The Office of Federal Housing Enterprise Oversight (OFHEO) reported its home price index fell by 0.6% in July.

In addition, June was revised downward to negative 0.3% from remaining the same previously. Year-over-year, prices are down 5.3%, according to the OFHEO.
Regions reporting the largest price declines in July were Middle Atlantic (negative 1.1%), New England (negative 1.0%) and Pacific ( negative 1.0%).

Unlike last month, no regions reported price gains. Year-over-year, the Pacific states have the largest price drop at 17.7%, followed by the South Atlantic at negative 5.2% and Mountain states at negative 4.7%. The West South Central States had a positive 12-month change at 0.6%.    
Tomorrow gets more information on the housing market with mortgage application activity for the week ending Sept.19 and the existing home sales report for August.

Consensus is calling for a decline of 1.6% to 4.92 million on existing home sales. The Refinance Index is expected to move toward 3000 with the sharp drop in mortgage rates. For the week ending Sept.12, the Refinance Index surged 88% to 2300.
The improvement in mortgage rates is expected to be felt in the October prepayment reports (released in November). Speeds are currently projected to jump over 60% in FNMAs from September's average, about twice as much as previously predicted. 

Ginnie Mae speeds are projected to increase over 30%. The largest percentage gains are in 2007 and 2006 vintages, and in 6% and 6.5% coupons.  

In part, premium coupon speeds are expected to be impacted by increased buyout activity from the GSEs, which has been on hold for sometime due to their capital situation, as well as, from delinquent refinancing through the Federal Housing Administration.

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