The government-sponsored enterprise Wednesday reported fourth quarter net income of $2.9 billion, up slightly quarter-over-quarter and 65% higher from the final months of 2022. Greater net revenues and a credit reserve release in single-family operations drove those increases, said Chris Lown, executive vice president and chief financial officer. 

"An improvement in house prices drove an $872 million benefit for credit losses this year, versus a provision of $1.8 billion in the prior year," he said in an earnings conference call. "In 2022, the provision for credit losses was driven by deterioration in housing market conditions."

House prices rose 6.6% last year compared to 4.9% in 2022, according to Freddie Mac's estimations. The benefit for credit losses has fluctuated in the past few quarters, at $467 million over the final months of 2023 compared to $575 million over the same period in 2022. In the third quarter of 2023, the figure was just $263 million.

Those credit provision shifts helped Freddie Mac record $10.5 billion in net income for the year, up 13% from 2022's $9.3 billion. Gains were also tempered by a $313 million expense in the third quarter tied to a judgment in favor of shareholders also entangling GSE rival Fannie Mae. 

Last year's sluggish purchase and refinance markets sent Freddie Mac's new business activity down $241 million annually to $300 billion over 2023. Fourth quarter performance also deteriorated, with $73 billion in single-family business representing a 35% quarterly decline and 16% annual drop. 

In terms of homes funded, the GSE powered 955,000 mortgages last year compared to 1.8 million in 2022. Lown pointed out 51% home purchases were made by first-time homebuyers, the highest percentage Freddie Mac has seen since it began tracking the statistic three decades ago. 

The serious delinquency rate for single-family business was 55 basis points, unchanged quarterly and down from last year's 66 bps. The multifamily serious delinquency rate was 28 bps in the fourth quarter, up 12 bps annually. Lown attributed that jump to senior housing and small-balance loan portfolios. He said 89% of such loans have credit enhancement coverage.

Single-family net income was up 80% year-over-year at $2.7 billion, while multifamily profit was steady at $300 million. Revenues for both segments were relatively flat both quarterly and annually: Net revenue for single-family was $4.8 billion, and the mark for multifamily was $600 million.