diana olick with trends at the housing in 2015. >> reporter: the housing recovery took a step backwards in 2014 as home prices rose too far, too fast. and incomes couldn't keep up. now as employment improves and price gains ease 2015 is looking brighter. but perhaps even bumpier. as buyers run head on into

diana olick explains. >> reporter: president obama heads back to phoenix tomorrow the hard hit market a favorite backdrop to announce new help for housing, as he did two years ago. >> now that we've made it harder for reckless buyers, let's make ittier easier for qualified buyers to buy the homes they can afford. >> reporter: president announces the drop in the annual insurance premium. the government's insurer of down payment loans from 1.35% of the loan to 8%. that will pr vied the borrower a savings of about $80 a month on $195,000 loan according to core logic. this will help millions of families save billions of dollars in mortgage payments over the years. president said in a statement previewing the details. >> this is a matter of getting the pendulum back to a balance point. not overpromoting, but not barricadeing the doors needlessly to come into the market. >> in order to shore its reserves doubled the premium leaving much out in the cold. faa's insurance fund recently moved back. the change will help borrowers, but it could help the fha itself. fannie mae and freddie mac anno

diana olick has the story from washington. >> reporter: mortgage applications spiked 49% last week and that was adjustment for the new year's holiday. a sharp interest rate drop combined with fannie loans responsible for the move. a 66% driver for the week the highest level since july of 2013. jumbo quadrupled but more sensitive to interest rates. applications for a loan to purchase a home up 24% from the previous week. they're also up 2% from a year ago and that's the first time in over a year that they've been higher annually. all this as the average contract rate on the 30 year fix conforming loan dropped to 3.89%, the lowest level since may of 2013. adding to the momentum fannie mae's new 3% down payment loan and an announcement that it would cut annual insurance premiums by half a percent. that doesn't go into effect for a few weeks but borrowers are applying and absolutely lowing. that is huge. one lender in northern virginia calls the response unbelievable. he says people who have been debating buying a home are now going ahead with prequalifications in the homes they'll find th

diana olick in chicago. >> looks pretty nice. that does it for us on nightly business report i'm sue herera thanks for watching. >> i'm tyler mathisen. have a great evening, everybody. we hope to see you tomorrow night. >>> tonight on "quest" -- concussions are common for athletes in all kinds of sports. but as scientists have learned more about them, they've discovered that concussions can be more serious than we thought. >>> and seahorses are enchanting. but overfishing has left them struggling to survive. meet the seahorse sleuths, whose mission to understand these mysterious fish may save them from extinction. >>> major funding for "quest" is provided by -- the national science foundation and the corporation for public broadcasting. additional su

diana olick explains. >> reporter: rows of town homes rising in rockville, maryland. it may be cold in this d.c. suburb but sales are heating up and lower gasoline prices could be fueling the surge. >> people are feeling far more comfortable with that extra money in their pocketbook. and yes, our traffic has been very high and sales are quite good especially during the typically slow december season. >> reporter: but how much extra money is it really? rammed the numbers and with gas prices down 23%, that adds about $100 in monthly income for the average american. and that translates to an 11% boost in purchasing power on a starter home. not to mention mortgage rates have fallen in response to lower oil prices. >> for most americans, it's a huge tax break. >> reporter: ceo richard dew ga is not concerned about his company's large footprint in energy heavy texas. >> we are one of the most builders with big holdings in the southeast, midwest, frankly, the west coast. i think whatever impact we may see and again, i'm not counting on demand from oil, i think you'll see off

diana olick in chicago. >> looks pretty nice. that does it for us on nightly business report i'm sue herera thanks for watching. >> i'm tyler mathisen. have a great evening, everybody. we hope to see you tomorrow night. ( neighing ) oh! good heavens! ohh! it is you, the clockmaker. what are you doing here? i was missing the welcoming charms of candleford so much, miss pratt, i decided to come back. walk on. laura: once a year, candleford and lark rise and all the local villages looked forward to the only night when mischief was not only allowed it was encouraged. pranks and tricks and all manner of shocks and surprises were played by one neighbor on another. no one was safe. no one.

so, diana olick is in washington going to make sense of it all. hi diana, why price gains in new construction but smaller gains on existing homes? >> well sue, it's really where the market is right now, the supply and demand. there's a much greater supply of newly built homes than there are of existing homes. and there are many more buyers of the newly built homes. these are higher end buyers. we've been talking about how that first time home buyer who's not going to buy the more expensive newly built home has really been sidelined in this recovery. so the activity we're seeing on the higher end all sort of skews to that newly built home and keeps existing home sales pretty low. >>> let's talk about conflicting reports, s&p's david blitzer saying 2015 isn't going to be a home run for housing, but red fin says there's been a huge jump in buyer traffic in just the past couple weeks. why the disconnect? >> well that to me was very interesting today in seeing those two reports. blitzer was talking about prices. he was seeing the weakness in prices and

for "nightly business report," i'm diana olick in washington. >>> gilead sciences scores a deal with cvs sending shares higher. cvs will make gilead's drug sovaldi and harvoni, the exclusive treatment option for beneficiaries on some of its plans. a competing drug made by abbvie will only be available if patients receive a medical exception. last month gilead shares tumbled after express scripts said it would exclusively offer abslee's help-c treatment on its largest plan. shares of cvs were off, gilead rose 2%. abbvie saw its stock fall 2%. kite pharma and amagain developed a deal to market cancer immunity treatments. they'll fund research costs through the filing of a new drug application. shares of kite pharma popped 15%, up more than $9. amgen fell 1%. >>> and some good news for isis pharmaceuticals. johnson & johnson said it will pay the company up to $835 million for the option to license three drug testing targetsing autoimmune diseases in the bowel. j & j fell a fraction to 103.79. >>> morgan stanley fired an employee for stealing data from up to 10% of its wealth management

diana olick with trends at the housing in 2015. >> reporter: the housing recovery took a step backwards in 2014 as home prices rose too far, too fast. and incomes couldn't keep up. now as employment improves and price gains ease 2015 is looking brighter. but perhaps even bumpier. as buyers run head on into rising rates. here are three predictions. there will be more houses. there has to be. as household formation improves the builders look at more developed lots easier credit and a better labor market. i'm going with 740,000 single family housing starts in 2015 and a little cooling on all that rental apartment construction. mortgage rates have nowhere to go but up. predicted rates rise this year and we were wrong. but with the fed pulling away from mortgage buying and an improving u.s. economy, interest rates have to break out of the current lows. it won't happen immediately but we should see the average rate on the 30 year fixed edging closer to 5% by the end of next year. home prices have to cool off. sticker shock sank the market in 2014. home prices have jumped double digits and pay

back to you. >> thanks for putting it in per perspective perspective, diana olick and rick santelli withr. a big sell-off. the dow's down nearly 300 points. s&p 500 down 1.3%. bring in art cashin director of floor operations with ubs. the blue chip companies missing, one by one by one this morning, that is what it is negative sentiment around earnings? >> more than domestic. you're right impact of the dollar on earnings is clearly being felt and that's casting a pall not only on those reported but anticipation of those yet to report. we still have problems in europe. they kind of let greece slide yesterday. they're back at them today. greek banks are down 10%, in some cases. so this is kind of a combination of several things. the strong dollar impact on earnings, and some lousy 8:30 data. >> why is this coming as such a surprise? we've been talking -- i've been talking about the strong dollar for the last six, seven months and how it will hit earnings and the stock market kept going higher. why is this a surprise? is it going to impact the stock market and earnings for rest of the year b

now going to aim the wagons east and diana olick who has breaking news on december existing home sales sales up 2.4% in december month-to-month to rate of 5.04 million units. that's a slight miss. street looking for 5.08 and november's numbers were revised down slightly. big disappoint in the annual. the full figures for 2014 total sales down 3.1% for the year from 2013. the first drop in annual sales difference 2010 which marked the end of the home buyer tax credit. not great year. and the question is do we go any higher? what was the problem? prices. median existing home price in december 209,500 and the realtors say pricing beginning to accelerate again. why. >> because of very low supply. inventory fell 0.5% year-over-year in december. and it's the first decline in inventory in 16 months. that is just a 4.4 month supply balanced market is closer to a six-month supply. not great news heading into 2015. back to you. >> diana olick great job on that. terrific report. starbucks reported earnings in line, that's heyadline. find out why. joining us exclusively, howard schultz, chairman a

diana olick.tt with a look at what is coming up next on "squawk alley" with the dow up 150 points jon. >> a lot for you, sara. we've got microsoft, the writer for wired who got the first look at that will join us. google, is it a good idea to sell wireless service? we'll dig into those plans. adam jonas on tesla coming up on "squawk alley." ife special by being apart of it. (everyone) cheers! glad you made it buddy. thanks for inviting me. thanks again my friends. for everything for all your help. through all life's milestones our trusted advisors are with you every step of the way. congratulations! thanks for helping me plan for my retirement. you should come celebrate with us. i'd be honored. plan for your goals with advisors you know and trust. so you can celebrate today and feel confident about tomorrow. chase. so you can. tdd# 1-800-345-2550 [ male announcer ] your love for trading never stops tdd# 1-800-345-2550 even on the go. tdd# 1-800-345-2550 open a schwab account, and you could earn td

and that's where he wewe find diana olick. >> reits do not love this town.laggard in the nation's economic recovery losing jobs and population. but that's finally turning around at least here downtown. tech is behind a lot of it which is feeding both office and luxury rental apartments. a chicago developer now acquiring a 100-year-old building downtown rehabbing it with tech tenants in mind. this after groupon bought the wrigley building, google increased its chicago footprint and motorola moved in to the merchandise mart. the jobs are also fueling the luxury rental market with a $328 million sale last week of relates 111 west whacker. related and private companies, the reits don't like chicago because it was a laggard in the recovery, but that may have been a mistake. >> given the performance that we found over the last four years in the rental market here which have grown at almost a 9% pace every year, i think that those investors are now seeing chicago as one of the most stable strongest largest markets. >> so this v.have they been missing out? >> no que

. >> since you have just given diana olick since high praise let's bring her in with two big mortgageries that have been developing today, applications and premium changes. >> right. look, i'm going to agree with my colleague, rick. that is what is behind this big news today from the fha. 3.5% required. sources telling cnbc that president obama will announce a significant reduction in the fha's annual insurance premium tomorrow. fha had been the loan of choice for first-time home buyers with not quite perfect credit but it began bleeding cash and went into the red. so it raised the premiums and credit scores leaving those much needed first time home buyers in the cold. the administration is looking to get buyers back, as well. for the average borrower this decrease could mean a savings of about $80 a month. another reason is that fanny and freddy announced a 3% down payment product which could cut into fha's business and hurt the ongoing repair of its portfolio by taking away the best borrowers. all of this as mortgage applications down 8% from a year ago according to mortgage bankers

three-piece brander band every, rush, in "subdivisions" but maybe they were on to something because diana olick us along with nella richardson. is home ownership losing its luster? >> i think the suburbs are losing their luster. i would quote little boxes on the hillside but that's just me. what's so interesting is the home ownership rate going down is actually a factor of something really good that's going on in the housing market right now and that is that household formation quadrupled in the last report. a household being formed when junior moves out of the basement and forms their own household. all the fomrmation was on the rennren re renter side. >> as a counter point to that though, to what degree do you think young people don't have the same attitude towards owning anything whether it be a house or whatever? it's the sharing economy. it's the subscription economy. you pay until you've had enough, and then you move on, try something else. >> and it's also a very economic issue. it matters where you start your career. a lot of young people are choosing the cities and choosing to rent. bu

diana olick with pending home sales. diana?pending home sales down 3.7% in december from a downwardly revised november read a big miss. street lookinging for a slight gain. sales in december though still up 6.1% from a year ago. pending home sales a measure of signed contracts to buy existing homes. so again, future indicator about two months later foreclosed home sales. closed sales in december higher than november. chief economist is blaming falling inventory and higher prices for the lack of pending home sales in december. this after newly-built home sales rose 11% a measure of signed contracts. pulte great earning with the ceo saying that they saw much stronger buyer traffic in november and december. realtors also reported stronger traffic in december. that's why the number is a surprise. going regionally in the northeast, month to month, pending sales down 7.5, midwest 2.8% down. south down 2.6% the west stronger, down 4.6% on month to month. all saw gains year-over-year. back to you guys. >> a bit of a disappointment on t

let's get to diana olick, breaking news on home builders sentiment. >> home builder confidence, downoint in december. it didn't move for the month. the monthly sentiment index stands at 57. anything above 50 positive and it has been in positive territory for seven straight months. last january, it was at 56. but then it dropped into the 40s for the first half of 2014. a mid higher interest rates and higher sales. david crow said steady economic growth rising consumer confidence and growing labor market will help housing market to continue to move forward in 2015. of the index's three components, current sales conditions unchanges at 62 expectations for future sales dropped four points to 6 on traffic of prospect evg buyers fell two points to 44. buyer traffic the only component unable to break into positive territory. builder confidence highest in the west lowest in the northeast. housing starts tomorrow morning at 8:30. >> thanks very much for breaking news on housing, diana. it has been a volatile start to the year and the morning. stocks opening higher. now dow down 9 points. stro

diana olick has details on that. >> we do have it confirmed that president obama will announce a reduction premiums tomorrow at a housing event in phoenix, arizona. the reduction will be from the current 1.35% insurance premium to 0.85%. that is a significant drop and will definitely make a difference on many people's monthly mortgage payments. now, a source i spoke with who has seen the president's speech already says this quote couldn't come at a better the better time. especially right before the spring housing market. the spring housing marketing begins in february. why so important? not only will it give a boost of confidence to the lagging housing recovery now. we've seen mortgage applications falling dramatically as fewer and fewer people are getting into the market. but what it will also do is help the fha. as you may recall fannie mae and fred mac announced talo down payment mortgage product. at 3%. and the fha could stand to lose significant volume if all of that business went to fanny and freddy. by lowering the premium they are making themselves competitive again with fanny and

. >> we did hear from diana olick about the mortgage applications.highest in years. probably because mortgage rates are so low. >> the boon that we've seen in the housing market in 2012 i think was precipitated by the record low of -- we have a record low of 30-year mortgage rate. and people are really influenced by that. and we're getting close now, the 30-year treasury is essentially at a record low. very close to that. >> it could be another refinancing boom. we haven't had one in a while. >> yeah. and that kind of thing generates animal spirits. we haven't seen much -- you know, it hasn't been dramatic. we haven't seen -- except in some cities like san francisco, maybe. but generally, not. >> for the affordability index for housing, mortgage is probably the most important, obviously. >> right. >> but is your monthly energy bill also part of what it would be -- >> you know what i think, i like to look at real home prices. they are -- you can compare. but consumer price index is probably more affected by oil prices than our home prices. so that mea

also with us diana olick. thanks for joining us today. >> thanks for having me. let's explain this. when we talk about lower premiums, the premium they have to pay on the insurance. if you don't put 20% down on a house? >> we're talking about fha insurance premiums that's right. so today the fha is lowering its insurance premiums by 50 basis points. >> and what brought the fha to that decision? >> well as folks may remember we got our last annual report in november. and what it showed was over the last couple of years, the mutual mortgage insurance fund has gained $21 billion of value. since the housing crisis started, these insurance premiums had gone up about 145%. these are our annual premiums. and really what this is about is first of all, maintaining a great balance between ensuring we have a strong mutual insurance fund and also fulfilling the fha's mission of providing opportunity for first-time home buyers and middle class families to be able to own a home. over at hud we call ourselves the department of opportunity. and i think this is a very prudent ste