by Calculated Risk on 9/18/2023 04:07:00 PM
Monday, September 18, 2023
MBA Survey: "Share of Mortgage Loans in Forbearance Decreases to 0.33% in August"
From the MBA: Share of Mortgage Loans in Forbearance Decreases to 0.33% in August
The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance decreased by 6 basis points from 0.39% of servicers’ portfolio volume in the prior month to 0.33% as of August 31, 2023. According to MBA’s estimate, 165,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 7.92 million borrowers since March 2020.
In August, the share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.19%. Ginnie Mae loans in forbearance decreased 15 basis points to 0.65%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 6 basis points to 0.39%.
“The forbearance rate is just 8 basis points shy of where it was at the beginning of March 2020, which indicates that most homeowners have recovered from the pandemic,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “While there was a monthly decline in the performance of post-forbearance workouts in August, overall mortgage servicing portfolios remain resilient. Compared to other credit types with weaker performance, the percentage of home mortgages that are performing is holding steady at a non-seasonally adjusted 96 percent.”
emphasis added
This graph shows the percent of portfolio in forbearance by investor type over time.
The share of forbearance plans has been decreasing and declined to 0.33% in August from 0.39% in July.
At the end of July, there were about 165,000 homeowners in forbearance plans.
Lawler: Early Read on Existing Home Sales in August and Some New Household/Housing Stock Data
by Calculated Risk on 9/18/2023 02:58:00 PM
Today, in the Calculated Risk Real Estate Newsletter: Lawler: Early Read on Existing Home Sales in August and Some New Household/Housing Stock Data
A brief excerpt:
From housing economist Tom Lawler:There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/
Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.07 million in August, unchanged from July’s preliminary pace and down 14.7 % from last August’s seasonally adjusted pace.
Local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by about 3.8% from last August.
CR Note: The NAR is scheduled to released August Existing Home Sales on Thursday at 10:00 AM ET. The consensus is for 4.10 million SAAR, up from 4.07 million in July.
Cleveland Fed: Median CPI increased 0.3% and Trimmed-mean CPI increased 0.3% in August
by Calculated Risk on 9/18/2023 02:01:00 PM
Note: I didn't update this last week.
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% in August. The 16% trimmed-mean Consumer Price Index also increased 0.3% in August. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".
This graph shows the year-over-year change for these four key measures of inflation.
Note: The Cleveland Fed released the median CPI details. "Motor Fuel" increased at a 237% annualized rate in August!
NAHB: Builder Confidence Decreased in September
by Calculated Risk on 9/18/2023 10:05:00 AM
The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 45, down from 50 last month. Any number above 50 indicates that more builders view sales conditions as good than poor.
From the NAHB: High Mortgage Rates Continue to Weaken Builder Confidence
Persistently high mortgage rates above 7% continue to erode builder confidence, as sentiment levels have dropped below the key break-even measure of 50 for the first time in five months.
Builder confidence in the market for newly built single-family homes in September fell five points to 45, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. This follows a six-point drop in August.
“The two-month decline in builder sentiment coincides with when mortgage rates jumped above 7% and significantly eroded buyer purchasing power,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “And on the supply-side front, builders continue to grapple with shortages of construction workers, buildable lots and distribution transformers, which is further adding to housing affordability woes. Insurance cost and availability is also a growing concern for the housing sector.”
“High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower,” said NAHB Chief Economist Robert Dietz. “Putting into place policies that will allow builders to increase the housing supply is the best remedy to ease the nation’s housing affordability crisis and curb shelter inflation. Shelter inflation posted a 7.3% year-over-year gain in August, compared to an overall 3.7% consumer inflation reading.”
As mortgage rates stayed above 7% over the last month, more builders are reducing home prices again to bolster sales. In September, 32% of builders reported cutting home prices, compared to 25% in August. That’s the largest share of builders cutting prices since December 2022 (35%). The average price discount remains at 6%. Meanwhile, 59% of builders provided sales incentives of all forms in September, more than any month since April 2023.
While more pricing-out is now occurring, the lack of resale inventory at the start of 2023 has shifted the new construction buyer mix. A special question in the September HMI survey revealed that 42% of new single-family home buyers were first-time buyers on a year-to-date basis in 2023. This is significantly higher than the 27% reading from a more normalized market in 2018.
...
All three major HMI indices posted declines in September. The HMI index gauging current sales conditions fell six points to 51, the component charting sales expectations in the next six months also declined six points to 49 and the gauge measuring traffic of prospective buyers dropped five points to 30.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell two points to 54, the Midwest dropped three points to 42, the South fell four points to 54 the West posted a three-point decline to 47.
emphasis added
This graph shows the NAHB index since Jan 1985.
This was below the consensus forecast.
Housing September 18th Weekly Update: Inventory increased 1.9% Week-over-week; Down 6.1% Year-over-year
by Calculated Risk on 9/18/2023 08:21:00 AM
This inventory graph is courtesy of Altos Research.
Sunday, September 17, 2023
Sunday Night Futures
by Calculated Risk on 9/17/2023 06:31:00 PM
Weekend:
• Schedule for Week of September 17, 2023
Monday:
• At 10:00 AM ET, The September NAHB homebuilder survey. The consensus is for a reading of 50, unchanged from 50 in August. Any number above 50 indicates that more builders view sales conditions as good than poor.
From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures and DOW futures are up slightly (fair value).
Oil prices were down over the last week with WTI futures at $90.77 per barrel and Brent at $93.93 per barrel. A year ago, WTI was at $86, and Brent was at $89 - so WTI oil prices are up 5% year-over-year.
Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.82 per gallon. A year ago, prices were at $3.65 per gallon, so gasoline prices are up $0.17 year-over-year.
FOMC Preview: No Change to Policy Expected
by Calculated Risk on 9/17/2023 08:11:00 AM
Most analysts expect there will be no change to FOMC policy at this meeting, keeping the target range for the federal funds rate at 5‑1/4 to 5-1/2 percent.
"We expect the Fed to stay on hold at the September FOMC meeting, consistent with recent Fed communications and current market pricing. Recent data should leave the Fed encouraged by ongoing disinflation but concerned about re-acceleration in inflation because of the strength in activity. ... The biggest focus of the September meeting should be the updated Summary of Economic Projections (SEP). We expect the 2023 median policy rate forecast to show one more 25bp hike, for a terminal rate of 5.5-5.75%. Perhaps the most important forecast is the 2024 median, which we think will shift up by 25bp to 4.875%, reflecting just 75bp of cuts next year."And from Goldman Sachs economists:
emphasis added
"[T]he story of the year so far is that solid growth has not derailed either the rebalancing of the labor market or progress in lowering inflation, as one might have feared. In fact, measures of labor market tightness have now returned to roughly their pre-pandemic levels, on average. This means that the desired rebalancing of supply and demand is now largely complete and that further sustained below-potential growth is likely no longer necessary.
At their September meeting, Fed officials are likely to make fairly straightforward revisions to their economic projections that reflect these recent developments. For 2023, we expect a substantial upward revision to GDP growth (+1.1pp to +2.1%) and moderate downward revisions to the unemployment rate (-0.2pp to 3.9%) and core inflation (-0.4pp to 3.5%)."
GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1 | ||||
---|---|---|---|---|
Projection Date | 2023 | 2024 | 2025 | |
June 2023 | 0.7 to 1.2 | 0.9 to 1.5 | 1.6 to 2.0 | |
March 2023 | 0.0 to 0.8 | 1.0 to 1.5 | 1.7 to 2.1 |
The unemployment rate was at 3.8% in August. To reach the mid-point of the FOMC projections for Q4 2023, the economy would likely have to lose a significant number of jobs in Q4. The FOMC's unemployment rate projection for Q4 will likely be revised down.
Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2 | ||||
---|---|---|---|---|
Projection Date | 2023 | 2024 | 2025 | |
June 2023 | 4.0 to 4.3 | 4.3 to 4.6 | 4.3 to 4.6 | |
March 2023 | 4.0 to 4.7 | 4.3 to 4.9 | 4.3 to 4.8 |
As of July 2023, PCE inflation increased 3.3 percent year-over-year (YoY), up from 3.0 percent YoY in June, and down from the recent peak of 7.0 percent in June 2022. Projections for PCE inflation will likely be revised down.
Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1 | ||||
---|---|---|---|---|
Projection Date | 2023 | 2024 | 2025 | |
June 2023 | 3.0 to 3.5 | 2.3 to 2.8 | 2.0 to 2.4 | |
March 2023 | 3.0 to 3.8 | 2.2 to 2.8 | 2.0 to 2.2 |
PCE core inflation increased 4.2 percent YoY, up from 4.1 percent in April, and down from the recent peak of 5.4 percent in February 2022. This includes PCE measure of shelter that was up 7.8% YoY in July (even though asking rents are soft). Core PCE inflation likely declined to around 3.8% in August, and the FOMC will revise down their projections.
Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1 | ||||
---|---|---|---|---|
Projection Date | 2023 | 2024 | 2025 | |
June 2023 | 3.7 to 4.2 | 2.5 to 3.1 | 2.0 to 2.4 | |
March 2023 | 3.5 to 3.9 | 2.3 to 2.8 | 2.0 to 2.2 |
Saturday, September 16, 2023
Real Estate Newsletter Articles this Week: Current State of the Housing Market
by Calculated Risk on 9/16/2023 02:11:00 PM
At the Calculated Risk Real Estate Newsletter this week:
• Q2 Update: Delinquencies, Foreclosures and REO
• Part 1: Current State of the Housing Market; Overview for mid-September
• Part 2: Current State of the Housing Market; Overview for mid-September
• 3rd Look at Local Housing Markets in August
• 2nd Look at Local Housing Markets in August
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/
Schedule for Week of September 17, 2023
by Calculated Risk on 9/16/2023 08:11:00 AM
The key reports this week are August Housing Starts and Existing Home sales.
The FOMC meets this week and no change to policy is expected.
10:00 AM: The September NAHB homebuilder survey. The consensus is for a reading of 50, unchanged from 50 in August. Any number above 50 indicates that more builders view sales conditions as good than poor.
This graph shows single and total housing starts since 1968.
The consensus is for 1.440 million SAAR, down from 1.452 million SAAR.
10:00 AM: State Employment and Unemployment (Monthly) for August 2023
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).
2:00 PM: FOMC Meeting Announcement. No change to policy is expected at this meeting.
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.
2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 224 thousand initial claims, up from 220 thousand last week.
8:30 AM: the Philly Fed manufacturing survey for September. The consensus is for a reading of 0.0, up from -12.0.
The graph shows existing home sales from 1994 through the report last month.
Housing economist Tom Lawler expects the NAR to report 4.07 million SAAR.
No major economic releases scheduled.
Friday, September 15, 2023
Sept 15th COVID Update: Deaths and Hospitalizations Increased
by Calculated Risk on 9/15/2023 07:58:00 PM
Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.
COVID Metrics | ||||
---|---|---|---|---|
Now | Week Ago | Goal | ||
Hospitalized2🚩 | 14,489 | 12,984 | ≤3,0001 | |
Deaths per Week2🚩 | 860 | 844 | ≤3501 | |
1my goals to stop weekly posts, 2Weekly for Currently Hospitalized, and Deaths 🚩 Increasing number weekly for Hospitalized and Deaths ✅ Goal met. |
This graph shows the weekly (columns) number of deaths reported.