by Calculated Risk on 4/23/2015 07:51:00 PM

From Freddie Mac today: Mortgage Rates Move Down Slightly

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates moving down slightly this week and remaining near their 2015 lows as the spring homebuying season continues. ...

30-year fixed-rate mortgage (FRM) averaged 3.65 percent with an average 0.6 point for the week ending April 23, 2015, down from last week when it averaged 3.67 percent. A year ago at this time, the 30-year FRM averaged 4.33 percent.

15-year FRM this week averaged 2.92 percent with an average 0.6 point, down from last week when it averaged 2.94 percent. A year ago at this time, the 15-year FRM averaged 3.39 percent.

Click on graph for larger image.

This graph shows the 30 year and 15 year fixed rate mortgage interest rates from the Freddie Mac Primary Mortgage Market Survey®.  

30 year mortgage rates are up a little (30 bps) from the all time low of 3.35% in late 2012, but down from 4.33% a year ago. 

The Freddie Mac survey started in 1971. Mortgage rates were below 5% back in the 1950s.

The PMMS is a weekly survey. Here is an update on daily rates from Matthew Graham at Mortgage News Daily: Mortgage Rates Hold Ground at Recent Highs

Freddie collects data for the Survey from Monday through Wednesday, but most of the responses have been received by Tuesday. This week, that meant that most of the respondents had not yet seen the steep losses on Wednesday. Naturally then, Freddie's numbers suggest rates are lower than they actually are by the time people read about them on Thursday morning. Rates are, in fact, markedly higher than last week's. Whereas most top tier scenarios were being quoted 3.625% for conventional 30yr fixed loans last week, 3.75% is more prevalent today

by Calculated Risk on 4/23/2015 03:31:00 PM

From housing economist Tom Lawler:

PulteGroup reported that net home orders in the quarter ended March 31, 2015 totaled 5,139, up 5.7% from the comparable quarter of 2014. The average net order price last quarter was $332,400, up 0.5% from a year ago. Home deliveries last quarter totaled 3,365, down 2.1% from the comparable quarter of 2014, at an average sales price of $323,000, up 1.9% from a year ago. The company’s order backlog at the end of March was 7,624, up 5.9% from last March. Pulte’s net home building margin was 22.7%, compared to 23.8% a year ago.

Meritage Homes reported that net home orders in the quarter ended March 31, 2015 totaled 1,979, up 29.8% from the comparable quarter of 2014. The average net order price last quarter was $396,000, up 8.8% from a year ago. Home deliveries totaled 1,335, up 20.4% from the comparable quarter of 2014, at an average sales price of $387,000, up 5.7% from a year ago. The company’s order backlog at the end of March was 2,758k up 22.0% from last quarter. The company’s gross home building margin last quarter was 18.5%, down from 22.5% a year ago.

M/I Homes reported that net home orders in the quarter ended March 31, 2015 totaled 1,108, up 12.8% from the comparable quarter of 2014. Home deliveries last quarter totaled 717, down 2.0% from the comparable quarter of 2014, at an average sales price of $325,000, up 8.7% from a year ago. The company’s order backlog at the end of March was 1,613, up 5.8% from last March, at an average order price of $358,000, up 9.8% from a year ago. The company’s gross home building margin last quarter was 21.7%, unchanged from a year ago.

The general theme of builder reports so far compared to a year ago are (1) significantly stronger growth in net orders; (2) substantially lower increases in sales prices (with the exception of M/I Homes); and (3) lower gross margins (with the exception of M/I Homes).

Here are some summary stats.

	Net Orders			Settlements			Average Closing Price
Qtr. Ended:	3/15	3/14	% Chg	3/15	3/14	% Chg	3/15	3/14	% Chg
D.R. Horton	11,135	8,569	29.9%	8,243	6,194	33.1%	$281,305	271,230	3.7%
PulteGroup	5,139	4,863	5.7%	3,365	3,436	-2.1%	$323,000	317,000	1.9%
NVR	3,926	3,325	18.1%	2,534	2,211	14.6%	$371,000	361,400	2.7%
Meritage Homes	1,979	1,525	29.8%	1,335	1,109	20.4%	$387,000	366,000	5.7%
M/I Homes	1,108	982	12.8%	717	732	-2.0%	$325,000	299,000	8.7%
Total	23,287	19,264	20.9%	16,194	13,682	18.4%	$314,652	$306,463	2.7%

Sales per active community for the above five builders combined last quarter were up 17.3% from the comparable quarter of 2014.

 By way of comparison, the YOY increase in net orders for these five builders combined for the quarter ended March 31, 2014 was 0.4%, net orders per community were down 6.2% YOY; and the average sales price was up 10.4% YOY.

by Calculated Risk on 4/23/2015 12:26:00 PM

The new home sales report for March was below expectations at 481 thousand on a seasonally adjusted annual rate basis (SAAR).

However, sales for December, January and February were revised up by a combined 35 thousand (SA).  So, including revisions, sales were about as expected.

Even with a little weakness in March, sales in 2015 are off to a solid start.

Earlier: New Home Sales decline to 481,000 Annual Rate in March

The Census Bureau reported that new home sales this year, through March, were 129,000, Not seasonally adjusted (NSA). That is up 22% from 106,000 during the same period of 2014 (NSA). This is very early - and the next several months are usually the strongest of the year NSA - but this is a solid start.

Sales were up 19.4% year-over-year in March, but that was an easy comparison.

Click on graph for larger image.

This graph shows new home sales for 2014 and 2015 by month (Seasonally Adjusted Annual Rate).

The year-over-year gain will probably be strong in Q2 too (the first half was especially weak in 2014), however I expect the year-over-year increases to slow later this year.

And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next few years.

The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through February 2015. This graph starts in 1994, but the relationship has been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.

I expect existing home sales to move sideways (distressed sales will continue to decline and be offset by more conventional / equity sales).  And I expect this gap to slowly close, mostly from an increase in new home sales.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

by Calculated Risk on 4/23/2015 10:12:00 AM

The Census Bureau reports New Home Sales in March were at a seasonally adjusted annual rate (SAAR) of 481 thousand.

The previous months were revised up by a total of 35 thousand (SA).

"Sales of new single-family houses in March 2015 were at a seasonally adjusted annual rate of 481,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.4 percent below the revised February rate of 543,000, but is 19.4 percent above the March 2014 estimate of 403,000."

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Even with the increase in sales over the previous two years, new home sales are still close to the bottoms for previous recessions.

The second graph shows New Home Months of Supply.

The months of supply increased in March to 5.3 months.

The all time record was 12.1 months of supply in January 2009.

This is now in the normal range (less than 6 months supply is normal).

"The seasonally adjusted estimate of new houses for sale at the end of March was 213,000. This represents a supply of 5.3 months at the current sales rate."

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In March 2015 (red column), 45 thousand new homes were sold (NSA). Last year 39 thousand homes were sold in March.  This is the highest for March since 2008.

The high for March was 127 thousand in 2005, and the low for March was 28 thousand in 2011.

This was below expectations of 510,000 sales in March, however with the upward revisions to previous months, this is still a solid start for 2015.  I'll have more later today.

by Calculated Risk on 4/23/2015 08:33:00 AM

The DOL reported:

In the week ending April 18, the advance figure for seasonally adjusted initial claims was 295,000, an increase of 1,000 from the previous week's unrevised level of 294,000. The 4-week moving average was 284,500, an increase of 1,750 from the previous week's unrevised average of 282,750.

There were no special factors impacting this week's initial claims.

The previous week was unrevised.

The following graph shows the 4-week moving average of weekly claims since January 2000.

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 284,500.

This was above the consensus forecast of 290,000, and the low level of the 4-week average suggests few layoffs.