The outstanding amount of home mortgages as of 4Q11 fell $40 billion quarter-over-quarter and $240 billion year-over-year to $10.3 trillion, Standard & Poor's analysts noted this morning, citing the Federal Reserve flow-of-funds data.
Meanwhile, agency MBS trended upwards by $50 billion year-over-year to $5.8 trillion, while outstanding private-label RMBS fell about $200 billion to $1.1 trillion.
At the recent American Securitizaton Forum conference held in Las Vegas in January, some participants said that the only way that the private-label RMBS market can start picking up again were if the U.S. housing market can find a bottom in prices.
There might be hope in this case. S&P said yesterday that the bottom in housing prices might be near.
In a report titled Global Housing Prices Are Still Searching For The Bottom, analysts said the falling unemployment rate, although still very high, and an uptick in house sales and housing starts have bolstered hopes that a recovery has taken hold.
However, the S&P Case-Shiller Index revealed that home prices dropped significantly in December, which is the the fourth straight monthly dip. Home prices are actually currently at 2002 levels, the rating agency analysts stated.
"The pick-up in the economy has simply not been strong enough to keep home prices stabilized," says David Blitzer, chairman of the Index committee at S&P Indices. "If anything, it looks like we might have reentered a period of decline as we begin 2012."
Even though it might appear bleak again for U.S. housing, S&P analysts believe that prices are close to their "final" bottom. They now project that the S&P/Case-Shiller prices will decrease an added 4% from where they are currently, to a record 36% below the July 2006 peak sometime in the fall.
Additionally, they also think that the Federal Housing Finance Agency home price index will not reach its trough until next winter.
However, until that bottom is finally past, analysts said that there is a chance that U.S. homebuyers who might get tired of the stricter mortgage underwriting and appraisal standards, will continue to just rent. This is a trend that will weigh on home sales and prices, analysts stated.