Fannie Mae did not need additional bailout funds in the first quarter.

NEW YORK (CNNMoney) -- Mortgage backer Fannie Mae reported the best quarterly results since before the housing meltdown, saying it did not need additional billions in tax funds for the quarter and that it believes losses on past mortgages peaked at the end of last year.

The company also reported just enough profit in the three months ended March 31 to cover its latest payment to the Treasury Department, and predicted better profits ahead.

Email-->
• Print
• Comment

The first quarter earnings of $2.7 billion before that payment was the best net income since the $4.3 billion Fannie made in second quarter of 2004. That was in the midst of the housing bubble, when rising home sales and prices contributed to the company's profits until the market collapsed three years later.

Fannie attributed the better results to a slowing in the decline in home prices, a drop in its inventory of foreclosed homes and better sale prices for the foreclosed homes it sold.

"We expect our financial results for 2012 to be significantly better than 2011," said Susan McFarland, Fannie's chief financial officer, in the earnings statement released Wednesday.

There have been numerous signs of improvement in the long-battered housing market in recent months, as record-low mortgage rates, low home prices and lower unemployment have helped to draw home buyers back into the market. But the large supply of foreclosed homes for sale have continued to depress home prices.

Fannie and Freddie provide most of funds used for U.S. home mortgages, as they purchase and bundle loans made by banks and other lenders, attach loan guarantees, and then sell or hold securities backed by those mortgages. As of March 31, the two companies guaranteed $3.06 trillion in home loans.

Fannie to rent you your foreclosed home

When the housing bubble that inflated in the last decade burst in 2007, the drop in home prices and the spike in foreclosures caused huge losses for the two firms.

In the summer of 2008, Congress essentially agreed to cover those losses, concerned that if they were to go out of business, home buying would cease and financial markets would seize up. Treasury stepped in to place both companies under conservatorship, which is similar to bankruptcy.

0:00 /2:20House flipping is back

Since then, Fannie has received $116.1 billion in bailout funds. It has made $22.6 billion in dividend payments back to Treasury, including $2.8 billion in the most recent quarter. The result was a net cost to taxpayers of $93.5 billion.

Freddie Mac has received $72.3 billion from the Treasury, and paid back dividends of $18.3 billion. It needed $19 million from Treasury at the end of the first quarter, after making a $1.8 billion dividend payment.

There have been quarters in this period when Fannie would have been profitable if not for the large dividend payments and the payment from Treasury was simply being used to make the dividend payment back to the government. That was the case for Freddie in the first quarter.

Before the dividend payment, Fannie reported net income in the quarter of $2.7 billion, compared to a net loss of $6.5 billion a year earlier. 

First Published: May 9, 2012: 10:23 AM ET

1."We're hopelessly out of fashion."

Also See

• 10 Things Online Data Collectors Won't Say
• 10 Things Your iPad Won't Say
• 10 Things the IRS Won't Tell You

Once a primary tool for real-estate agents looking to sell a home, experts say the traditional open house has lost its influence in the Internet age. Nearly 90% of buyers search online for homes, while only half that number visit open houses, according to a 2011 report from the National Association of Realtors. And open houses are rarely used as a first step to a home search: Thirty-five percent of buyers start their search online while just 4% start at open houses. Online listings are now the most popular source for finding a home, followed by real estate agents, according to the NAR. Open house signs rank third. "Open houses are somewhat of a dinosaur," says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.

Indeed, most buyers today conduct their preliminary research at home -- reviewing online photos, virtual tours and a home's layout -- and arranging for private showings of the properties they're interested in. In addition to listings, other information such as comps (the prices similar homes nearby sold for), property taxes and the school district the house belongs to can also be easily found online. Years ago, buyers had to visit open houses or speak with a real estate agent to get the low down.

We're still finding Open Houses to be a great way to expose homes to buyers in our area. As a matter of fact, 2 our of the last 3 listings we sold came from buyers who walked thru our open house. Web sites, e-marketing, videos etc. help to attract buyers, who then want to see the home in person. For us, Open Houses help to "round out" our marketing campaign, helping our clients to sell their home fast.

Homes in our marketplace (Orange County) usually sell within 2 - 3% of asking price. Low inventory and motivated buyers sometimes even create a multiple offer situation, where properties sell above asking price. Now is the best time in the last 6 years for homeowners to put their property on the market!

More from Yahoo! Real Estate » Playfully Mixing and Matching Home Decor » DIY apps that hit the nail on the head » An otherworldly upside-down home

Could it be that housing has emerged from its funk?

While some hard-hit markets still lag, overall, a number of key indicators are pointing in that direction and could confirm “the beginning of a broad-based housing recovery,” according to the latest report from Realtor.com. “We’re seeing some hope,” says Steve Berkowitz, the company’s chief executive officer, adding that in general, close-in suburbs are recovering faster than the outlying ones. The report looked at data from March 2012 and compared it with a year earlier.

Signaling the more optimistic outlook, median list prices for resale homes jumped about 5.6% to $189,900 from a year before. (Sales prices of existing homes eased up 0.3% in February to an estimated $156,600 from a year earlier, according to the latest statistics from the National Association of Realtors.)

In the 146 markets Realtor.com surveyed, listing prices were up 1% year over year in 111 metropolitan statistical areas and 5% or more in 70 cities. The biggest listing price increases happened in two places that had been hard-hit by the foreclosure crisis, Phoenix and Miami. The report suggests that because asking prices have risen, these two cities, as well as Boise City, Idaho, and Punta Gorda, Fla., “appear to be in the recovery process.”

Listing prices were flat in 18 markets and fell more than 1% in 17 markets. Only two cities, Chicago and Knoxville, Tenn., experienced a drop of 5% or more. The report says that the shift shows a change in the nation’s housing problems “away from the sand states and into older, more industrialized areas” that have been slammed by the recent recession.

When it comes to days on the market, there’s more good news for sellers. The median time on the market was 89 days in March, roughly a 19.8% decline from the same month a year earlier. It's a remarkable turnaround: In March 2010, the median age of for-sale inventory was up about 26.1% from the year before. Homes sold in fewer than 50 days in Denver; Washington, D.C.; and Iowa City, Iowa, as well as the California cities of Oakland, Fresno, Bakersfield and San Francisco. They took longer than 150 days in rural areas in southern South Carolina as well as Asheville, N.C.; Santa Fe, N.M.; and Myrtle Beach, S.C.

Shrinking supply also has a lot to do with consumers’ more upbeat attitudes, the report noted. Nationwide, inventory levels of resale homes, which include single-family, condos, townhouses and coops, fell about 21.5% from the year before, which the report says is a sign that the market is in a stronger position than it was this time last year. Some of the country’s most distressed markets have seen inventory declines greater than 38%, including Oakland, Bakersfield and Fresno in California and Miami, Fort Lauderdale and Orlando in Florida. Atlanta, Seattle, Phoenix and Portland, Ore., also showed steep declines. Only Philadelphia and Hartford, Conn., showed bump ups in inventory levels, and the increases were slight.

However, the so-called “shadow inventory” of homes that are heading for foreclosure or already reclaimed by lenders remains a wild card that could dampen the recovery’s momentum. Santa Ana, Calif.-based research firm CoreLogic estimates that the shadow inventory is about 1.6 million units, which would take about six months to clear at the current sales rate. But some economists think that estimate is too low. Ed Sullivan, chief economist for the Portland Cement Association, says that bank processing delays are masking the true extent of the shadow inventory and expects that it will take nearly nine months to burn it off. “It will slow things down, but not stop the recovery,” he says.

Here in South Orange County, buyers are out looking and homes are selling quickly. This is the best time to be a home seller we've seen in the last 5 years.

Here in Orange County, buyers are out and we are seeing multiple offers. Looks like we may be near the end of a long, cold winter.

By Alexandra Scaggs

Improving economic data and government-policy developments have led Bank of America/Merrill Lynch to call for the long-awaited bottom in housing prices this year.

The firm tweaked its forecast from November, when it expected home prices to fall 3.5% in 2012. Now, it expects a modest gain of 0.5%, a good sign for the sector that continues limping through its worst downturn in generations.

Still, “along with the earlier bottom is a slower recovery,” the firm warns. It expects home prices to gain 2.8% in 2014, solidly below its prior estimate of 8.1%. Its prediction for 2020 remains roughly the same, when it expects beaten-down home prices to have recovered by 42%.

Inventory dropped sharply in the second half of last year, according to the firm’s research. And while BofA/Merrill expects those numbers to pick up because winter’s unseasonable warmth may have already supported home sales, it now expects lower inventory levels than previously thought. Also, recent trends of higher-than-expected job creation and record-low mortgage rates, the firm said, further support the case that housing is undervalued.

The note’s authors—MBS/ABS Strategists Ryan Asato and Chris Flanagan and U.S. Economist Michelle Meyer—wrote that government policies have helped the market as well. While no recent moves have been a panacea for home prices, “they represent a positive step forward.” The firm mentioned a settlement involving state and federal officials and U.S. banks on foreclosure practices and easier refinancing for homeowners as two of these.

However, the firm writes that its outlook could easily change if policies or macroeconomic factors do. If the U.S. economy weakens again in the second half of 2012, housing demand will fall, resulting in continued price declines. And even with this year’s bottom, it will take years for the market to recover in full. “Although the housing market is healing, it is still far from a robust recovery.”

To be sure, some industry watchers aren’t as optimistic because the market faces continued headwinds. Foreclosures remain a stubborn issue, while lending standards remain strict for many would-be buyers. The rental market poses stiff competition, while many consumers remain too afraid to buy homes.

“Despite the optimistic signs from the selling season, we remain cautious,” David Goldberg, a home builder analyst with UBS, wrote in a client note.

–Dawn Wotapka contributed to this post.