Each month Wells Fargo releases a research reporon the housing market. The most recent was a week ago. Hedre are there conclusions.

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The housing market has regained some footing, although the next three to six months will be a period of uncertainty as major programs designed to support the housing and mortgage market expire.

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Given the experience with the tax credit in the November to December 2009 period, we can expect some buy-ahead volume, and incremental price pressure, in the March to April time frame as the credit expires atthe end of April, with a payback in the May to June period.

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The Fed program of purchasing mortgage-backed securities from the GSEs is scheduled to end in March. Already the Fed has cut the pace at which it is purchasing MBS (see page 8 below), and the well anticipatedend to the program is now expected by dealers to have only a minor impact on rate spreads.

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The exact rate impact still remains to be seen, and buyer and seller responses are also uncertain. Nonetheless, at this point, it seems like the Fed’s frequent repetition of its intent has created expectations that will ease the transition.

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The HAMP program of mortgage modifications will remain in place, and may accelerate.. So far, according to a recent Treasury report, only a fraction (25%) of eligible borrowers is in the HAMP process.

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Interest rates are still historically low as of the most recent reporting week (February 11), with the 30-year fixed rate mortgage at 4.97% according to the PMMS, creating historically high affordability.

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In our December report, we indicated re-finance activity was below the expectations, given the interest rate incentive. This has now changed, with re-finance activity

Though there is always uncertainty, the mood certainly seems better than it has been.