2011 -0.1
April 2011 -0.2
May 2011 0.5
June 2011 -0.5
July 2011 0.1
August 2011 -0.8
September 2011 -1.2
October 2011 -0.8
November 2011 -0.3
December 2011 -0.6
January 2012 -0.5
February 2012 -0.1
March 2012 -0.8
April 2012 0.2
May 2012 0.1
June 2012 -0.2
July 2012 0.0
August 2012 0.1
September 2012 0.7
October 2012 0.7
November 2012 0.7
December 2012 0.9
January 2013 0.8
February 2013 1.2
March 2013 1.5
April 2013 1.3

Note: Average expected change in own home value during the next 12 months.

Source: Thomson Reuters/University of Michigan Surveys of Consumers.

Mortgage purchase applications are low

Figure 5. Purchase Mortgage Application Activity

Series: Index, March 16, 1990 = 100
Horizon: 2001-2013 (April)
Description: The index starts the series in 2001 at about 300. It gradually increases over the next few years before peaking in early 2005 at about 475. The index decreases to about 375 in mid-2006 and fluctuates around this level until early 2008 when it starts to decline steadily, reaching about 150 in mid-2010. The index stays around 200 through April 2013.

Note: The data are seasonally adjusted.

Source: Mortgage Bankers Association.

Purchase originations have fallen more for borrowers with lower credit scores

Figure 6. Purchase Mortgage Originations, by Credit Score

Series: Credit scores ranges of 621-680, 681-710, 711-740, 741-770, 771-800, and more than 800
Horizon: 2001-2013 (February)
Description: The number of mortgage originations with credit scores of 621-680, 681-710, and 711-740 follow similar paths, starting the series in 2001 at about 10,000. The number of originations for these scores increases to about 25,000 in early 2003 and fluctuate between about 20,000 and 30,000 through late 2007. In late 2007, they begin a steady decline, reaching about 5,000 in early 2009 and fluctuating between about 5,000 and 10,000 through February 2013.

The number of mortgage originations with credit scores of 741-770 and 771-800 are higher than the previously mentioned credit score ranges but follow a similar trajectory. The number of mortgage originations with credit scores of 741-770 and 771-800 start the series in 2001 at about 15,000, increasing steadily to reach about 37,000 by early 2003. They then fluctuate between about 23,000 and 33,000 through late 2007, when they start to decrease. The number of originations with a credit score of 741-770 reaches about 12,000 in mid-2008 and fluctuates between about 10,000 and 15,000 through February 2013. The number of originations with a credit score of 771-800 reaches about 15,000 in mid-2008 and fluctuates between about 17,000 and 23,000 through February 2013.

The number of originations with a credit score more than 800 is markedly lower than other credit score ranges. The number of originations with a credit score more than 800 starts the series in 2001 at about 2,000 and gradually increases to reach about 10,000 by mid-2005. It then fluctuates between about 7,000 and 10,000 through February 2013.

Note: Prime mortgages only.

Source: Staff calculations based on data provided by McDash Analytics, LLC, a wholly owned subsidiary of Lender Processing Services, Inc.

The credit score distribution for prime mortgages also shows this contraction

Figure 7. Credit Scores on New Prime Mortgages

Series: 90th percentile, median, and 10th percentile of FICO scores
Horizon: 2003-2013 (March)
Description: Data are monthly.

The 90th percentile of FICO scores on new prime mortgages starts the series in 2003 at about 790 and remains fairly steady throughout the series, gradually increasing to reach about 800 by March 2013. The median of FICO scores starts the series in 2003 at about 730 and fluctuates around this level through mid-2007 when it starts to increase, reaching nearly 770 in early 2009. The median of FICO scores fluctuates just below 770 through March 2013. The 10th percentile of FICO scores starts the series in 2003 at about 640, remaining steady with the exception of a slight dip to about 630 in mid-2007. The 10th percentile of FICO scores starts increasing in late 2007 to reach about 670 in mid-2008, dipping to about 650 in late 2009, increasing to about 680 in mid-2010 and then fluctuating around 670 through March 2013.

Note: Purchase mortgages only.

Source: Staff calculations based on data provided by McDash Analytics, LLC, a wholly owned subsidiary of Lender Processing Services, Inc.

Mortgages insured or guaranteed by the FHA, VA, or RHS have filled in some of the gap

Figure 8. Share of Purchase Mortgages Guaranteed or Insured by the FHA, VA, or RHS

Percent

Year Percent guaranteed by FHA, VA, or RHS
2000 20.30
2001 20.61
2002 16.29
2003 13.69
2004 8.98
2005 5.96
2006 6.20
2007 9.10
2008 31.29
2009 47.54
2010 46.01
2011 42.50

Note: FHA is Federal Housing Administration; VA is Department of Veterans Affairs; RHS is Rural Housing Service.

Source: Federal Financial Institutions Examination Council, data reported under the Home Mortgage Disclosure Act.

FHA loan originations have also contracted for borrowers with low credit scores

Figure 9. Credit Scores on New FHA Mortgages

Series: 90th percentile, median, and 10th percentile of FICO scores
Horizon: 2003-2013 (March)
Description: Data are monthly.

The 90th percentile of FICO scores on new FHA mortgages starts the series in 2003 at just below 750 and remains near this level before dropping slightly to about 725 in late 2007. The 90th percentile of FICO scores then increases to just above 750 in early 2008 and fluctuates around 775 through March 2013. The median of FICO scores starts the series in 2003 at about 650 and remains near this level before dropping slightly to about 625 in late 2007. The median of FICO scores then increases to a bit above 650 in early 2008 and fluctuates between about 675 and 700 through March 2013. The 10th percentile of FICO scores starts the series in 2003 at about 575 and remains near this level before dropping slightly to about 550 in late 2007. The 10th percentile of FICO scores then increases to about 600 in early 2008 and fluctuates between about 625 and 650 through March 2013.

Note: Purchase mortgages only. FHA is Federal Housing Administration.

Source: Staff calculations based on data provided by McDash Analytics, LLC, a wholly owned subsidiary of Lender Processing Services, Inc.

Many lenders are not offering quotes on mortgages to borrowers with low credit scores

Figure 10. Lenders Offering Quotes on 30-Year Fixed-Rate Residential Mortgages

Series: Credit scores of 750, 680, and 620
Horizon: 2009-2013 (April 29)
Description: Data are weekly. Unit is percent.

The percent of lenders offering quotes to borrowers with a credit score of 750 starts the series in late 2009 at about 95. The percentage decreases to about 85 in early 2010 and stays around 90 through the end of the year. It then increases slightly to just below 100, where it remains through April 29, 2013.

The percent of lenders offering quotes to borrowers with a credit score of 680 starts the series in late 2009 at just above 70. The percentage decreases to about 65 in early 2010 and then starts increasing to reach about 85 in early 2011. It then increases slightly to just above 90, where it remains through April 29, 2013.

The percent of lenders offering quotes to borrowers with a credit score of 620 starts in mid-2010 at about 45. The percentage dips to about 35 later in 2010 and then stays just above 40 through mid-2011. It then increases through the rest of 2011, fluctuating between about 50 and 60 through April 29, 2013.

Note: All quotes based on a 90 percent loan-to-value ratio. Purchase mortgages eligible for sale to Fannie Mae or Freddie Mac only.

Source: LoanSifter.

Lenders are less likely to approve a low-credit-score FHA loan than in 2006

Figure 11. Likelihood of Approving an Application for an FHA Home-Purchase Loan Relative to 2006

Percent of respondents

FICO Score Much less likely Somewhat less likely About the same Somewhat more likely Much more likely
FICO Score 580
Down payment 3.5%
61.22 8.16 26.53 4.08 0.00
FICO Score 620
Down payment 3.5%
30.61 32.65 32.65 4.08 0.00
FICO Score 660
Down payment 3.5%
12.25 12.25 63.27 8.16 4.08

Note: FHA is Federal Housing Administration. Results are from the October 2012 survey.

Source: Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices.

Approval rates for low-credit-score FHA mortgages have continued to decline

Figure 12. Likelihood of Approving an Application for an FHA Home-Purchase Loan Relative to Last Year

Percent of respondents

FICO Score Much less likely Somewhat less likely About the same Somewhat more likely Much more likely
FICO Score 580
Down payment 3.5%
20.00 12.73 65.45 1.82 0.00
FICO Score 620
Down payment 3.5%
18.18 12.73 69.09 0.00 0.00
FICO Score 660
Down payment 3.5%
1.72 6.90 86.21 5.17 0.00

Note: FHA is Federal Housing Administration. Results are from the April 2013 survey.

Source: Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices.

Capacity constraints are still a factor

Figure 13. Refinance Applications and Real Estate Credit Employees

Series: Refi applications index (March 16, 1990 = 100), Real estate credit employees (Thousands of employees)
Horizon: 2000-2013 (February)
Description: The refi applications index starts the series in 2000 at just above zero. The index increases to just over 2,000 in early 2001, jumps to about 4,500 in late 2001, dips back to about 1,800 in early 2002, and increases to nearly 6,000 by the end of 2002. The index starts 2003 a bit above 8,000 before dropping to just below 2,000 by the end of the year. It reaches a bit above 4,000 in early 2004 and then levels out some, at a bit below 2000, through 2007. The index then fluctuates between about 250 and 350 through February 2013.

The number of real estate credit employees starts the series in 2000 at about 300,000. The number of employees starts gradually increasing in early 2001, reaching about 450,000 by mid-2003. It fluctuates between about 450,000 and 500,000 through early 2007 when it starts a decline, reaching about 250,000 by the end of 2008. The number of employees then fluctuates between about 250,000 and 300,000 through February 2013.

Source: For refinance (refi) applications index, Mortgage Bankers Association; for real estate credit employees, Bureau of Labor Statistics.

Borrowers with high DTIs have less income, fewer assets, and more leverage

Figure 14. Selected Characteristics of Households, by DTI

DTI Median income
(Thousands of dollars)
Median financial assets
(Thousands of dollars)
Median LTV at purchase
(Ratio)
DTI less than 43 percent 78 33 95
DTI greater than 43 percent 54 12 99

Note: Values shown are the averages from the 2007 and 2010 surveys; income and assets are in thousands of dollars. DTI is debt-to-income ratio; LTV is loan-to-value ratio.

Source: Federal Reserve Board, Survey of Consumer Finances.

Borrowers with FICO scores below 620 are a significant share of first-time homebuyers

Figure 15. Share of First-Time Mortgage Borrowers with Credit Scores below 620

Percent

Year Percent with credit scores below 620
1999 27.59
2000 27.25
2001 24.79
2002 24.45
2003 20.39
2004 25.36
2005 26.53
2006 27.93
2007 22.71
2008 20.62
2009 10.98
2010 11.81
2011 10.52
2012 7.97
Source: Federal Reserve Bank of New York/Equifax Consumer Credit Panel.


 

Last update: August 2, 2013