by Calculated Risk on 9/22/2021 10:40:00 AM

In the Newsletter I have additional comments on August existing home sales.

This was the first month this year with sales down year-over-year. This should continue through the rest of the year, since sales averaged 6.6 million SAAR over the last four months of 2020.

by Calculated Risk on 9/22/2021 10:11:00 AM

From the NAR: Existing-Home Sales Recede 2.0% in August

Existing-home sales retreated in August, breaking two straight months of increases, according to the National Association of Realtors®. Each of the four major U.S. regions experienced declines on both a month-over-month and a year-over-year perspective.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 2.0% from July to a seasonally adjusted annual rate of 5.88 million in August. Year-over-year, sales dropped 1.5% from a year ago (5.97 million in August 2020).
...
Total housing inventory at the end of August totaled 1.29 million units, down 1.5% from July's supply and down 13.4% from one year ago (1.49 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from July but down from 3.0 months in August 2020.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in August (5.88 million SAAR) were down 2.0% from last month, and were 1.5% below the August 2020 sales rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.29 million in August from 1.31 million in July.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was down 13.4% year-over-year in August compared to August 2020.

Months of supply was unchanged at 2.6 months in August from 2.6 months in July.

This was slightly above the consensus forecast. I'll have more later.

by Calculated Risk on 9/22/2021 07:00:00 AM

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

Mortgage applications increased 4.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 17, 2021. The previous week’s results included an adjustment for the Labor Day holiday.

... The Refinance Index increased 7 percent from the previous week and was 5 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 12 percent compared with the previous week and was 13 percent lower than the same week one year ago.

“There was a resurgence in mortgage applications the week after Labor Day, with activity overall at its highest level in over a month, and purchase applications jumping to a high last seen in April 2021,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Housing demand is strong heading into the fall, despite fast-rising home prices and low inventory. The inventory situation is improving, with more new homes under construction and more homeowners listing their home for sale. Despite this week’s increase, purchase applications were still 13 percent lower than the same week a year ago.”

Added Kan, “Homeowners acted while rates remained low at 3.03 percent. This week’s refinance gain of 7 percent was driven heavily by an increase in FHA and VA applications.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) remained unchanged at 3.03 percent, with points decreasing to 0.30 from 0.32 (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.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 13% year-over-year unadjusted.

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

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

by Calculated Risk on 9/21/2021 09:00:00 PM

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• During the day, The AIA's Architecture Billings Index for August (a leading indicator for commercial real estate).

• At 10:00 AM, Existing Home Sales for August from the National Association of Realtors (NAR). The consensus is for 5.81 million SAAR, down from 5.99 million in July.

• At 2:00 PM, FOMC Meeting Announcement. See FOMC Preview: Tapering "Advance Notice" Likely

• At 2:00 PM, FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

• At 2:30 PM, Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

by Calculated Risk on 9/21/2021 05:23:00 PM

The CDC is the source for all data.

The 7-day average deaths is the highest since February 27th.

According to the CDC, on Vaccinations.  Total doses administered: 386,780,816, as of a week ago 381,453,265, or 0.76 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	54.8%	54.0%	≥70.0%1
Fully Vaccinated (millions)	182.0	179.3	≥2321
New Cases per Day3	130,916	141,314	≤5,0002
Hospitalized3	83,998	91,810	≤3,0002
Deaths per Day3🚩	1,533	1,361	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of the 12 states that have achieved 60% of total population fully vaccinated: Vermont at 69.0%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland. New Jersey, Washington, New York, New Mexico, New Hampshire and Oregon at 60.0%.

The following 19 states and D.C. have between 50% and 59.9% fully vaccinated: Virginia at 59.8%, District of Columbia, Colorado, California, Minnesota, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, Michigan, South Dakota, Kentucky, Arizona, Kansas and Texas, and Nevada at 50.0%.

Next up (total population, fully vaccinated according to CDC) are Utah at 49.8%, Ohio at 49.7%, Alaska at 49.3%, North Carolina 48.8% and Montana at 47.9%.

Click on graph for larger image.

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

by Calculated Risk on 9/21/2021 03:22:00 PM

Here is an initial look at the prime age (25 to 54) participation rate.

The first graph shows the prime age participation rate since 1948.

Click on graph for larger image.

There are two clear long term trends:

1. The participation rate for prime age women increased significantly from around 34% in the '40s to around 77% in 2000 (and then started declining).

2. The participation rate for prime age men has gradually been decreasing, from close to 97% in the '40s to around 88% in 2014.

The second graphs show the trend since 2010.

The participation rate for both men and women appears to have bottomed around 2014, and then were impacted significantly by the pandemic in 2020.

Currently the participation rate for prime age women is 75.4%, and 88.4% for prime age men.

Some of increase in the second half of the last decade was probably due to a large cohort aging out of the "prime age".   Even in the prime age (25 to 54), different cohorts have different participation rates, with the group in the 50 to 54 having the lowest participation rate.    I'll look at an age adjusted graph soon.

by Calculated Risk on 9/21/2021 11:24:00 AM

In the Newsletter I have additional comments on August housing starts

Currently there are also 702 thousand multi-family units under construction. This is the highest level since 1974! For multi-family, construction delays are a factor. The completion of these units should help with rent pressure.

by Calculated Risk on 9/21/2021 08:40:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately‐owned housing starts in August were at a seasonally adjusted annual rate of 1,615,000. This is 3.9 percent above the revised July estimate of 1,554,000 and is 17.4 percent above the August 2020 rate of 1,376,000. Single‐family housing starts in August were at a rate of 1,076,000; this is 2.8 percent below the revised July figure of 1,107,000. The August rate for units in buildings with five units or more was 530,000

Building Permits:
Privately‐owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,728,000. This is 6.0 percent above the revised July rate of 1,630,000 and is 13.5 percent above the August 2020 rate of 1,522,000. Single‐family authorizations in August were at a rate of 1,054,000; this is 0.6 percent above the revised July figure of 1,048,000. Authorizations of units in buildings with five units or more were at a rate of 632,000 in August.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) increased in August compared to July.   Multi-family starts were up 53% year-over-year in August.

Single-family starts (blue) decreased in August, and were up 5% year-over-year.   

The second graph shows single and multi-family housing starts since 1968.

The second graph shows the huge collapse following the housing bubble, and then the eventual recovery (but still not historically high).

Total housing starts in August were above expectations, and starts in June and July were revised up slightly.

I'll have more later …

by Calculated Risk on 9/20/2021 07:25:00 PM

From Matthew Graham at Mortgage News Daily: MBS RECAP: Surprise Snowball Rally as Stocks Swoon Over Global Risks

It remains to be seen how long the stock swoon continues as there is some disagreement about whether the Evergrande drama deserves as much credit as it received today. Either way, bonds simply endured an in-range correction, and they remain more susceptible to Wednesday's Fed when it comes to volatility risks on the horizon. [30 year fixed 3.00%]
emphasis added

Tuesday:
• At 8:30 AM ET, Housing Starts for August. The consensus is for 1.560 million SAAR, up from 1.534 million SAAR.

by Calculated Risk on 9/20/2021 04:00:00 PM

Note: This is as of September 12th.

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 3.00%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 8 basis points from 3.08% of servicers’ portfolio volume in the prior week to 3.00% as of September 12, 2021. According to MBA’s estimate, 1.5 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 5 basis points to 1.47%. Ginnie Mae loans in forbearance remained the same relative to the prior week at 3.39%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 32 basis points to 6.95%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 8 basis points to 3.25%, and the percentage of loans in forbearance for depository servicers decreased 5 basis points to 3.10%.

“The share of loans in forbearance decreased by 8 basis points last week, as forbearance exits remained elevated and new forbearance requests and re-entries were unchanged,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “20% of loans in forbearance are either new forbearance requests or re-entries. At this point, borrowers in forbearance extensions are exiting at a faster rate as they near – or reach – the expiration of their maximum forbearance term.”
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April 2020, and has trended down since then.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained the same relative to the prior week at 0.05%."