by Calculated Risk on 9/25/2024 07:00:00 AM

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

Mortgage applications increased 11.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 20, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 11.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 11 percent compared with the previous week. The Refinance Index increased 20 percent from the previous week and was 175 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 increased 0.4 percent compared with the previous week and was 2 percent higher than the same week one year ago.

“Mortgage applications increased to their highest level since July 2022, boosted by a 20 percent increase in refinance applications after a large increase the prior week. The 30-year fixed rate decreased for the eighth straight week to 6.13 percent, while the FHA rate decreased to 5.99 percent, breaking the psychologically important 6 percent level,” Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result of lower rates, week-over-week gains for both conventional and government refinance applications increased sharply. The refinance share of applications is now at 55.7 percent, and while the level of refinance activity is still modest compared to prior refi waves, they now account for the majority of applications, given the seasonal slowdown in purchase activity.”

Added Kan, “Average loan sizes were higher both for purchase and refinance applications, which pushed the overall average loan size to its highest in the survey’s history at $413,100.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.13 percent from 6.15 percent, with points increasing to 0.57 from 0.56 (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 up 2.0% year-over-year unadjusted. 

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

Purchase application activity is up about 18% from the lows in late October 2023, but still about 2% 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 for two years - but has increased significantly recently as mortgage rates declined.

by Calculated Risk on 9/24/2024 07:21:00 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 August from the Census Bureau. The consensus is for 700 thousand SAAR, down from 739 thousand in July.

by Calculated Risk on 9/24/2024 01:12:00 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 9/24/2024 09:58:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 5.0% year-over-year in July

Excerpt:

S&P/Case-Shiller released the monthly Home Price Indices for July ("July" is a 3-month average of May, June and July closing prices). July closing prices include some contracts signed in March, 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).

For the second consecutive month, the MoM increase in the seasonally adjusted (SA) Case-Shiller National Index was at 0.18% (a 2.2% annual rate), This was the eighteenth consecutive MoM increase, but this tied the previous as the smallest MoM increase in the last 18 months.

On a seasonally adjusted basis, prices increased month-to-month in 18 of the 20 Case-Shiller cities. Seasonally adjusted, San Francisco has fallen 7.1% from the recent peak, Phoenix is down 4.2% from the peak, Portland down 3.1%, and Seattle and Denver are both down 2.9%.

There is much more in the article.

by Calculated Risk on 9/24/2024 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for July ("July" is a 3-month average of May, June and July 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 All-Time Highs Continue in July 2024

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.0% annual gain for July, down from a 5.5% annual gain in the previous month. The 10-City Composite saw an annual increase of 6.8%, down from a 7.4% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 5.9%, dropping from a 6.5% increase in the previous month. New York again reported the highest annual gain among the 20 cities with an 8.8% increase in July, followed by Las Vegas and Los Angeles with annual increases of 8.2% and 7.2%, respectively. Portland held the lowest rank for the smallest year-over-year growth, notching the same 0.8% annual increase in July as last month.
...
The U.S. National Index, the 20-City Composite, and the 10-City Composite upward trends continued to decelerate from last month, with pre-seasonality adjustment increases of 0.1% for the national index, and both the 20-City and 10-City Composites remained unchanged on the month.

After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 0.2%, while both the 20-City and 10-City Composite reported a monthly rise of 0.3%.

“Accounting for seasonality of home purchases, we have witnessed 14 consecutive record highs in our National Index,” says Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets. “While the S&P 500 has achieved 39 record highs and the S&P GSCI Gold TR hit 35 record highs, housing is following a similar trajectory. The growth has come at a cost, with all but two markets decelerating last month, eight markets seeing monthly declines, and the slowest annual growth nationally in 2024. Overall, the indices continue to grow at a rate that exceeds long-run averages after accounting for inflation.

“We continue to observe outperformance in most low-price tiers in the market on a three- and five-year horizon,” Luke continued. “The low-price tier of Tampa was the best performing market nationally with five-year performance of 88%. The New York market was the best market annually, posting a gain of 8.9%. New York’s low-tier index, which include home values up to $533,000, helped drive that growth with 10.8% annual gains. Over five years, markets such as New York and Atlanta saw low-price-tiered indices outperforming their market by as much as 20% and 18%, respectively. The relative outperformance of low-price-tiered indices has both benefited first-time homebuyers as well as made it more difficult for those looking for a starter home. The opposite is happening in California, which has the most expensive high-price tiers in the nation, all well over $1 million. The rich are getting richer in San Diego, Los Angeles, and San Francisco where their high-price-tiered indices outperformed on a one- and three-year basis. ”
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 0.3% in July (SA).  The Composite 20 index was up 0.3% (SA) in July.

The National index was up 0.2% (SA) in July.

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

The Composite 10 SA was up 6.8% year-over-year.  The Composite 20 SA was up 5.9% year-over-year.

The National index SA was up 5.0% year-over-year.

Annual price changes were close to expectations.  I'll have more later.

by Calculated Risk on 9/23/2024 06:59:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Move Slightly Higher to Start New Week

Mortgage rates rose modestly last week after hitting long term lows before the Fed announced its 0.50% rate cut. In not so many words, mortgage rates had already gotten in position for that cut and were thus left to undergo a mild correction. [30 year fixed 6.20%]
emphasis added

Tuesday:
• At 9:00 AM ET, S&P/Case-Shiller House Price Index for July. The consensus is for a 5.9% year-over-year increase in the Composite 20 index for July.

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

• At 10:00 AM, the Richmond Fed manufacturing survey for September.

by Calculated Risk on 9/23/2024 04:10:00 PM

From the MBA: Share of Mortgage Loans in Forbearance Increases to 0.31% in August

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance increased to 0.31% as of August 31, 2024. According to MBA’s estimate, 155,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.2 million borrowers since March 2020.

The share of Fannie Mae and Freddie Mac loans in forbearance increased 1 basis point to 0.13% in August 2024. Ginnie Mae loans in forbearance increased by 10 basis points to 0.66%, and the forbearance share for portfolio loans and private-label securities (PLS) increased 2 basis points to 0.35%.

“For the third consecutive month, the percentage of loans in forbearance increased across all loan types,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “By investor type, Ginnie Mae loans in forbearance have increased the most – up 27 basis points since May 2024.”

Added Walsh, “Forbearance levels are much lower than they were during the first two years of the pandemic. However, a weakening in the performance of servicing portfolios and an increase in forbearance requests are both likely given the softening observed in the labor market.”
emphasis added

At the end of August, there were about 155,000 homeowners in forbearance plans.

by Calculated Risk on 9/23/2024 02:05:00 PM

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12-month average.

Click on graph for larger image.

On a rolling 12-month basis, inbound traffic increased 2.2% in August compared to the rolling 12 months ending in July.   Outbound traffic increased 0.3% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in the Winter depending on the timing of the Chinese New Year.  

Imports were up 27% YoY in August, and exports were up 4% YoY.    

In general, it appears port traffic is returning to the pre-pandemic patterns - although this was a very strong August for imports as retailers prepare for holiday shopping - and possibly to beat any increase in tariffs or the potential strike.

by Calculated Risk on 9/23/2024 11:01:00 AM

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

A brief excerpt:

Both inventory and sales are well below pre-pandemic levels, and I think we need to keep an eye on months-of-supply to forecast price changes. Historically nominal prices declined when months-of-supply approached 6 months - and that is unlikely any time soon - however, as expected, months-of-supply is back to 2019 levels.

Months-of-supply was at 4.2 months in August compared to 4.0 months in August 2019. Even though inventory has declined significantly compared to 2019, sales have fallen even more - pushing up months-of-supply.

The following graph shows months-of-supply since 2017. Note that months-of-supply is higher than the last 3 years (2021 - 2023), and above August 2019. Months-of-supply was at 4.2 in August 2017 and 4.3 in August 2018. In 2020 (black), months-of-supply increased at the beginning of the pandemic and then declined sharply.
...
What would it take to get months-of-supply above 5 months? If sales stay depressed at 2023 and 2024 levels, how much would inventory have to increase to put months-of-supply at 5 months by, say, June 2024?

There is much more in the article.

by Calculated Risk on 9/23/2024 08:11:00 AM

Altos reports that active single-family inventory was up 1.6% week-over-week. Inventory is now up 46.8% from the February seasonal bottom.  

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of September 20th, inventory was at 725 thousand (7-day average), compared to 714 thousand the prior week. 

This is the highest level of inventory since May 2020.  

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.  

Inventory was up 37.2% compared to the same week in 2023 (last week it was up 37.4%), and down 24.0% compared to the same week in 2019 (last week it was down 25.2%). 

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.