by Calculated Risk on 4/29/2022 04:09:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency decreased to 1.01% in March from 1.11% in February. The serious delinquency rate is down from 2.58% in March 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), 3.12% are seriously delinquent (down from 3.30% in February). 

For loans made in 2005 through 2008 (2% of portfolio), 5.14% are seriously delinquent (down from 5.46%), 

 For recent loans, originated in 2009 through 2021 (97% of portfolio), 0.81% are seriously delinquent (down from 0.89%). 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 4/29/2022 02:32:00 PM

From CoStar: STR: US Weekly Hotel Rates Exceed Pre-Pandemic Numbers by 15%

U.S. hotel performance increased from the previous week, according to STR‘s latest data through April 23.

April 17-23, 2022 (percentage change from comparable week in 2019*):

• Occupancy: 65.8% (-4.2%)
• Average daily rate (ADR): $148.35 (+15.4%)
• Revenue per available room (RevPAR): $97.66 (+10.5%)

*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.  Dashed purple is 2019 (STR is comparing to a strong year for hotels).

The 4-week average of the occupancy rate is at 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 4/29/2022 11:46:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Realtor.com Reports Weekly Inventory down only 6% Year-over-year

Excerpt:

Realtor.com has monthly and weekly data on the existing homes. Here is their most recent weekly report released yesterday: Weekly Housing Trends View — Data Week Ending April 23, 2022. They have data on list prices, new listing and more, but this focus is on inventory.

• Active inventory is down just 6 percent from a year ago.

The number of homes for sale is past this year’s seasonal low, which was also a record low, which means the number of homes for sale is climbing week to week and month to month as it typically does in spring. While the market has not yet caught up to last year’s level, this week marked a big jump forward. The gap between this year’s homes for sale and last year’s is one-fifth the size that it was at the beginning of the year. The catch up is likely to continue, as we noted last week, as new listings grow and home sales slow, and we expect active inventory to surpass year ago levels in the next few months. This growth will mean more options for shoppers than they’ve had in a while, even though inventory continues to lag pre-pandemic normal.

Here is a graph of the year-over-year change in inventory according to realtor.com. Note: I corrected a sign error in the data for Feb 26, 2022.

The previous week, inventory was down 12.6% YoY according to Realtor.com. That is close to the 11.2% that Altos reported. I expect Altos to report a single digit year-over-year decline in inventory on Monday.

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

by Calculated Risk on 4/29/2022 08:38:00 AM

The BEA released the Personal Income and Outlays report for March:

Personal income increased $107.2 billion (0.5 percent) in March, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $89.7 billion (0.5 percent) and personal consumption expenditures (PCE) increased $185.0 billion (1.1 percent).

Real DPI decreased 0.4 percent in March and Real PCE increased 0.2 percent; goods decreased 0.5 percent and services increased 0.6 percent. The PCE price index increased 0.9 percent. Excluding food and energy, the PCE price index increased 0.3 percent
emphasis added

The March PCE price index increased 6.6 percent year-over-year and the PCE price index, excluding food and energy, increased 5.2 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through March 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 slightly above expectations, and the increase in PCE was above expectations.

by Calculated Risk on 4/28/2022 09:15:00 PM

Friday:
• At 8:30 AM ET: Personal Income and Outlays, March 2021. The consensus is for a 0.4% increase in personal income, and for a 0.6% increase in personal spending. And for the Core PCE price index to increase 0.3%.  PCE prices are expected to be up 6.4% YoY, and core PCE prices up 5.3% YoY.

• At 9:45 AM, Chicago Purchasing Managers Index for April. The consensus is for a reading of 62.0, down from 62.9 in March.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Final for April). The consensus is for a reading of 65.7.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
Percent fully Vaccinated	66.1%	---	≥70.0%1
Fully Vaccinated (millions)	219.6	---	≥2321
New Cases per Day3🚩	53,133	42,426	≤5,0002
Hospitalized3🚩	10,803	9,909	≤3,0002
Deaths per Day3	334	352	≤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.

Deaths are declining week-over-week, but new cases and hospitalizations are increasing.

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 4/28/2022 03:05:00 PM

From the National Multifamily Housing Council (NMHC): Apartment Demand Continues to Grow, but Investors Face Tougher Financing Conditions

Apartment markets tightened further according to the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for April 2022, while financing became more costly. The Market Tightness (60) index was the only index to come in above the breakeven level (50) this quarter; the Sales Volume (50) index came in at exactly 50, with much disagreement among respondents; while both the Equity Financing (35) and Debt Financing (9) indexes indicated weaker conditions compared to three months prior.

“Demand for apartments continues to exceed supply, resulting in the fifth straight quarter of tightening markets,” noted NMHC’s Chief Economist, Mark Obrinsky. “Yet, even as rent growth and occupancy remain elevated, developers are struggling to build more housing due to the increasing cost of materials, a lack of available labor, continued obstructionism from NIMBYs, and, because of rising interest rates, an increasing cost of capital.”
...
The Market Tightness Index came in at 60 this quarter – above the breakeven level of 50 – indicating that market conditions have become tighter. While less than one-third (30 percent) of respondents reported markets to be tighter than three months ago, an even smaller share (10 percent) thought that markets have become looser. A majority of respondents (59 percent), meanwhile, thought that apartment market conditions were unchanged from last quarter.

Click on graph for larger image.

This graph shows the quarterly Apartment Tightness Index. Any reading above 50 indicates tighter conditions from the previous quarter. 

Even though the index declined in April, this indicates market conditions tightened further in April for the fifth consecutive quarter, after being especially weak during the early months of the pandemic.

by Calculated Risk on 4/28/2022 02:38:00 PM

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

The positive visitation trajectory continued in March as Las Vegas hosted more than 3.3M visitors, nearly 50% ahead of last March and roughly 10% shy of March 2019.

With meetings returning across the destination along with tradeshows such as ASD Las Vegas, Nat'l Automobile Dealers Assn, Bar & Restaurant Expo, and Int'l Pizza Expo, the convention segment saw continued improvement, reaching an est. 495k attendees for the month, roughly 90% of pre‐COVID levels of Mar 2019. Overall hotel occupancy reached 80.6%, up approx. 25 pts YoY and down only 10.9 pts vs. March 2019. Weekend occupancy exceeded 92% (up 14.4 pts YoY and down 5.0 pts vs. March 2019) and Midweek occupancy reached 76.6% (up 28.8 pts YoY and down 12.3 pts vs. March 2019).

ADR exceeded $163, well ahead of last March (+63.0%) and March 2019 (+21.8%) while RevPAR reached $131.49 for the month, dramatically ahead of March 2021 (+136.7%) and 7.3% over March 2019 levels

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 9.8% compared to the same month in 2019.

Visitor traffic was up 50% compared to last March.

The second graph shows convention traffic.

Convention traffic was down 10.5% compared to March 2019.

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

by Calculated Risk on 4/28/2022 12:22:00 PM

Earlier from the BEA: Gross Domestic Product, Fourth Quarter and Year 2021 (Advance Estimate)

Real gross domestic product (GDP) decreased at an annual rate of 1.4 percent in the first quarter of 2022, according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 6.9 percent....

The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment increased.
emphasis added

The advance Q1 GDP report, at -1.4% annualized, was below expectations, primarily due to a negative impact from trade and a decrease in inventories. 

Personal consumption expenditures (PCE) increased at a 2.7% annualized rate in Q1.

The graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy.

In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So, the usual pattern - both into and out of recessions is - red, green, blue.

Of course - with the sudden economic stop due to COVID-19 - the usual pattern didn't apply.

The dashed gray line is the contribution from the change in private inventories.

Click on graph for larger image.

Residential investment (RI) increased at a 2.1% annual rate in Q1.  Equipment investment increased at a 15.3% annual rate, and investment in non-residential structures increased at a 9.2% annual rate.

The contribution to Q1 GDP from investment in private inventories was -0.84 percentage points.

On a 3-quarter trailing average basis, RI (red) is unchanged, equipment (green) is up, and nonresidential structures (blue) is still down.

I'll post more on the components of non-residential investment once the supplemental data is released.

The second graph shows residential investment as a percent of GDP.

Residential Investment as a percent of GDP increased in Q1.

I'll break down Residential Investment into components after the GDP details are released.

Note: Residential investment (RI) includes new single-family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

The third graph shows non-residential investment in structures, equipment and "intellectual property products".  

Investment in non-residential structures increased in Q1 as a percent GDP.

by Calculated Risk on 4/28/2022 08:41:00 AM

The DOL reported:

In the week ending April 23, the advance figure for seasonally adjusted initial claims was 180,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 184,000 to 185,000. The 4-week moving average was 179,750, an increase of 2,250 from the previous week's revised average. The previous week's average was revised up by 250 from 177,250 to 177,500.
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 increased to 179,750.

The previous week was revised up.

Weekly claims were close to the consensus forecast.

by Calculated Risk on 4/28/2022 08:35:00 AM

From the BEA: Gross Domestic Product, First Quarter 2022 (Advance Estimate)

Real gross domestic product (GDP) decreased at an annual rate of 1.4 percent in the first quarter of 2022, according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 6.9 percent....

The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment increased.
emphasis added

PCE increased at a 2.7% rate, and residential investment increased at a 2.1% rate. Change in private inventories and trade were a huge drag in Q1. The advance Q1 GDP report, with 1.4% annualized decline, was below expectations.

I'll have more later ...

by Calculated Risk on 4/28/2022 07:00:00 AM

This is a new monthly affordability index from the Mortgage Bankers Association (MBA).

From the MBA: Mortgage Application Payments Jumped 5 Percent to $1,736 in March

Homebuyer affordability declined in March, with the national median payment applied for by applicants rising 5.0 percent to $1,736 from $1,653 in February. This is according to the Mortgage Bankers Association's (MBA) new Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey (WAS).

“The start of the spring homebuying season is off to a mixed start. The healthy labor market and robust wage gains fueled demand throughout the country in March, but rapid home-price growth and the 42- basis-point surge in mortgage rates last month slowed purchase application activity. A typical borrower’s principal and interest payment was $387 more than in March 2021,” said Edward Seiler, MBA's Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “Swift price-appreciation, sky-high inflation, low inventory, and mortgage rates now two percentage points higher than last year are all headwinds for the housing market in the coming months – especially for first-time buyers.”
...
An increase in MBA’s PAPI – indicative of declining borrower affordability conditions – means that the mortgage payment to income ratio (PIR) is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings. A decrease in the PAPI – indicative of improving borrower affordability conditions – occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.

Click on graph for larger image.

The national PAPI (Figure 1) increased 5.0 percent to 150.9 in March from 143.7 in February, meaning payments on new mortgages take up a larger share of a typical person’s income. Compared to March 2021 (122.9), the index jumped 22.8 percent. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased 3.2 percent to $1,129 from $1,094 in February
emphasis added

This will increase further in April with the further increase in mortgage rates.

by Calculated Risk on 4/27/2022 09:23:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 180 thousand down from 184 thousand last week.

• Also at 8:30 AM, Gross Domestic Product, 1st quarter 2021 (Advance estimate). The consensus is that real GDP increased 1.0% annualized in Q1, down from 6.9% in Q4.

• At 11:00 AM, the Kansas City Fed manufacturing survey for April. This is the last of regional manufacturing surveys for April.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
Percent fully Vaccinated	66.1%	---	≥70.0%1
Fully Vaccinated (millions)	219.4	---	≥2321
New Cases per Day3🚩	48,692	40,812	≤5,0002
Hospitalized3🚩	10,606	9,833	≤3,0002
Deaths per Day3	299	360	≤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.

Deaths are declining week-over-week, but new cases and hospitalizations are increasing.

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 4/27/2022 04:12:00 PM

The Case-Shiller house price indexes for February were released this week. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Zillow Research: February 2022 Case-Shiller Results & Forecast: Prices Accelerate Again

While these challenging conditions might be expected to drain the pool of buyers, and may still do so eventually, there are signs the market remains very competitive. Listings are going pending after about a week on the market and a large share of homes are continuing to sell above their asking price. Existing home sales have trended below 2021 levels, but that appears to be more a function of low inventory than a lack of demand. There are fewer than half the number of homes on the market than at this time in 2019 – the last comparable period prior to the pandemic – yet sales continue to trend above pre-pandemic levels. Changes in inventory and affordability will remain key to the housing decisions of prospective buyers in the months ahead.

Annual home price growth as reported by Case-Shiller are expected to accelerate in the national and 10-city indices and slow slightly in the 20-city index. Monthly appreciation in March is expected to decelerate from February in both city indices, and hold in the national index. S&P Dow Jones Indices is expected to release data for the March S&P CoreLogic Case-Shiller Indices on Tuesday, May 31.
emphasis added

The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be a record 20.2% in March.

by Calculated Risk on 4/27/2022 11:48:00 AM

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

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 and 2022), 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. And excluding the bubble - with all the “affordability products” - this is the worst affordability since 1995.

Also, in February, the average 30-year mortgage rates were around 3.8%, and currently mortgage rates are close to 5.3% - 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 4/27/2022 11:26:00 AM

The Census Bureau released the Residential Vacancies and Homeownership report for Q1 2022.

The results of this survey were significantly distorted by the pandemic in 2020.

This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn't rely on the absolute numbers. Analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.

National vacancy rates in the first quarter 2022 were 5.8 percent for rental housing and 0.8 percent for homeowner housing. The rental vacancy rate was 1.0 percentage points lower than the rate in the first quarter 2021 (6.8 percent) and not statistically different from the rate in the fourth quarter 2021 (5.6 percent).

The homeowner vacancy rate of 0.8 percent was 0.1 percentage points lower than the rate in the first quarter 2021 (0.9 percent) and not statistically different from the rate in the fourth quarter 2021 (0.9 percent).

The homeownership rate of 65.4 percent was not statistically different from the rate in the first quarter 2021 (65.6 percent) and not statistically different from the rate in the fourth quarter 2021 (65.5 percent).
emphasis added

Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st, 1990, 2000 and 2010.  The Census Bureau will release data for 2020 soon.

The HVS homeownership rate decreased to 65.4% in Q1, from 65.5% in Q4.

The results starting in Q2 2020 were distorted by the pandemic.

The HVS homeowner vacancy decreased to 0.8% in Q1 from 0.9% in Q4.

Once again - this probably shows the general trend, but I wouldn't rely on the absolute numbers.

The rental vacancy rate increased to 5.8% in Q1 from 5.6% in Q4.  

The HVS also has a series on asking rents. This surged following the early stages of the pandemic - like other measures - and is up 20.5% over the last two years. However, asking rents were only up 2.3% year-over-year in Q1 2022.

The quarterly HVS is the timeliest survey on households, but there are many questions about the accuracy of this survey.

by Calculated Risk on 4/27/2022 10:07:00 AM

From the NAR: Pending Home Sales Sag 1.2% in March

Pending home sales dropped in March, signifying five straight months that contract activity has declined, according to the National Association of Realtors®. Month-over-month, only the Northeast saw an increase in contract signings, while the three other major U.S. regions experienced declines in transactions. All four regions reported decreases in year-over-year contract activity.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, fell 1.2% to 103.7 in March. Year-over-year, transactions sank 8.2%. An index of 100 is equal to the level of contract activity in 2001.
...
Month-over-month, the Northeast PHSI grew 4.0% to 89.3 in March, a 9.2% fall from a year ago. In the Midwest, the index dropped 6.1% to 94.7 last month, down 4.8% from March 2021.

Pending home sales transactions in the South decreased 0.9% to an index of 125.8 in March, down 9.5% from March 2021. The index in the West declined 0.2% in March to 89.8, down 8.4% from a year prior.
emphasis added

This was above expectations of a 1.8% decrease for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in April and May.

by Calculated Risk on 4/27/2022 07:00:00 AM

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

Mortgage applications decreased 8.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 22, 2022.

... The Refinance Index decreased 9 percent from the previous week and was 71 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 8 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 17 percent lower than the same week one year ago.

“With mortgage rates increasing last week to the highest level since 2009, applications continued to decline. Overall application activity fell to the lowest level since 2018, with both purchase and refinance applications posting declines. Refinance applications were 70 percent below the same week a year ago, when the 30-year fixed rate was in the 3-percent range,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The drop in purchase applications was evident across all loan types. Prospective homebuyers have pulled back this spring, as they continue to face limited options of homes for sale along with higher costs from increasing mortgage rates and prices. The recent decrease in purchase applications is an indication of potential weakness in home sales in the coming months.”

Added Kan, “In a period of high home-price growth and rapidly increasing mortgage rates, borrowers continued to mitigate higher monthly payments by applying for ARM loans. The ARM share of applications last week was over 9 percent by loan count and 17 percent based on dollar volume. At 9 percent, the ARM share was double what it was three months ago, which also coincides with the 1.5 percentage point increase in the 30-year fixed rate.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.37 percent from 5.20 percent, with points increasing to 0.67 from 0.66 (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 December 2018.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 17% year-over-year unadjusted.

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

by Calculated Risk on 4/26/2022 09:19:00 PM

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, Pending Home Sales Index for March. The consensus is for a 1.8% decrease in the index.

• Also, at 10:00 AM, the Q1 2022 Housing Vacancies and Homeownership from the Census Bureau.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
Percent fully Vaccinated	66.1%	---	≥70.0%1
Fully Vaccinated (millions)	219.4	---	≥2321
New Cases per Day3🚩	47,407	37,471	≤5,0002
Hospitalized3🚩	10,300	9,791	≤3,0002
Deaths per Day3	330	372	≤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.

Deaths are declining week-over-week, but new cases and hospitalizations are increasing.

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 4/26/2022 04:44:00 PM

CR Note: This is from housing economist Tom Lawler.   He argues that demographics are not as favorable for housing as many have argued (including myself).   He also says that we shouldn't use the 2017 Vintage projections (too out of data, and too wrong). 

Deaths:

The CDC recently released provisional US death data for 2021 by age group. Below is a table showing deaths by age for the past three years. The data speak for themselves.

CR Note: The data may "speak for themselves", but look at the percentage increase in deaths for the prime age population. 

A 50% increase in deaths for the 35 to 44 age group.  

And almost 39% increase in deaths for the 25 to 34 age group.

Census Vintage 2021 Population Estimates by Age

Census recently released it “Vintage 2021” estimates of the US resident population by single year of age for April 1, 2020 (Decennial Census results), July 1, 2020, and July 1, 2021. Below is a table showing the estimates for selected age groups for July 1 of the past two years.

The population changes by age from July 2020 to July 2021 would, if there had been no pandemic, no plunge in mortgage rates, and no “ultra” accommodative monetary and fiscal policy, not have suggested “strong” housing demand over that period. Stated another way, if pre-pandemic headship rates by age were applied to the latest population estimates, one would have expected a very modest increase in total US households last year (for which, unfortunately, there are no timely data available, and Census has not yet released Census 2020 household data by age.)

Census previously released 2021 total population estimates showing that the US population grew at the slowest pace in over a century late last year, with the reasons for the slow growth reflecting historically low births, historically high deaths, and historically low net international migration.

It should be noted that Census has not yet released updated estimates of the US resident population for 2011 through 2019 that would reflect the results of Census 2020. These estimates will probably be higher than the currently available estimates, as Census 2020 showed a population that was about 1.8 million higher than the Vintage 2020 estimate for 4/1/2020.

It should also be noted that Census has not updated its long-term population projections to reflect both recent trends in key demographic drivers and the Census 2020 results, and the last population projections were released in 2017. Over the last four years births were significantly lower, deaths were significantly higher, and net international migration was significantly lower than the assumptions in the “Census 2017” projections. As such, those projections are of little or no value, and should not be used for any purposes.

Below is a table showing Census’ Vintage 2021 estimates of the US resident population for July 1, 2021 compared to the Census 2017 projections by 5-year age groups.

The Vintage 2021 estimate of the US resident population for July 1, 2021 was a whopping 3.1 million lower than the Census 2017 projection. While over half of this “miss” reflected massively lower than projected births, there were also significantly higher than projected deaths (even before Covid) and significantly lower net international migration. (I can’t do a full reconciliation because the Census 2017 starting point will almost certainly be higher than was assumed.)

The age distribution of the adult population in the latest population estimates is also substantially different from that projected in Census 2017 for July 1 of last year, as the table suggests, with substantially fewer 20 to 34 year olds, somewhat higher 35-59 year olds, and significantly fewer 65+ year olds.

The gap between updated population estimates and the latest, extremely outdated population estimates will almost certainly widen significantly over the rest of this decade. Below are the Census 2017 assumptions for births, deaths, and net international migration for 2022 through 2030.

Obviously these assumptions are way too optimistic, especially over the next several years.

All of this, of course, is just a long-winded way of say that it is totally inappropriate to use the Census 2017 population projections for any analysis whatsoever. Hopefully Census will release a new set of population projections sometime soon, so just trying to get a handle on likely deaths over the next few years is a daunting challenge.

CR Note: I used the 2017 projections recently since those are the only ones available, although I added a caution. Hopefully Census will release better projections soon (and all the 2020 data!)

by Calculated Risk on 4/26/2022 12:16:00 PM

Today, in the Calculated Risk Real Estate Newsletter: March New Home Sales: Little Completed Inventory, High Number of Homes Under Construction

Brief excerpt:

The next graph shows new home sales for 2021 and 2022 by month (Seasonally Adjusted Annual Rate). Sales in March 2022 were down 12.6% from March 2021.

The year-over-year comparisons will be easier going forward.
...
And on prices, from the Census Bureau:

The median sales price of new houses sold in March 2022 was $436,700.  The average sales price was $523,900.

 The following graph shows the median and average new home prices. Overall home prices are up sharply year-over-year.

During the housing bust, the builders had to build smaller and less expensive homes to compete with all the distressed sales.  When housing started to recovery - with limited finished lots in recovering areas - builders moved to higher price points to maximize profits.

Then the average and median house prices mostly moved sideways since 2017 due to home builders offering more lower priced homes.  Prices really picked up during the pandemic.

The average price in March 2022 was $523,900 up 26% year-over-year.  The median price was $436,700, up 21% year-over-year.  

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