by Calculated Risk on 4/01/2022 03:02:00 PM

Today, in the Calculated Risk Real Estate Newsletter: It is the Change in Monthly Payment that Matters

Excerpt:

Yesterday I pointed that we shouldn’t compare the current situation to the housing bubble and bust, but instead we should look to the 1978 to 1982 period for lessons.

See: Housing: Don't Compare the Current Housing Boom to the Bubble and Bust

In that post, I argued it wasn’t the level of mortgage rates that impacted housing, but the change in rates (this was a shortcut).

More precisely, it is the change in monthly payments that impacts housing. Monthly payments include principal, interest, taxes, insurance (PITI), and sometimes HOA fees (Homeowners Association). We could also include maintenance, utilities and other costs.

The following graph shows the year-over-year change in principal & interest (P&I) assuming a fixed loan amount since 1977. Currently P&I is up about 21% year-over-year for a fixed amount (this doesn’t take into account the change in house prices).

So, this is less of an increase than in 1979.

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

by Calculated Risk on 4/01/2022 11:25:00 AM

From the Census Bureau reported that overall construction spending increased 1.3%:

Construction spending during February 2022 was estimated at a seasonally adjusted annual rate of $1,704.4 billion, 0.5 percent above the revised January estimate of $1,695.5 billion. The February figure is 11.2 percent above the February 2021 estimate of $1,533.3 billion.
emphasis added

Private spending increased and public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $1,353.7 billion, 0.8 percent above the revised January estimate of $1,343.4 billion. ...

In February, the estimated seasonally adjusted annual rate of public construction spending was $350.7 billion, 0.4 percent below the revised January estimate of $352.2 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential (red) spending is 25% above the bubble peak (in nominal terms - not adjusted for inflation).

Non-residential (blue) spending is 21% above the bubble era peak in January 2008 (nominal dollars).

Public construction spending is 8% above the peak in March 2009.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 16.6%. Non-residential spending is up 9.7% year-over-year. Public spending is up 1.4% year-over-year.

This was below consensus expectations of a 0.9% increase in spending; however, construction spending for the previous two months was revised up.

by Calculated Risk on 4/01/2022 11:11:00 AM

From BofA:

Our 1Q GDP tracking estimate fell by 0.6ppt to 0.4% qoq SAAR as real personal spending was weaker than we expected. [April 1 estimate]
emphasis added

From Goldman:

Following today’s data,we left our Q1 GDP tracking estimate unchanged at +0.5% (qoq ar). [March 31 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2022 is 1.3 percent on March 31, up from 0.9 percent on March 24. [March 31 estimate]

by Calculated Risk on 4/01/2022 09:18:00 AM

This was another solid report.

The headline jobs number in the March employment report was slightly below expectations, however employment for the previous two months was revised up by 95,000.   The participation rate and the employment-population ratio both increased, and the unemployment rate decreased to 3.6%.

Leisure and hospitality gained 112 thousand jobs in March.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.20 million jobs, and are now down 1.47 million jobs since February 2020.  So, leisure and hospitality has now added back about 82% all of the jobs lost in March and April 2020.

Construction employment increased 19 thousand and is now 4 thousand above the pre-pandemic level. 

Manufacturing added 38 thousand jobs and is still 118 thousand below the pre-pandemic level.

Earlier: March Employment Report: 431 thousand Jobs, 3.6% Unemployment Rate

In March, the year-over-year employment change was 6.5 million jobs.

Permanent Job Losers

Click on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the report today.

This data is only available back to 1994, so there is only data for three recessions.

In March, the number of permanent job losers decreased to 1.392 million from 1.583 million in the previous month.

These jobs will likely be the hardest to recover, so it is a positive that the number of permanent job losers is almost back to pre-recession levels.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 participation rate increased in March to 82.5% from 82.2% in February, and the 25 to 54 employment population ratio increased to 80.0% from 79.5% the previous month.

Both are slightly below the pre-pandemic levels and indicate almost all of the prime age workers have returned to the labor force.

Part Time for Economic Reasons

From the BLS report:

"The number of persons employed part time for economic reasons was about unchanged at 4.2 million in March and is little different from its February 2020 level. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons increased in March to 4.170 million from 4.135 million in February. This is at pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 6.9% from 7.2% in the previous month. This is down from the record high in April 22.9% for this measure since 1994. This measure is below the 7.0% in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.702 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.691 million the previous month.

This does not include all the people that left the labor force. 

Summary:

The headline monthly jobs number was slightly below expectations; however, the previous two months were revised up by 95,000 combined.  

The headline unemployment rate decreased to 3.6%.  The household survey indicated a strong gain in employment of 736 thousand, pushing up the participation rate and employment-population ratio, and pushing down the unemployment rate to 3.6%, and U-6 to below pre-recession levels.

Both the prime age participation rate and employment-population ratio increased, and are now close to pre-pandemic levels, indicating almost all of the prime age workers have returned to the labor force.  

There are still 1.6 million fewer jobs than prior to the recession.  

Overall, this was another solid report.

by Calculated Risk on 4/01/2022 08:44:00 AM

From the BLS:

Total nonfarm payroll employment rose by 431,000 in March, and the unemployment rate declined to 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains continued in leisure and hospitality, professional and business services, retail trade, and manufacturing.

The change in total nonfarm payroll employment for January was revised up by 23,000, from +481,000 to +504,000, and the change for February was revised up by 72,000, from +678,000 to +750,000. With these revisions, employment in January and February combined is 95,000 higher than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the job losses from the start of the employment recession, in percentage terms.

The current employment recession was by far the worst recession since WWII in percentage terms.

However, 25 months after the onset of the current employment recession, almost all of the jobs have returned.

The second graph shows the year-over-year change in total non-farm employment since 1968.

In March, the year-over-year change was 6.5 million jobs.  This was up significantly year-over-year.

Total payrolls increased by 431 thousand in March.  Private payrolls increased by 426 thousand, and public payrolls increased 5 thousand.

Payrolls for January and February were revised up 95 thousand, combined.

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate increased to 62.4% in March, from 62.3% in February. This is the percentage of the working age population in the labor force.

The Employment-Population ratio increased to 60.1% from 59.9% (blue line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate decreased in March to 3.6% from 3.8% in February.

This was slightly below consensus expectations; however, January and February payrolls were revised up by 95,000 combined.  

I'll have more later ...

by Calculated Risk on 3/31/2022 09:07:00 PM

My March Employment Preview

A few brief excerpts from a note by Goldman Sachs economist Spencer Hill:

We estimate nonfarm payrolls rose by 575k in March (mom sa) ... we believe fierce competition for workers incentivized firms to pull forward recruiting activities earlier in the spring hiring season. We also note that short-term unemployment only partially reversed its Omicron spike with the February report, implying scope for additional rehiring in March. ... We estimate a one-tenth drop in the unemployment rate to 3.7%
emphasis added

Friday:
• At 8:30 AM ET, Employment Report for March.   The consensus is for 475,000 jobs added, and for the unemployment rate to decrease to 3.7%.

• At 10:00 AM, ISM Manufacturing Index for March. The consensus is for the ISM to be at 58.6, unchanged from 58.6 in February.  

• At 10:00 AM, Construction Spending for February. The consensus is for a 0.9% increase in construction spending.

• All Day, Light vehicle sales for March. The consensus is for light vehicle sales to be 14.1 million SAAR in March, unchanged from 14.1 million in February (Seasonally Adjusted Annual Rate).

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
Percent fully Vaccinated	65.6%	---	≥70.0%1
Fully Vaccinated (millions)	217.6	---	≥2321
New Cases per Day3	25,732	26,518	≤5,0002
Hospitalized3	12,243	15,482	≤3,0002
Deaths per Day3	626	732	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37-day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the daily (columns) and 7-day average (line) of deaths reported.

New cases, hospitalizations and deaths are declining.

by Calculated Risk on 3/31/2022 04:39:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Housing: Don't Compare the Current Housing Boom to the Bubble and Bust

Excerpt:

It is natural to compare the current housing boom to the mid-00s housing bubble. The bubble and subsequent bust are part of our collective memories. And graphs of nominal house prices and price-to-rent ratios look eerily similar to the housing bubble.

However, there are significant differences. First, lending has been reasonably solid during the current boom, whereas in the mid-00s, underwriting standards were almost non-existent (“fog a mirror, get a loan”). And demographics are much more favorable today than in the mid-00s.
...
A much more similar period to today is the late ‘70s and early ‘80s. House prices were increasing sharply. Demographics were very favorable for homebuying as the baby boomers moved into the first-time homebuying age group (similar to the millennials now). And inflation picked up from an already elevated level due to the second oil embargo in 1979, followed by the Iran-Iraq war in 1980, driving up costs.

In 1979, the Volcker Fed responded by raising rates, and combined with inflation, this pushed up mortgage rates sharply. Now the Powell Fed is embarking on a tightening cycle and mortgage rates have already increased significantly.

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

by Calculated Risk on 3/31/2022 04:34:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency decreased to 1.11% in February from 1.17% in January. The serious delinquency rate is down from 2.76% in February 2021.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59% following the housing bubble and peaked at 3.32% in August 2020 during the pandemic.

Click on graph for larger image

By vintage, for loans made in 2004 or earlier (1% of portfolio), 3.30% are seriously delinquent (down from 3.39% in January). 

For loans made in 2005 through 2008 (2% of portfolio), 5.46% are seriously delinquent (down from 5.67%), 

 For recent loans, originated in 2009 through 2021 (97% of portfolio), 0.89% are seriously delinquent (down from 0.95%). So, Fannie is still working through a few poor performing loans from the bubble years.

Mortgages in forbearance are counted as delinquent in this monthly report, but they will not be reported to the credit bureaus.

The pandemic related increase in delinquencies was very different from the increase in delinquencies following the housing bubble.   Lending standards had been fairly solid over the previous decade, and most of these homeowners had equity in their homes - and the vast majority of these homeowners have been able to restructure their loans once they were employed.

Freddie Mac reported earlier.

by Calculated Risk on 3/31/2022 12:33:00 PM

From CoStar: STR: US Hotel Rates Stay High in Latest Weekly Performance Data

With lower Spring Break travel volume, U.S. hotel performance dipped slightly from the previous week, according to STR‘s latest data through March 26.

March 20-26, 2022 (percentage change from comparable week in 2019*):

• Occupancy: 65.5% (-5.5%)
• Average daily rate (ADR): $149.38 (+13.5%)
• Revenue per available room (RevPAR): $97.92 (+7.3%)

*Due to the pandemic impact, STR is measuring recovery against comparable time periods from 2019.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2022, black is 2020, blue is the median, and dashed light blue is for 2021.

The 4-week average of the occupancy rate is just below the median rate for the previous 20 years (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.

The 4-week average of the occupancy rate will now mostly move sideways seasonally until the summer.

by Calculated Risk on 3/31/2022 12:11:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus is for 475,000 jobs added, and for the unemployment rate to decrease to 3.7%.

There were 678,000 jobs added in February, and the unemployment rate was at 3.8%.

Click on graph for larger image.

• First, currently there are still about 2.1 million fewer jobs than in February 2020 (before the pandemic).

This graph shows the job losses from the start of the employment recession, in percentage terms.

The current employment recession was by far the worst recession since WWII in percentage terms.  However, the current employment recession, 24 months after the onset, is now significantly better than the worst of the "Great Recession".

• ADP Report: The ADP employment report showed a gain of 455,000 private sector jobs, slightly above the consensus estimates of 438,000 jobs added.  The ADP report hasn't been very useful in predicting the BLS report, but this suggests a solid March BLS report.

• ISM Surveys: The ISM surveys for March have not been released yet.

• Unemployment Claims: The weekly claims report showed a decrease in the number of initial unemployment claims during the reference week (includes the 12th of the month) from 249,000 in February to 215,000 in March. This would usually suggest fewer layoffs in March than in February, although this might not be very useful right now. In general, weekly claims were below expectations in March.

• Permanent Job Losers: Something to watch in the employment report will be "Permanent job losers". This graph shows permanent job losers as a percent of the pre-recession peak in employment through the January report.

This data is only available back to 1994, so there is only data for three recessions. In February, the number of permanent job losers decreased to 1.583 million from 1.630 million in the previous month.

These jobs will likely be the hardest to recover, so it is a positive that the number of permanent job losers is declining fairly rapidly.

•  COVID: As far as the pandemic, the number of daily cases during the reference week in February was around 33,000, down sharply from around 200,000 in February.   This is a positive for the job market.

• Conclusion: There is optimism concerning the March employment report.  Overall, the ADP report was solid, and unemployment claims decreased during the reference week.   This suggests another solid employment report, probably at or above consensus expectations.

by Calculated Risk on 3/31/2022 08:44:00 AM

The BEA released the Personal Income and Outlays, February 2022:

Personal income increased $101.5 billion (0.5 percent) in February, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $76.1 billion (0.4 percent) and personal consumption expenditures (PCE) increased $34.9 billion (0.2 percent).

Real DPI decreased 0.2 percent in February and Real PCE decreased 0.4 percent; goods decreased 2.1 percent and services increased 0.6 percent. The PCE price index increased 0.6 percent. Excluding food and energy, the PCE price index increased 0.4 percent
emphasis added

The February PCE price index increased 6.4 percent year-over-year and the November PCE price index, excluding food and energy, increased 5.4 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through February 2022 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was at expectations, and the increase in PCE was below expectations.

Using the two-month method to estimate Q1 PCE growth, PCE was increasing at a 1.9% annual rate in Q1 2022. (Using the mid-month method, PCE was increasing at 1.3%).

by Calculated Risk on 3/31/2022 08:33:00 AM

The DOL reported:

In the week ending March 26, the advance figure for seasonally adjusted initial claims was 202,000, an increase of 14,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 187,000 to 188,000. The 4-week moving average was 208,500, a decrease of 3,500 from the previous week's revised average. The previous week's average was revised up by 250 from 211,750 to 212,000.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 208,500.

The previous week was revised up.

Weekly claims were slightly above the consensus forecast.

by Calculated Risk on 3/30/2022 08:56:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for an increase to 195 thousand from 187 thousand last week.

• Also at 8:30 AM, Personal Income and Outlays for February. The consensus is for a 0.5% increase in personal income, and for a 0.5% increase in personal spending. And for the Core PCE price index to increase 0.4%.

• At 9:45 AM, Chicago Purchasing Managers Index for March. The consensus is for a reading of 56.6, up from 56.3 in February.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
Percent fully Vaccinated	65.5%	---	≥70.0%1
Fully Vaccinated (millions)	217.6	---	≥2321
New Cases per Day3	25,218	26,682	≤5,0002
Hospitalized3	12,625	16,043	≤3,0002
Deaths per Day3	644	755	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37-day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the daily (columns) and 7-day average (line) of deaths reported.

New cases, hospitalizations and deaths are declining.

by Calculated Risk on 3/30/2022 02:21:00 PM

From the Las Vegas Visitor Authority: February 2022 Las Vegas Visitor Statistics

Despite continued waning effects of the Omicron variant during the month, Las Vegas visitation exceeded 2.6M in February, 70% ahead of a year ago but down ‐18% vs. February 2019.

Overall hotel occupancy reached 69.3%, roughly 10 pts ahead of January, up 27.3 pts YoY and down 17.7 pts vs. February 2019. Weekend occupancy came in relatively strong at 87.5%, 24.7 pts ahead of the weekend levels of last February and only 4.4 pts below February 2019. Midweek occupancy still reflected a convention segment in recovery but reached 60.7%, well over the 32.1% level of last February (+28.6 pts) but down 23.9 pts vs. February 2019.

February 2022 ADR approached $150, surpassing both February 2021 (+52.5%) and February 2019 (+15.0%) while RevPAR reached $103.62 for the month, dramatically ahead of February 2021 (+151.7%) and down only 8.4% vs. February 2019.

Click on graph for larger image.

The first graph shows visitor traffic for 2019 (dark blue), 2020 (light blue), 2021 (yellow) and 2022 (red)

Visitor traffic was down 18.0% compared to the same month in 2019.

Visitor was up 70% compared to last January.

The second graph shows convention traffic.

Convention traffic was down 41.4% compared to January 2019.

Note: There was almost no convention traffic from April 2020 through May 2021.

by Calculated Risk on 3/30/2022 11:04:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Real House Prices, Price-to-Rent Ratio and Price-to-Median Income in January

Excerpt:

I’ve put together my own affordability index - since 1976 - that is similar to the FirstAm approach (more of a house price index adjusted by mortgage rates and the median household income).

I used median income from the Census Bureau (estimated 2021), assumed a 15% down payment, and used a 2% estimate for property taxes, insurance and maintenance. This is probably low for high property tax states like New Jersey and Texas, and too high for lower property tax states. If we were including condos, we’d also include HOA fees too (this is excluded).

For house prices, I used the Case-Shiller National Index, Seasonally Adjusted (SA). Also, for the down payment - there wasn’t a significant difference between 15% and 20%. For mortgage rates, I used the Freddie Mac PMMS (30-year fixed rates).

So here is what the index looks like (lower is more affordable like the FirstAm index):


Note that by this index, during the early ‘80s, homes were very unaffordable due to the very high mortgage rates. During the housing bubble, houses were also less affordable using 30-year mortgage rates, however, during the bubble, there were many “affordability products” that allowed borrowers to be qualified at the teaser rate (usually around 1%) that made houses seem more affordable.

In general, this would suggest houses are the least affordable since the housing bubble. This says nothing about if “now is a good time to buy” (see the bottom of my post Housing: A Look at "Affordability" Indexes).

Also, in January, the average 30-year mortgage rates were around 3.45%, and currently mortgage rates are close to 4.9% - so we already know the “Affordability Price Index” will increase sharply over the next couple of months (meaning houses are even less affordable).

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

by Calculated Risk on 3/30/2022 08:36:00 AM

From the BEA: Gross Domestic Product (Third Estimate), Corporate Profits, and GDP by Industry, Fourth Quarter and Year 2021

Real gross domestic product (GDP) increased at an annual rate of 6.9 percent in the fourth quarter of 2021, according to the "third" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.3 percent.

The "third" estimate of GDP released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 7.0 percent. The downward revision primarily reflected downward revisions to personal consumption expenditures (PCE) and exports that were partly offset by an upward revision to private inventory investment.
emphasis added

Here is a Comparison of Third and Second Estimates. PCE growth was revised down from 3.1% to 2.5%. Residential investment was revised up from 1.0% to 2.2%.

by Calculated Risk on 3/30/2022 08:22:00 AM

From ADP:

Private sector employment increased by 455,000 jobs from February to March according to the March ADP® National Employment Report^TM. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by the ADP Research Institute® in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual data of those who are on a company’s payroll, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis

“Job growth was broad-based across sectors in March, contributing to the nearly 1.5 million jobs added for the first quarter in 2022,” said Nela Richardson, chief economist, ADP. “Businesses are hiring, specifically among the service providers which had the most ground to make up due to early pandemic losses. However, a tight labor supply remains an obstacle for continued growth in consumer-facing industries
emphasis added

This was slightly above the consensus forecast of 438,000 for this report.

The BLS report will be released Friday, and the consensus is for 475 thousand non-farm payroll jobs added in March. The ADP report has not been very useful in predicting the BLS report, but this suggests a solid March BLS report.

by Calculated Risk on 3/30/2022 07:00:00 AM

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

Mortgage applications decreased 6.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 25, 2022.

... The Refinance Index decreased 15 percent from the previous week and was 60 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 10 percent lower than the same week one year ago.

“Mortgage rates jumped to their highest level in more than three years last week, as investors continue to price in the impact of a more restrictive monetary policy from the Federal Reserve. Not surprisingly, refinance application volume declined further, as fewer borrowers have an incentive to apply at rates that are significantly higher than a year ago. Refinance application volume is now 60 percent below last year’s levels, in line with MBA’s forecast for 2022,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Even with the ongoing climb in rates, purchase application volumes were little changed last week. This is particularly auspicious, as we are now in the beginning of the spring homebuying season, and those shopping for homes are struggling with not only higher and more volatile mortgage rates, but also an ongoing shortage of homes on the market. Given these hurdles, it appears to be promising news that purchase application volume has not declined, as many potential buyers are likely feeling the squeeze in their purchasing power from the jump in rates.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.80 percent from 4.50 percent, with points decreasing to 0.56 from 0.59 (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 refinance index since 1990.

With higher mortgage rates, the refinance index has declined sharply over the last several months.

The refinance index is at the lowest level since May 2019.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 10% year-over-year unadjusted.

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

by Calculated Risk on 3/29/2022 09:01:00 PM

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

• At 8:15 AM, The ADP Employment Report for March. This report is for private payrolls only (no government). The consensus is for 438,000 payroll jobs added in March, down from 475,000 added in February.

• At 8:30 AM, Gross Domestic Product, 4th quarter 2021 (Third estimate). The consensus is that real GDP increased 7.1% annualized in Q4.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
Percent fully Vaccinated	65.5%	---	≥70.0%1
Fully Vaccinated (millions)	217.5	---	≥2321
New Cases per Day3	26,190	27,282	≤5,0002
Hospitalized3	12,934	16,599	≤3,0002
Deaths per Day3	700	862	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37-day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the daily (columns) and 7-day average (line) of deaths reported.

New cases, hospitalizations and deaths are declining.

by Calculated Risk on 3/29/2022 05:21:00 PM

From Matthew Graham at MortgageNewsDaily: Here We Go Again: Mortgage Rates Making Another Recovery Attempt

Now today, we have another improvement in the bond market that looks quite similar to the one seen last week. This one arose due to hopes for some sort of de-escalation in Ukraine. The thought process is that de-escalation helps oil prices drop, thus easing upward pressure on inflation and allowing the Fed to be slightly less aggressive in making policy changes that are unfriendly to rates.

If recent instances of hope and the subsequent crushing of those hopes are any guide, this could certainly be another head fake. There's no way to tell how likely that is. What we can say is that it would take several more days with bigger improvements to alter the broader rising rate trend.

The average lender was closest to 5.0% on Friday and Monday for top tier conventional 30yr fixed scenarios. Today's number is closer to 4.875% for the same scenarios.

Click on graph for larger image.

This is a graph from Mortgage News Daily (MND) showing 30-year fixed rates from three sources (MND, MBA, Freddie Mac) since 2010.  

The 30-year fixed rate for top tier scenarios was 4.88% today, down from 4.95% on Monday.

Go to MND and you can adjust the graph for different time periods.