STC Stewart Information Services Corp.

Management Discussion

• Comparisons of our results of operations for the three and nine months ended September 30, 2019 with the three and nine months ended September 30, 2018 are set forth below. Factors contributing to fluctuations in the results of operations are presented in the order of their monetary significance, and we have quantified, when necessary, significant changes. Segment results are included in the discussions and, when relevant, are discussed separately.
• Our statements on home sales and loan activity are based on published industry data from sources including Fannie Mae, the National Association of Realtors® (NAR) and the U.S. Census Bureau. We also use information from our direct operations.
• Operating environment. Actual existing home sales in the third quarter 2019 improved approximately 3% from the third quarter 2018, while September 2019 existing home sales totaled 452,000, which was up 7% (seasonally-adjusted) from a year ago. Respectively, September 2019 median and average home prices were $272,100 and $308,500, which were 6% and 4% higher than the prior year. The increased home prices were primarily due to a shortage of home inventory, which was estimated to be 3% lower at the end of September 2019 compared to a year ago. According to Fannie Mae, one-to-four family residential lending in the third quarter 2019 increased 29% to $598 billion from the prior year quarter. This increase was primarily driven by $124 billion, or 101%, higher refinancing originations which was mainly influenced by lower interest rates in the third quarter 2019 versus the third quarter 2018. Purchase originations modestly increased $10 billion, or 3%, as total housing starts improved 5% and average home prices increased in the third quarter versus last year's quarter.