Fannie Mae and Freddie Mac are continuing to do exceptionally well for 2013 as new data suggests that the housing market in the United States continues to improve over time.
The improvements are in home prices and sales both of which have been on the rise since 2012. Data from the Commerce Department shows that new home sales were at 4 and a half year highs for the month of January. There were approximately 437,000 homes sold in the United States for the month of January which is a 16 percent increase from the month of December.
According to Standard & Poor’s/Case-Shiller home price index, the value of homes rose 0.9 percent for January and has climbed 6.8 percent from 2012. Of the 20 major cities being examined by S&P, all of them but 1 saw price increases. Seven of them saw how values rise by as much as double digits while New York City seemed to buck the trend and saw the value of its commercial real estate actually decline.
For all the talk of uncertainty in the markets, there has been a steady flow of good news from the housing sector. Anthony Chan, chief economist at Chase Private Client, remains convinced the housing market is actually improving despite setbacks that may occur along the way. He writes, “There’s no doubt when you look at all the housing data that’s come out, it certainly paints a picture of continued improvement in that market.”
Freddie Mac reported a net income of $11 billion for 2012. This is far cry from its financial standing in 2011. That year was one of the worst years on record for the mortgage giant. It reported a net loss of 5.3 billion dollars. Freddie Mac CEO Donald Layton put it this way: “It’s clear from our earnings that the housing market has turned a corner and that our work to minimize legacy losses and build a strong new book of business is paying off,” said Layton.
Fannie Mae’s shares have continued to improve as well and have surged nearly 15 percent for the year. Timothy J. Mayopoulos, President and CEO of Fannie Mae, has echoed the sentiments of numerous economists and business leaders about the improving state of the housing market. According to Mayopoulos, “We are seeing signs of sustained improvement in housing and our actions to support the housing recovery have generated strong financial results in 2012.”
However, not all of the news surrounding Fannie Mae and Freddie Mac has been positive. A new federal report which is noteworthy for its bipartisan support has called the complete elimination of the two mortgage lenders.
The Policy Center Commission has reached the conclusion that the role of the federal government in the housing sector should be smaller and give more control back the private sector. Proponents of the new measure argue that scaling back Fannie and Freddie’s role would not increase the likelihood of another catastrophic collapse.
