Housing Finance Outlook | Q3 2025
- 2 days ago
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May 28, 2025 | Premium Service | In this issue of The Institutional Risk Analyst, we provide our latest quarterly Outlook on Housing Finance. While average home prices are still rising nationally, many markets are already seeing falling home valuations as high interest rates and a dwindling supply of buyers take a toll on residential markets.
Anecdotal reports suggest that prices for single family homes and condominiums in FL and TX are weakening fast, but prices in supply constrained blue states remain relatively firm. Wolf Street reports that markets including Austin, Oakland, New Orleans, San Francisco, Washington D.C., Phoenix, Portland, Denver, Fort Worth, and San Antonio are all below their peak levels of home prices.
Meanwhile in the world of single-family mortgage lenders, the divide between large and small firms is growing. The MBA Quarterly Performance Report for Q1 2025 shows that the average Net Production Income (pretax income less any net servicing income or MSR valuation adjustments) was minus $28 per loan, or minus 7.5 basis points. For firms without large mortgage servicing books, current market conditions are a challenge.
“The small guys were hurting, as lenders doing less than $100 million per quarter lost 37 bps per loan, while lenders doing between $500 million and $1 billion per quarter earned 27 bps per loan,” notes Joe Garrett of Garret McAuley. “That segment of the mortgage industry, originators of $2 billion to $4 billion in mortgages annually, was the top-performing segment in the industry.”
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