Housing markets

Construction activity in smaller cities also saw a significant annual decline, according to the National Association of Home Builders.

But there are regional variations in housing markets across the country, the Federal Housing Finance Agency said.

The Mortgage Bankers Association sees the likelihood of a rise in sales activity later this year based on recent construction trends, in a turnaround from the 2022 market.

Low interest rates on 2021 and 2022 mortgages might mean low prepayment rates, exposing investors to duration risk on supported mortgage-backed securities.

Home price overvaluations over 10% are easing in some markets, analysts say, but RMBS investors are still cautiously tightening liquidity amid uncertainty.

Housing costs increased at the slowest pace in over a decade nationwide, even while monthly growth now exceeds its pre-pandemic level.

Stronger than expected demand and home prices drove the latest forecast.

Fannie Mae researchers found housing costs decelerating for the fourth straight quarter, but limited inventory may be driving hopeful buyers to look for opportunities in the new-construction market.

But overall availability still remained near a 10-year low in March, with government-backed products falling for the third time in four months, the Mortgage Bankers Association found.

Last month saw purchase rate locks increase by 44%, jumping past the 30% average in February, according to Black Knight's report.