by Calculated Risk on 4/18/2023 09:07:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: March Housing Starts: Most Multi-family Under Construction Since 1973

Excerpt:

The fourth graph shows housing starts under construction, Seasonally Adjusted (SA).

Red is single family units. Currently there are 716 thousand single family units (red) under construction (SA). This was down in March compared to February, and 112 thousand below the recent peak in April and May 2022. Single family units under construction have peaked since single family starts are now declining. The reason there are still so many homes under construction is probably due to supply constraints.

Blue is for 2+ units. Currently there are 958 thousand multi-family units under construction.  This is the highest level since November 1973! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Combined, there are 1.674 million units under construction, just 37 thousand below the all-time record of 1.711 million set in October 2022.

There is much more in the post.  You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 4/18/2023 08:37:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately‐owned housing starts in March were at a seasonally adjusted annual rate of 1,420,000. This is 0.8 percent below the revised February estimate of 1,432,000 and is 17.2 percent below the March 2022 rate of 1,716,000. Single‐family housing starts in March were at a rate of 861,000; this is 2.7 percent above the revised February figure of 838,000. The March rate for units in buildings with five units or more was 542,000.

Building Permits:
Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,413,000. This is 8.8 percent below the revised February rate of 1,550,000 and is 24.8 percent below the March 2022 rate of 1,879,000. Single‐family authorizations in March were at a rate of 818,000; this is 4.1 percent above the revised February figure of 786,000. Authorizations of units in buildings with five units or more were at a rate of 543,000 in March
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 (blue, 2+ units) decreased in March compared to February.   Multi-family starts were up 6.5% year-over-year in March. 

Single-family starts (red) increased in March and were down 27.7% year-over-year.

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

This shows the huge collapse following the housing bubble, and then the eventual recovery - and the recent collapse in single-family starts.

Total housing starts in March were slightly above expectations, however, starts in January and February were revised down slightly, combined.

I'll have more later …

by Calculated Risk on 4/17/2023 09:01:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Suddenly Near 1-Month Highs

After bottoming out at the lowest levels in months in the first week of April, mortgage rates have been rising fairly quickly. As of this afternoon, you'd have to go back nearly a month to see a higher 30yr fixed rate from the average lender.

In the slightly bigger picture, this leaves us slightly higher than the middle of 2023's range marked by lows near 6% in early February and highs just over 7% in early March. [30 year fixed 6.61%]
emphasis added

Tuesday:
• At 8:30 AM ET, Housing Starts for March. The consensus is for 1.400 million SAAR, down from 1.450 million SAAR in February.

by Calculated Risk on 4/17/2023 04:00:00 PM

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 0.55% in March

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance decreased by 5 basis points from 0.60% of servicers’ portfolio volume in the prior month to 0.55% as of March 31, 2023. According to MBA’s estimate, 275,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 7.8 million borrowers since March 2020.

In March 2023, the share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 0.26%. Ginnie Mae loans in forbearance decreased 10 basis points to 1.18%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 10 basis points to 0.68%.

“As the COVID-19 national emergency draws to a close, the number of loans in forbearance continues to drop,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Mortgage performance remains strong with the percentage of borrowers who were current on their mortgage payments and post-forbearance workouts increasing in March.”

Adds Walsh, “MBA’s forecast still calls for a recession in 2023, which may change the current performance levels, but credit quality is generally good and many borrowers facing financial hardship can now access enhanced loss mitigation options that resulted from successes of pandemic-related policies.”
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.

The share of forbearance plans has been decreasing, declined to 0.55% in March from 0.60% in February.

At the end of March, there were about 275,000 homeowners in forbearance plans.

by Calculated Risk on 4/17/2023 11:30:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Lawler on Demographics: New Population Estimates Incorporate Unprecedented Methodological Changes

A brief excerpt:

Demographics are very useful in predicting long term trends for housing and the economy.

The following note from housing economist Tom Lawler discusses the most recent release from the Census Bureau.

Last week Census released its “Vintage 2022” estimates of the US resident population by single year of age, and the estimates incorporated unprecedented methodological changes that, if accurate, significantly changed estimates of the age distributions of the US population from previous “vintage” estimates.

In December Census noted that because of some “issues” with Census 2020, it would create a “blended” base (or decadal starting point) for April 1, 2020 that would incorporate age and sex data from the 2020 Demographic Analysis.  Stated another way, for (I believe) the first time ever the starting point for this decade’s population estimates do NOT reflect the age distribution from the Decennial Census.  Here is an excerpt from its methodology section.

“At the national level, then, it is accurate to say that resident, household, and group quarters (GQ) population totals are derived from the 2020 Census, age and sex detail is drawn from 2020 DA, and race and Hispanic origin detail comes from V2020.”

Incorporation of this “blended” base resulted in significant changes in the age distribution of the resident population, as shown in the table below.

As the table shows, while the total population estimates for 4/1/2020 are virtually unchanged, there were sizable changes in population estimates for various age groups.
...
CR Note: ... This estimated change in the late teens / early 20’s population in 2020 - that Lawler highlighted - is important (if accurate) for multi-family housing.

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 4/17/2023 10:06:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 45, up from 44 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Lack of Existing Inventory Continues to Support Builder Sentiment

Builders remained cautiously optimistic in April as limited resale inventory helped to increase demand in the new home market even as the industry continues to grapple with building material issues.

Builder confidence in the market for newly built single-family homes in April rose one point to 45, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

Currently, one-third of housing inventory is new construction, compared to historical norms of a little more than 10%. More buyers looking at new homes, along with the use of sales incentives, have supported new home sales since the start of 2023.
...
The HMI index gauging current sales conditions in April rose two points to 51 and the component charting sales expectations in the next six months increased three points to 50. This marks the first time these components both returned to the 50+ range since June 2022. The gauge measuring traffic of prospective buyers remained unchanged at 31. This is the first time the traffic component failed to improve in 2023.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose four points to 46, the Midwest edged up two points to 37, the South increased four points to 49 and the West moved four points higher to 38.
emphasis added

Click on graph for larger image.

This graph shows the NAHB index since Jan 1985.

This was at the consensus forecast. 

The "traffic of prospective buyers" is still well below breakeven at 31 (below 50).

by Calculated Risk on 4/17/2023 08:25:00 AM

Altos reports that active single-family inventory was down 1.3% week-over-week. Inventory still hasn't bottomed seasonally.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of April 14th, inventory was at 405 thousand (7-day average), compared to 411 thousand the prior week.   

Year-to-date, inventory is down 17.4%.

The second graph shows the seasonal pattern for active single-family inventory since 2015.

The red line is for 2023.  The black line is for 2019.  Note that inventory is up from the previous two years (the record low was in 2022), but still well below normal levels.

Inventory was up 51.6% compared to the same week in 2022 (last week it was up 59.1%), and down 52.4% compared to the same week in 2019 (last week down 50.9%). 

A key will be when inventory starts increasing in 2023.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 4/16/2023 06:52:00 PM

Weekend:
• Schedule for Week of April 16, 2023

Monday:
• At 8:30 AM ET, The New York Fed Empire State manufacturing survey for April. The consensus is for a reading of -18.0, up from -24.6.

• At 10:00 AM, The April NAHB homebuilder survey. The consensus is for a reading of 45, up from 44.  Any number below 50 indicates that more builders view sales conditions as poor than good.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 8 and DOW futures are up 50 (fair value).

Oil prices were up over the last week with WTI futures at $82.52 per barrel and Brent at $86.31 per barrel. A year ago, WTI was at $107, and Brent was at $111 - so WTI oil prices are down about 23% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.65 per gallon. A year ago, prices were at $4.05 per gallon, so gasoline prices are down $0.40 per gallon year-over-year.

by Calculated Risk on 4/16/2023 11:13:00 AM

Note: I used to post this monthly, but I stopped during the COVID-19 pandemic. I've received a number of requests lately to post this again, so here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, Fed Chair, or any other marker.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter, George H.W. Bush and Trump only served one term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (dark blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (dark red) took office.

There was a recession towards the end of President G.H.W. Bush (light purple) term, and Mr. Clinton (light blue) served for eight years without a recession.   And there was a pandemic related recession in 2020.

First, here is a table for private sector jobs. The top two previous private sector terms were both under President Clinton.  

Term	Private Sector Jobs Added (000s)
Carter	9,039
Reagan 1	5,363
Reagan 2	9,351
GHW Bush	1,511
Clinton 1	10,877
Clinton 2	10,093
GW Bush 1	-820
GW Bush 2	447
Obama 1	1,906
Obama 2	9,927
Trump	-2,135
Biden	11,8241
1After 26 months.

Click on graph for larger image.

The first graph is for private employment only.

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 820,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 373,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased by 9,039,000 under President Carter (dashed green), by 14,714,000 under President Reagan (dark red), 1,511,000 under President G.H.W. Bush (light purple), 20,970,000 under President Clinton (light blue), and 11,833,000 under President Obama (dark dashed blue).  During Trump's term (Orange), the economy lost 2,135,000 private sector jobs.

In the first 26 months of President Biden's term (Blue), the economy has added 11,824,000 private sector jobs, as the economy recovered from the pandemic.

 A big difference between the presidencies has been public sector employment.  Note: the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, 2010 and 2020. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).  However the public sector declined significantly while Mr. Obama was in office (down 271,000 jobs).  During Trump's term, the economy lost 535,000 public sector jobs.

In the first 26 months of President Biden's term, the economy has added 776,000 public sector jobs (about 70% of public job growth has been local education).

And a table for public sector jobs. Public sector jobs declined the most during Obama's first term and increased the most during Reagan's 2nd term.

Term	Public Sector Jobs Added (000s)
Carter	1,304
Reagan 1	-24
Reagan 2	1,438
GHW Bush	1,127
Clinton 1	692
Clinton 2	1,242
GW Bush 1	900
GW Bush 2	844
Obama 1	-710
Obama 2	447
Trump	-535
Biden	7761
1After 26 months.

by Calculated Risk on 4/15/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• Lawler: Early Read on Existing Home Sales in March

• Current State of the Housing Market; Overview for mid-April

• Remote Work and Household Formation

• A Few Comments on Commercial Real Estate

• 2nd Look at Local Housing Markets in March

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

You can subscribe at https://calculatedrisk.substack.com/

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