by Calculated Risk on 6/24/2021 10:59:00 AM

Note: The year-over-year occupancy comparisons are easy, since occupancy declined sharply at the onset of the pandemic.  So STR is comparing to the same week in 2019.

The occupancy rate is down 9.9% compared to the same week in 2019. Leisure (weekend) occupancy has recovered, but weekday (more business) is still down double digits.

From CoStar: STR: US Hotel Occupancy Reaches Highest Level in More Than 19 Weeks

U.S. weekly hotel occupancy hit its highest level in 85 weeks, according to STR‘s latest data through June 19.

June 13-19, 2021 (percentage change from comparable week in 2019*):

• Occupancy: 68.0% (-9.9%)
• Average daily rate (ADR): US$128.90 (-4.4%)
• Revenue per available room (RevPAR): US$87.62 (-13.8%)

In addition to occupancy reaching its highest point since the week ending November 9, 2019, ADR and RevPAR were pandemic-era highs.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

Occupancy is now above the horrible 2009 levels and weekend occupancy (leisure) has been solid.

Note: Y-axis doesn't start at zero to better show the seasonal change.

With solid leisure travel, the next two months should have decent occupancy - but it is uncertain what will happen in the Fall with business travel.

by Calculated Risk on 6/24/2021 08:42:00 AM

The DOL reported:

In the week ending June 19, the advance figure for seasonally adjusted initial claims was 411,000, a decrease of 7,000 from the previous week's revised level. The previous week's level was revised up by 6,000 from 412,000 to 418,000. The 4-week moving average was 397,750, an increase of 1,500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 395,000 to 396,250.
emphasis added

This does not include the 104,682 initial claims for Pandemic Unemployment Assistance (PUA) that was up from 97,762 the previous week.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 397,750.

The previous week was revised up.

Regular state continued claims decreased to 3,390,000 (SA) from 3,534,000 (SA) the previous week.

Note: There are an additional 5,950,167 receiving Pandemic Unemployment Assistance (PUA) that decreased from 6,125,524 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.  And an additional 5,273,180 receiving Pandemic Emergency Unemployment Compensation (PEUC) up from 5,165,249.

Weekly claims were higher than the consensus forecast.

by Calculated Risk on 6/24/2021 08:30:00 AM

From the BEA: Gross Domestic Product (Third Estimate), GDP by Industry, and Corporate Profits (Revised), 1st Quarter 2021

Real gross domestic product (GDP) increased at an annual rate of 6.4 percent in the first quarter of 2021, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 4.3 percent.

The “third” estimate of GDP released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was also 6.4 percent. Upward revisions to nonresidential fixed investment, private inventory investment, and exports were offset by an upward revision to imports, which are a subtraction in the calculation of GDP
emphasis added

Here is a Comparison of Third and Second Estimates. PCE growth was revised up slightly to 11.4%. Residential investment was revised up from 12.7% to 13.1%. This was at the consensus forecast.

by Calculated Risk on 6/23/2021 09:00:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for a decrease to 390 thousand from 412 thousand last week.

• Also at 8:30 AM, Durable Goods Orders for May from the Census Bureau. The consensus is for a 3.0% increase in durable goods orders.

• Also at 8:30 AM, Gross Domestic Product, 1st quarter 2020 (Third estimate). The consensus is that real GDP increased 6.4% annualized in Q1, unchanged from the second estimate of a 6.4% increase.

• At 11:00 AM, the Kansas City Fed manufacturing survey for June. This is the last of regional manufacturing surveys for June.

• At 4:30 PM, Federal Reserve releases Results from 2021 Bank Stress Tests

by Calculated Risk on 6/23/2021 04:05:00 PM

This data is from the CDC.

According to the CDC, on Vaccinations.

Total doses administered: 319,872,053, as of yesterday 319,223,844. Daily change: 0.65 million.

COVID Metrics
	Today	Yesterday	Week Ago	Goal
Percent over 18, One Dose	65.6%	65.5%	64.7%	≥70.0%1,2
Fully Vaccinated (millions)	150.8	150.4	146.5	≥1601
New Cases per Day3,4	11,282	11,251	12,146	≤5,0002
Hospitalized3	12,402	12,633	14,015	≤3,0002
Deaths per Day3,4	287	293	276	≤502
1 America's Goal by July 4th, 2my goals to stop daily posts, 37 day average for Cases, Hospitalized, and Deaths 4Cases and Deaths updated Mon - Fri

KUDOS to the residents of the 16 states and D.C. that have already achieved the 70% goal: Vermont, Hawaii and Massachusetts are at 80%+, and Connecticut, New Jersey, Maine, Rhode Island, Pennsylvania, New Mexico, California, Maryland, Washington, New Hampshire, New York, Illinois, Virginia and D.C. are all over 70%.

Next up are Minnesota at 69.3%, Delaware at 69.2%, Colorado at 68.9%, Oregon at 68.9%, Wisconsin at 64.8%, Nebraska at 63.8%, and South Dakota at 63.6%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

This data is from the CDC.

by Calculated Risk on 6/23/2021 01:53:00 PM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Architecture billings continue historic rebound

Demand for design services from U.S. architecture firms continues to grow at a vigorous pace, according to a new report today from The American Institute of Architects (AIA).

AIA’s Architecture Billings Index (ABI) score for May rose to 58.5 compared to 57.9 in April (any score above 50 indicates an increase in billings). May’s ABI score is one of the highest in the index’s 25-year history. During May, the new design contracts score reached its second consecutive record high with a score of 63.2, while new project inquiries also recorded a near-record high score at 69.2.

“Despite ballooning costs for construction materials and delivery delays, design activity is roaring back as more and more places reopen,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “However, concern over rising inflation and ongoing supply chain disruptions, as well as emerging labor shortages, could dampen the emerging construction recovery.”
...
• Regional averages: Midwest (63.4); South (59.0); West (57.4); Northeast (54.2)

• Sector index breakdown: commercial/industrial (60.6); multi-family residential (59.5); mixed practice (57.9); institutional (57.1)
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 58.5 in May, up from 57.9 in April. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index had been below 50 for eleven consecutive months, but has been solidly positive for the last foure months.  

The eleven months of decline represented a significant decrease in design services, and suggests a decline in CRE investment through most of 2021 (This usually leads CRE investment by 9 to 12 months), however we might see a pickup in CRE investment towards the end of the 2021 and into 2022.

by Calculated Risk on 6/23/2021 01:25:00 PM

Note: At the beginning of the pandemic, the delinquency rate increased sharply (see table below).   Loans in forbearance are counted as delinquent in this survey, but those loans are not reported as delinquent to the credit bureaus.

From Black Knight: Black Knight’s First Look at May 2021 Mortgage Data

• The national delinquency rate rose to 4.73% from 4.66% in April, driven largely by the three-day Memorial Day weekend foreshortening available payment windows

• Similar occurrences are rare; the last time was in May 2004, at which time mortgage delinquencies jumped by more than 15% in a single month; this month saw a 1.5% increase

• Early-stage delinquencies (those 30 or 60 days past due) rose by 110,200 in May, while serious delinquencies (90 or more days but not yet in foreclosure) improved for the ninth consecutive month

• Despite this improvement, nearly 1.7 million first-lien mortgages remain seriously delinquent, 1.26 million more than there were prior to the pandemic

• Foreclosure inventory hit yet another new record low as both moratoriums and borrower forbearance plan participation continue to limit activity, keeping foreclosure starts near record lows as well

• Mortgage prepayments fell to their lowest level in more than a year, driven by falling refinance activity as well as purchase-related headwinds
emphasis added

According to Black Knight's First Look report, the percent of loans delinquent increased 1.5% in May compared to April, and decreased 39% year-over-year.

The percent of loans in the foreclosure process decreased 2.5% in May and were down 26% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.73% in May, up from 4.66% in April.

The percent of loans in the foreclosure process decreased in May to 0.28%, from 0.29% in April.

The number of delinquent properties, but not in foreclosure, is down 1,612,000 properties year-over-year, and the number of properties in the foreclosure process is down 52,000 properties year-over-year.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	May  2021	Apr 2021	May 2020	May 2019
Delinquent	4.73%	4.66%	7.76%	3.36%
In Foreclosure	0.28%	0.29%	0.38%	0.49%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	2,511,000	2,500,000	4,123,000	1,760,000
Number of properties in foreclosure pre-sale inventory:	148,000	153,000	200,000	255,000
Total Properties	2,659,000	2,653,000	4,323,000	2,015,000

by Calculated Risk on 6/23/2021 11:21:00 AM

New home sales for May were reported at 769,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised down significantly.

This was well below consensus expectations for May, but still the highest sales rate for May since 2007.

However, sales were in line with home builder comments about "limiting sales" in April and May mostly due to high material costs.

Still, sales have been strong for the last year.  Clearly low mortgages rates, low existing home supply, and favorable demographics have boosted sales.  A surging stock market has probably helped new home sales too.

Earlier: New Home Sales Decrease to 769,000 Annual Rate in May.

Click on graph for larger image.

This graph shows new home sales for 2020 and 2021 by month (Seasonally Adjusted Annual Rate).

The year-over-year comparisons were easy in the first half of 2021 - especially in March and April.

However, sales will likely be down year-over-year in the 2nd half of 2021 (maybe June) - since the selling season was delayed in 2020.

And on inventory: note that completed inventory (3rd graph in previous post) is near record lows, but inventory under construction is closer to normal.

This graph shows the months of supply by stage of construction.

The inventory of completed homes for sale was at 36 thousand in May, just above the record low of 33 thousand in April 2021. That is about 0.6 months of completed supply (just above the record low).

The inventory of new homes under construction, and not started, is at 4.6 months - a normal level.

by Calculated Risk on 6/23/2021 10:12:00 AM

The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 769 thousand.

The previous three months were revised down sharply, combined.

Sales of new single‐family houses in May 2021 were at a seasonally adjusted annual rate of 769,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.9 percent below the revised April rate of 817,000, but is 9.2 percent above the May 2020 estimate of 704,000.
emphasis added

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

This was the highest sales rate for May since 2007.

The second graph shows New Home Months of Supply.

The months of supply increased in May to 5.1 months from 4.6 months in April.

The all time record high was 12.1 months of supply in January 2009. The all time record low was 3.5 months, most recently in October 2020.

This is in the normal range (about 4 to 6 months supply is normal).

"The seasonally‐adjusted estimate of new houses for sale at the end of May was 330,000. This represents a supply of 5.1 months at the current sales rate."

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is just above the record low, but the combined total of completed and under construction is close to normal.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In May 2021 (red column), 69 thousand new homes were sold (NSA). Last year, 64 thousand homes were sold in May.

The all time high for May was 120 thousand in 2005, and the all time low for May was 26 thousand in 2010.

This was well below expectations, and sales in the three previous months were revised down sharply, combined. I'll have more later today.

by Calculated Risk on 6/23/2021 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 2.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 18, 2021.

... The Refinance Index increased 3 percent from the previous week and was 9 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 14 percent lower than the same week one year ago.

“Mortgage rates increased last week, with the 30-year fixed rate rising to 3.18 percent – the highest level in a month. Despite the jump in rates, refinances increased for the second consecutive week, pushed higher by a 4 percent bump in conventional refinance applications,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications have regained an upward trend over the past few weeks. Activity was slightly higher for the third straight week, but remained lower than the same week a year ago. Government purchase applications drove most of last week’s increase, which also contributed to a slightly lower overall average purchase loan size.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.18 percent from 3.11 percent, with points increasing to 0.48 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

With low rates, the index remains elevated, and picked up this week as rates declined.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 14% year-over-year unadjusted.

Note: The year ago comparisons for the unadjusted purchase index are now more difficult since purchase activity picked up in late May 2020.

Note: Red is a four-week average (blue is weekly).