Housing activity is expected to rebound later this year but at a slower pace than previously projected according to the March 2010 Economic Outlook released today by Fannie Mae’s (FNM/NYSE) Economics & Mortgage Market Analysis Group. A surprising drop in new and existing home sales disappointed, but the setback is viewed as temporary with gains expected in the second quarter then trending up on a sustainable basis by year end. The outlook continues to call for moderate economic growth of 3.0 percent for 2010, as the labor market appears poised to create jobs, the service sector shows improvement, and consumer spending joins in as part of the economic storyline. Consumer spending grew a solid 0.3 percent in January, suggesting a pickup in the first quarter despite the possibility of a slow down in February.

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The Federal Housing Administration will need taxpayer money because it failed to properly project how borrowers with FHA-backed loans are affected by job losses and diminished equity in their homes, New York University professor Andrew Caplin told a House panel Thursday.

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The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.

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How about this for a new and ingenious real estate money machine? Every time a house sells during the next 99 years, 1 percent of the price goes back to the original developer or is shared among investor partners. Ka-ching!

The levy won’t be subject to haggling between future buyers and sellers, either. That’s because it’s a covenanted mandate — a novel type of lien on the underlying real estate — called a private transfer fee. It’s not a government transfer tax. Nor is it a homeowner association or environmental protection covenant. It’s purely a private requirement that runs with the land. If a seller refuses to pay it to a third-party trustee at closing, the sale won’t proceed.

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Home prices continued to climb for the seventh consecutive month in December, according to a report released Tuesday that provided yet another hopeful sign that the battered housing market may be slowly recovering.

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Feb. 23 (Bloomberg) — Stabilization in U.S. home prices that may lay the foundation for a sustained recovery in the housing market is tied to government incentives to bolster the industry that precipitated the worst recession since the 1930s, said economist Robert Shiller.

“The rebound in the housing market since April seems to be related to these efforts” that include a homebuyer tax credit and Federal Reserve purchases of mortgage-backed securities designed to hold down borrowing costs, Shiller, co-creator of the S&P/Case-Shiller home-price index, said in a Bloomberg Television interview.

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Lending by the banking industry fell by $587 billion, or 7.5 percent, in 2009, the largest annual decline since the 1940s, as the number of troubled financial institutions rose sharply, the Federal Deposit Insurance Corp. reported Tuesday.

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The Mortgage Bankers Association released the National Delinquency Survey for Q4 2009 today. Total mortgage delinquency rates, seasonally adjusted, were down 17 basis points during the fourth quarter, but up year-over-year by 159 basis points.

9.47 percent of all mortgages on one- to four-family homes are now in some state of delinquency.

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Home builders are ramping up speculative construction to attract last-minute home buyers who want to tap a soon-to-expire tax credit.

The strategy is risky. If the buyers don’t materialize, builders could be saddled with unsold homes that will require heavy discounting to sell, hurting profits and slowing the housing recovery. New homes may also continue to lose market share to lower-priced foreclosed houses. Indeed, some economists expect an avalanche of foreclosures in the months ahead as lenders release homes they have been keeping off the market.

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WASHINGTON — Ben S. Bernanke, having survived a surprising challenge to his second term as Federal Reserve chairman, now faces the delicate task of beginning to pull the central bank out of its extraordinary effort to prop up the economy.

The main question is when and how the Fed should start raising short-term interest rates, which have been at a record low for more than a year. Related is the issue of how to manage, and eventually shrink, the record $2.2 trillion balance sheet that the Fed amassed as it pumped vast sums of money into the economy, starting in 2008. On Wednesday morning, the Fed will release a statement outlining Mr. Bernanke’s views on moving away from its exceptionally easy monetary policy.

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