JPMorgan Chase ($38.47 0.47%) expects home prices to stabilize in the spring “given recent improvements in housing indicators and economic data, though we recognize that the long-run demand-supply picture remains challenging.”
Analysts still project another 5% drop in prices from the third quarter to a bottom in the first half of this year that will equate to a 35% decline from the peak.
For the year, JPMorgan Chase expects home price to drop 1.6% from a year ago with net housing demand of roughly 1.6 million units.
Analysts said the recent decision by the Federal Housing Finance Agency to start a pilot program for bulk REO sales “could be a positive for the housing market and for non-agencies more broadly.”
“The outlook for the mortgage basis is practically binary, pivoting on the outlook for QE3,” according to Chase analysts, who also expect the AG settlement with mortgage servicers to be more of a non-agency event with little impact on agency MBS or rates.
Late Friday, Freddie Mac disclosed all of the mortgage repurchase requests it handled from Jan. 1, 2009 and Dec. 31, 2011. This was the first-such filing the government-sponsored enterprise made with the Securities and Exchange Commission as mandated by Dodd-Frank. Look for more coverage this week on HousingWire.com.
The Commerce Department reports housing starts for January on Thursday. Starts fell 4.1% in December after climbing 9.1% the prior month. Analysts polled by Econoday expect housing starts to rise to an annualized rate of 675,000 for the first month of 2012.
The government estimates 583,900 housing units were completed in 2011, which is 10.4% lower than the prior year and at the lowest level recorded. Single-family starts were particularly anemic last year.