by Calculated Risk on 7/10/2024 07:00:00 AM

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

Mortgage applications decreased 0.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending July 5, 2024. Last week’s results included an adjustment for the July 4th holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 20 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week and was 28 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 19 percent compared with the previous week and was 13 percent lower than the same week one year ago.

“The recent uptick in mortgage rates has slowed demand. Mortgage applications were essentially flat last week, as mortgage rates remained around 7 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase activity picked up slightly, driven primarily by increases in FHA and VA applications. Refinance applications decreased for the fourth consecutive week, in line with higher rates. Although home equity gains have been significant in recent years, most borrowers do not have much of an incentive to refinance at current rates.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.00 percent from 7.03 percent, with points decreasing to 0.60 from 0.62 (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 7/09/2024 07:33:00 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, Testimony, Fed Chair Jerome Powell, Semiannual Monetary Policy Report to Congress, Before the U.S. House Financial Services Committee

by Calculated Risk on 7/09/2024 02:22:00 PM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Declined in June

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were down in June compared to May. The Manheim Used Vehicle Value Index (MUVVI) fell to 196.1, a decline of 8.9% from a year ago. The seasonal adjustment to the index mitigated the impact on the month, resulting in values that declined 0.6% month over month for the second time in a row. The non-adjusted price in June decreased by 2.2% compared to May, moving the unadjusted average price down 10.0% year over year.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices declined in June (seasonally adjusted) and were down 8.9% year-over-year (YoY).

by Calculated Risk on 7/09/2024 11:19:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in June

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to June 2019 for each local market (some 2019 data is not available).

This is the first look at several early reporting local markets in June. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in June were mostly for contracts signed in April and May when 30-year mortgage rates averaged 6.99% and 7.06%, respectively (Freddie Mac PMMS). May was the first month since last Fall with average 30-year mortgage rates over 7%
...
In June, sales in these markets were down 6.7% YoY. Last month, in May, these same markets were up 3.1% year-over-year Not Seasonally Adjusted (NSA).

Sales in all of these markets are down significantly compared to June 2019.
...
This is a year-over-year decrease NSA for these early reporting markets. However, there were two fewer working days in June 2024 compared to June 2023 (19 vs 21), so seasonally adjusted sales will be much higher than the NSA data suggests.
...
This was just a several early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 7/09/2024 10:03:00 AM

This testimony will be live here at 10:00 AM ET.

Report here.

From Fed Chair Powell: Testimony: Semiannual Monetary Policy Report to the Congress. An excerpt:

The Federal Reserve remains squarely focused on our dual mandate to promote maximum employment and stable prices for the benefit of the American people. Over the past two years, the economy has made considerable progress toward the Federal Reserve's 2 percent inflation goal, and labor market conditions have cooled while remaining strong. Reflecting these developments, the risks to achieving our employment and inflation goals are coming into better balance.

The Committee has stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent. Incoming data for the first quarter of this year did not support such greater confidence. The most recent inflation readings, however, have shown some modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2 percent. emphasis added

by Calculated Risk on 7/09/2024 08:09:00 AM

I'm not sure about "renowned" but this interview hits several of the key points I've been discussing about housing.

From Lance Lambert at ResiClub: Renowned housing analyst who predicted the 2008 home price crash weighs in on the current market Here is the intro:

Years before the housing bubble burst in 2008, housing analyst Bill McBride began chronicling the troubles in the U.S. housing market in his blog Calculated Risk.

Not only did he predict the crash, but he also called the 2012 housing price bottom. Fast-forward to 2024, and this cycle he hasn’t been as concerned as he was in 2007.

McBride has maintained for the past few years that this housing cycle will ultimately resemble something closer to the 1978 to 1982 period—a time of overheated house price growth that saw spiked interest rates, strained affordability, crashed existing home sales volume, and yet no national home price crash—rather than the 2007-2011 national housing price crash years.

To better understand Bill McBride's perspective on the current housing and economic cycle, ResiClub reached out and conducted a Q&A with him.

Enjoy!

by Calculated Risk on 7/08/2024 07:26:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Gently Lower to Begin New Week

CPI has been the most important input for rates as far as economic reports are concerned. Thursday's is an exciting installment as it has a chance to confirm a promising shift seen in last month's data. If confirmed, rates should move easily into the 6's. [30 year fixed 7.01%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for June.

• At 10:00 AM, Testimony, Fed Chair Jerome Powell, Semiannual Monetary Policy Report to Congress, Before the U.S. Senate Committee on Banking, Housing, and Urban Affairs

by Calculated Risk on 7/08/2024 12:16:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Fannie and Freddie: Single Family Serious Delinquency Rate Decreased in May, Multi-family Increased Slightly

Brief excerpt:

Single-family serious delinquencies decreased in May, and multi-family serious delinquencies increased slightly.
...
Freddie Mac reports that the multi-family delinquencies rate increased to 0.36% in May, up from 0.35% in April, but down from the recent peak of 0.44% in January.

This graph shows the Freddie multi-family serious delinquency rate since 2012. Rates were still high in 2012 following the housing bust and financial crisis.

The multi-family rate increased following the pandemic and has increased recently as rent growth has slowed, vacancy rates have increased, and borrowing rates have increased sharply. The rate surged higher in January but declined in February and March. This will be something to watch as more apartments come on the market.

There is much more in the article.

by Calculated Risk on 7/08/2024 10:12:00 AM

Here is another monthly update on lumber prices.

SPECIAL NOTE: The CME group discontinued the Random Length Lumber Futures contract on May 16, 2023.  I switched to a physically-delivered Lumber Futures contract that was started in August 2022. 

Unfortunately, this impacts long term price comparisons since the new contract was priced about 24% higher than the old random length contract for the period when both contracts were available.

This graph shows CME random length framing futures through last August (blue), and the new physically-delivered Lumber Futures (LBR) contract starting in August 2022 (Red).

LBR is currently at $446.00 per 1000 board feet, down 20% from a year ago.

Click on graph for larger image.

There is somewhat of a seasonal demand for lumber, and lumber prices frequently peak in the first half of the year.

We didn't see a significant runup in the Spring period of 2023 or 2024 due to the housing slowdown.  LBR is now at the lowest level since the futures contract was started.

by Calculated Risk on 7/08/2024 08:13:00 AM

Altos reports that active single-family inventory was up 1.1% week-over-week. Inventory is now up 32.1% 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 July 5th, inventory was at 653 thousand (7-day average), compared to 646 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 75% from the record low for the same week in 2021, but still well below normal levels.

Inventory was up 40.0% compared to the same week in 2023 (last week it was up 38.4%), and down 31.2% compared to the same week in 2019 (last week it was down 33.2%). 

Inventory should be above 2020 levels for the same week next week.

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.