Fannie: Housing sector remains strong, but sales pace may slow

Nearer-term projections from Fannie Mae’s Economic and Strategic Research (ESR) Group, including for Q4 2020 and Q1 2021, revised modestly downward due in part to COVID-19, analysts wrote – except the housing market outlook, which remains strong. 

After a sharp rebound in Q3 2020 “housing is expected to demonstrate continued strength” through the rest of 2020 and into the New Year, the report notes. 

Moreover, the ESR Group has upgraded its new and existing home sales forecasts for Q4 2020 and Q1 2021, “due to stronger-than-expected sales to date” along with its mortgage origination forecasts for full-year 2020 and 2021. 

However, analysts do expect a slowdown in the home sales pace, which may have peaked in September, while pending sales and purchase mortgage applications “have pulled back recently,” as pent-up homebuyer demand ebbs away suggesting “a moderate slowdown” has already started. 

A renewal of more strict social distancing and infection avoidance behavior among prospective homebuyers and home sellers also could adversely affect the forecast, according to the report.

“The continued geographic shift and now resurgence of COVID-19 has raised risks to the pace of growth, though in our view not to the level of a potential second recessionary downturn,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Households appear reasonably well-positioned to weather and cushion the slowdown, but if a strict broad-based lockdown were to be instituted and sustained, then the economy could turn down again.”

Meanwhile, he added, “the housing market continues to thrive in the low rate environment, particularly refinancing, but the sector is showing some early signs of slowing on the purchase side as the delayed seasonal effect works its way through the market.”

Ellie Mae study: Lenders inconsistent in leveraging data

Just in case anyone doubts the value of data analytics, a recent Ellie Mae study shows “The Big Data Revolution” has made mortgage finance more efficient and will continue to power the American dream of homeownership.

The new eBook from Ellie Mae analyzes how lenders are using data and analytics tools to improve all aspects of mortgage lending operations and highlights the need for lenders to leverage both as a way “to become more operationally efficient” especially in today’s low interest rate, booming housing market.

Ellie Mae’s survey found that two out of five, or 39% of lenders could not say how much their companies spent on data and analytics in 2019, showing “how inconsistent the industry’s current use of data is to inform strategic business decisions.”

Lenders large to small have different data assessment starting points, resources and barriers to adopting such strategy. Ellie Mae found 60% of the large lenders “have a clearly defined data and analytics strategy,” compared to 55% of small and mid-size lenders, who are more likely to be in the early evaluation stage of their data journey.

Elle Mae, now part of ICE Mortgage Technology and Intercontinental Exchange, Inc, researched why current utilization of data and analytics is a challenge, what needs to change and its cumulative benefits to business decision making.

“As the industry becomes more competitive, lenders will need to find new ways to leverage and analyze available data to be operationally efficient, differentiate, and grow their business,” said Joe Tyrrell, president of ICE Mortgage Technology. “It’s not enough to use data to understand ‘what’ happened in the past. Lenders need to understand what is happening right now and what is likely to happen in the future, while they still have the ability to take corrective action and/or make critical decisions.” 

Ellie Mae’s survey shows lenders’ data and analytics journeys are at different points of development.

  • Descriptive Phase – 37% of lenders have just begun their journey, so they can see only simple facts about past business performance
  • Analytical Phase – 36% have gained insights on what happened and why
  • Predictive Phase – 24% also use data to discover patterns that affect their business
  • Prescriptive Phase – 3% are far enough along their data journey to conduct prescriptive-level analyses that can inform how they should make future decisions. For example, analysts note, recommend loan programs for specific applicants based on a set of predetermined factors.

“As lenders shift to a data mindset and use it to identify and correct competitive disadvantages, market opportunities, cost reductions and blind spots in their workflows,” the first step is to define a data and analytics strategy, said Tyrrell, which many lenders do not have. 

Ellie Mae Insights works with Ellie Mae’s Encompass Data Connect to enable users to analyze loan origination data to uncover actionable insights. 

Homebuilder Lennar introduces smart water tech

Lennar Corporation’s contribution to building sustainable, smarter energy and water efficient new homes now will include smart water shut off technology by Moen

The company announced a partnership with Moen, to offer Flo by Moen, an all-in-one water security ecosystem on newly built Lennar homes nationwide, that gives Lennar homeowners “complete control over their home’s water from anywhere, at any time.”

By introducing the new homebuilding standard, the homebuilder and its financial services division that provides mortgage financing, title and closing services primarily for buyers of Lennar’s homes, offer a new incentive to potential buyers.

“Connected homes are quickly becoming the expectation for many new homebuyers,” says Mark-Hans Richer, chief marketing and innovation officer at Moen. “We’re raising the bar by using smart home technology.”

From monitoring water usage in real time, its innovative leak detection technology, to setting water conservation goals, the Flo by Moen Smart Water Shutoff gives homeowners all the data they need to understand, control potential and actual water damage, and conserve water. 

Flo by Moen directly benefits home insurance customers. According to a Lexis Nexis study, within one year the Flo by Moen device helped reduce paid water leak insurance claims 96%, compared to two years prior to installation. 

“Smart devices have the potential to drive down risk and ultimately insurance claims while giving homeowners the opportunity to secure meaningful savings on their insurance premiums with smart home discounts,” said Yuval Harry, chief revenue officer of Hippo, a high-growth home insurance fintech group. “We’re very excited about the benefits this initiative will bring.” 

Flo by Moen reportedly connects to the home’s main water line and calculates pressure, flow rate and ambient temperature within the home’s water supply system delivering data to the homeowner via the Flo by Moen smartphone app.

It helps detect water vulnerabilities in the water supply system and according to the homeowner’s preferences, sends an alert through the app, or turns off the water supply automatically.

“We’re constantly focused on improving the future of home ownership, building homes to last that include the lifestyle preferences our customers want – including sustainable and connected features,” says Eric Feder, managing general partner at LEN Lennar’s technology division. “By integrating the Flo by Moen Smart Water Shutoff as a standard offering on our smart homes,” Lennar will help protect homes from water damage and will make them more sustainable.

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