by Calculated Risk on 6/26/2024 07:00:00 AM

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

Mortgage applications increased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending June 21, 2024. This week’s results include an adjustment for the Juneteenth holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index was essentially unchanged from the previous week and was 26 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 10 percent compared with the previous week and was 13 percent lower than the same week one year ago.

“Mortgage rates were mostly lower last week, with the 30-year fixed rate declining slightly to 6.93 percent, the lowest level in more than three months,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Lower rates, however, were still not enough to entice refinance borrowers back, as most continue to hold mortgages with considerably lower rates.”

Added Kan, “Purchase applications did see a small increase after adjusting for the Juneteenth holiday. Government purchase loans, primarily FHA and VA, saw gains of more than 2 percent over the previous week, as homebuyers in those segments sought to take advantage of the recent rate relief.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.93 percent from 6.94 percent, with points unchanged at 0.61 (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 MBA mortgage purchase index.

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

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

Purchase application activity is up slightly from the lows in late October 2023, but still below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index declined sharply in 2022, and mostly flat lined since then with a slight increase recently.

by Calculated Risk on 6/25/2024 08:48:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

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

• At 10:00 AM, New Home Sales for May from the Census Bureau. The consensus is for 650 thousand SAAR, up from 634 thousand in April.

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

by Calculated Risk on 6/25/2024 05:48:00 PM

From WardsAuto: June U.S. Light-Vehicle Sales Likely Reduced by Cyberattack (pay content).  Brief excerpt:

Unknown is how many unit sales in June might be lost because of the attack. Not all affected dealers stopped selling vehicles and many that did have since resumed, often manually processing sales and finding alternative ways to deliver vehicles to customers. Another unknown is how many buyers might have switched to an unaffected dealer to make a purchase. The bright side is that any lost sales in June likely will be made up in July.
emphasis added

Click on graph for larger image.

This graph shows actual sales from the BEA (Blue), and Wards forecast for May (Red).

On a seasonally adjusted annual rate basis, the Wards forecast of 15.9 million SAAR, would be unchanged from last month, and down 1.0% from a year ago.

by Calculated Risk on 6/25/2024 01:35:00 PM

Two key points:
1) There is a clear seasonal pattern for house prices.
2) The surge in distressed sales during the housing bust distorted the seasonal pattern.  This was because distressed sales (at lower price points) happened at a steady rate all year, while regular sales followed the normal seasonal pattern.  This made for larger swings in the seasonal factor during the housing bust.

Click on graph for larger image.

This graph shows the month-to-month change in the NSA Case-Shiller National index since 1987 (through March 2024). The seasonal pattern was smaller back in the '90s and early '00s and increased once the bubble burst.

The seasonal swings declined following the bust, however the pandemic price surge changed the month-over-month pattern.

The second graph shows the seasonal factors for the Case-Shiller National index since 1987. The factors started to change near the peak of the bubble, and really increased during the bust since normal sales followed the regular seasonal pattern - and distressed sales happened all year.   

The swings in the seasonal factors were decreasing following the bust but have increased again recently - this time without a surge in distressed sales.

by Calculated Risk on 6/25/2024 09:47:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 6.3% year-over-year in April; FHFA: House Prices Increased 0.2% in April, up 6.3% YoY

Excerpt:

S&P/Case-Shiller released the monthly Home Price Indices for April ("April" is a 3-month average of February, March and April closing prices). April closing prices include some contracts signed in December, so there is a significant lag to this data. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The MoM increase in the seasonally adjusted (SA) Case-Shiller National Index was at 0.26%. This was the fifteenth consecutive MoM increase, but this tied December as the smallest MoM increase in the last 14 month.

On a seasonally adjusted basis, prices increased month-to-month in 16 of the 20 Case-Shiller cities. Seasonally adjusted, San Francisco has fallen 7.8% from the recent peak, Seattle is down 6.0% from the peak, Portland down 3.7%, and Phoenix is down 3.7%.

There is much more in the article.

by Calculated Risk on 6/25/2024 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for April ("April" is a 3-month average of February, March and April closing prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

From S&P S&P CoreLogic Case-Shiller Index Break Prvious Month's All-Time High in April 2024

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.3% annual gain for April, down from a 6.5% annual gain in the previous month. The 10-City Composite saw an annual increase of 8.0%, down from an 8.3% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 7.2%, dropping from a 7.5% increase in the previous month. San Diego continued to report the highest annual gain among the 20 cities in April with a 10.3% increase this month, followed by New York and Chicago, with increases of 9.4% and 8.7%, respectively. Portland once again held the lowest rank this month for the smallest year-over-year growth, with a 1.7% annual increase in April.
...
The U.S. National Index, the 20-City Composite, and the 10-City Composite upward trends decelerated from last month, with pre-seasonality adjustment increases of 1.2%, 1.36% and 1.38%, respectively.

After seasonal adjustment, the U.S. National Index and 10-City Composite posted the same month-over-month increase of 0.3% and 0.5% respectively as last month, while the 20-City reported a monthly increase of 0.4%.

“For the second consecutive month, we’ve seen our National Index jump at least 1% over its previous all-time high,” says Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “2024 is closely tracking the strong start observed last year, where March and April posted the largest rise seen prior to a slowdown in the summer and fall. Heading into summer, the market is at an all-time high, once again testing its resilience against the historically more active time of the year.

“Thirteen markets are currently at all-time highs and San Diego reigns supreme once again, topping annual returns for the last six months. The Northeast is the best performing market for the previous nine months, with New York rising 9.4% annually. Sustained outperformance of the Northeast market was last observed in 2011. For the decade that followed, the West and the South held the top posts for performance. It’s now been over a year since we’ve seen the top region come from the South or the West.
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index was up 0.5% in April (SA).  The Composite 20 index was up 0.4% (SA) in April.

The National index was up 0.3% (SA) in April.

The second graph shows the year-over-year change in all three indices.

The Composite 10 SA was up 8.0% year-over-year.  The Composite 20 SA was up 7.2% year-over-year.

The National index SA was up 6.3% year-over-year.

Annual price changes were slightly above expectations.  I'll have more later.

by Calculated Risk on 6/24/2024 07:08:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Remain Exceptionally Flat for 4th Straight Day

... ever since last Monday, the average top tier conventional 30yr fixed rate hasn't moved mover than 0.02% on any single day and for the past 3 days, not more than 0.01%. That's a staggering level of "sideways-ness." [30 year fixed 7.02%]
emphasis added

Tuesday:
• At 8:30 AM ET, Chicago Fed National Activity Index for May. This is a composite index of other data.

• At 9:00 AM, S&P/Case-Shiller House Price Index for April. The National index was up 6.5% year-over-year in March.

• Also at 9:00 AM, FHFA House Price Index for April. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for June.

• Also at 10:00 AM, State Employment and Unemployment (Monthly) for May 2024.

by Calculated Risk on 6/24/2024 04:07:00 PM

From the MBA: Share of Mortgage Loans in Forbearance Decreases Slightly to 0.21% in May

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance declined slightly to 0.21% as of May 31, 2024. According to MBA’s estimate, 105,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.2 million borrowers since March 2020.

In May 2024, the share of Fannie Mae and Freddie Mac loans in forbearance declined 1 basis point to 0.10%. Ginnie Mae loans in forbearance remained the same relative to the previous month at 0.39%, and the forbearance share for portfolio loans and private-label securities (PLS) also stayed flat at 0.31%.

“The performance of servicing portfolios in May was solid, with about 96 percent of borrowers making their mortgage payments on time,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “There was a slight decline in the performance of post-forbearance loan workouts, but the results were relatively strong with 75 percent of homeowners making their payments in accordance with the workout terms.”
emphasis added

At the end of May, there were about 105,000 homeowners in forbearance plans.

by Calculated Risk on 6/24/2024 10:50:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Watch Months-of-Supply!

A brief excerpt:

Although inventory is well below normal levels, so are sales. I think we need to keep an eye on months-of-supply. Historically nominal prices declined when months-of-supply approached 6 months - and that is unlikely this year - but we could see months-of-supply back to 2019 levels later this year.

What would it take to get months-of-supply back to 2019 levels by mid-year? The following table is a simple exercise. If sales stay depressed at 2023 levels, how much would inventory have to increase to put months-of-supply at 2019 levels?

There is much more in the article.

by Calculated Risk on 6/24/2024 08:12:00 AM

Altos reports that active single-family inventory was up 2.2% week-over-week. Inventory is now up 28.4% from the February seasonal bottom, and at the highest level since July 2020.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of June 21st, inventory was at 634 thousand (7-day average), compared to 621 thousand the prior week.   

Inventory is still far below pre-pandemic levels. 

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

The red line is for 2024.  The black line is for 2019.  Note that inventory is up 80% from the record low for the same week in 2021, but still well below normal levels.

Inventory was up 37.7% compared to the same week in 2023 (last week it was up 37.3%), and down 33.6% compared to the same week in 2019 (last week it was down 34.2%). 

Inventory should be above 2020 levels for the same week in a few weeks.

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels is slowly closing.

Mike Simonsen discusses this data regularly on Youtube.