by Calculated Risk on 11/19/2018 07:22:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Maintain Recent Lows

Mortgage rates unexpectedly dropped to their lowest levels in more than a month as of last Friday. That assertion is at odds with quite a few media reports that cited Freddie Mac's weekly survey data saying that rates were essentially unchanged from the previous week. This occurred because Freddie's survey only captures the first few days of any given week and most of last week's improvement took place on Thursday and Friday. As such, this week's Freddie surveys should reflect that nice drop in rates.

How nice is "nice?" In absolute terms, we're talking about something slightly less than an eighth of a percentage point in terms of a typical 30yr fixed rate from the average lender. That's actually a fairly quick move relative to the average pace of mortgage rate movement. In any event, it's the nicest drop we've seen in more than a month, and it brings us to the lowest levels in more than a month as well. The caveat is that we're still fairly close to the long-term highs (highest since 2011).[30YR FIXED - 4.875-5.0%]
emphasis added

Tuesday:
• At 8:30 AM: Housing Starts for October. The consensus is for 1.240 million SAAR, up from 1.201 million SAAR.

by Calculated Risk on 11/19/2018 02:45:00 PM

Here are some Bay Area stats from Pacific Union chief economist Selma Hepp:

• Bay Area home sales dipped by 8 percent year over year in October; however, the 19 percent increase from September was the highest monthly increase between September and October going back to 1990.

• Santa Clara County and East Bay counties continued to lead the sales declines, while San Francisco activity remained steady on an annual basis.

• Sales of higher priced homes -- $2 million-plus -- rebounded notably, up by 24 percent from October 2017 following a September drop.

• Inventory grew by 21 percent year over year, with almost half of the increase -- or more than 1,100 homes -- priced below $1 million.

• Lower-priced inventory rose by 18 percent - the largest increase following 15 months of double-digit percent declines.

• Buyers of homes priced below $1 million are decidedly restrained, with the fewest homes selling for more than asking price since January 2017.

• There were more price reductions across the region and at all price ranges, with lower-priced homes posting the largest share of reductions in the past three years.

by Calculated Risk on 11/19/2018 12:51:00 PM

From SacRealtor.org: October 2018 Statistics – Sacramento Housing Market – Single Family Homes, Sales volume increases, median sales price dips

October closed with 1,413 sales, a 9.1% increase from the 1,318 sales of September. Compared to the same month last year (1,510), the current figure is down 4.8%. Of the 1,413 sales this month, 179 (12.4%) used cash financing, 910 (63.3%) used conventional, 230 (16%) used FHA, 92 (6.4%) used VA and 27 (1.9%) used Other types of financing.
...
The Active Listing Inventory decreased, dropping 5.4% from 3,236 to 3,060 units.  [note: year-over-year inventory is up 20.7%] The Months of Inventory decreased from 2.5 to 2.1 Months. This figure represents the amount of time (in months) it would take for the current rate of sales to deplete the total active listing inventory.
...
The Average DOM (days on market) continued its increase, rising from 26 to 30 from September to October. The Median DOM also increased, rising from 15 to 19. “Days on market” represents the days between the initial listing of the home as “active” and the day it goes “pending.” Of the 1,438 sales this month, 65.6% (944) were on the market for 30 days or less and 85.9% (1,236) were on the market for 60 days or less.
emphasis added

CR Note: Inventory is still low - months of inventory is at 2.1 months, probably closer to 4 months would be normal - however inventory is up significantly year-over-year in Sacramento.

by Calculated Risk on 11/19/2018 10:05:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 60 in November, down from 68 in October. Any number above 50 indicates that more builders view sales conditions as good than poor.

From NAHB: Builder Confidence Drops as Housing Affordability Issues Rise

Growing affordability concerns resulted in builder confidence in the market for newly-built single-family homes falling eight points to 60 in November on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Despite the sharp drop, builder sentiment still remains in positive territory.

“Builders report that they continue to see signs of consumer demand for new homes but that customers are taking a pause due to concerns over rising interest rates and home prices,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La.

“For the past several years, shortages of labor and lots along with rising regulatory costs have led to a slow recovery in single-family construction,” said NAHB Chief Economist Robert Dietz. “While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall.”

With the prospect of future interest rate hikes in store, Dietz said that builders have adopted a more cautious approach to market conditions and urged policymakers to take note.

“Recent policy statements on economic conditions have lacked commentary on housing, even as housing affordability has hit a 10-year low,” said Dietz. “Given that housing leads the economy, policymakers need to focus more on residential market conditions.”
...
All of the major HMI indices posted declines. The index measuring current sales conditions fell seven points to 67, the component gauging expectations in the next six months dropped 10 points to 65 and the metric charting buyer traffic registered an eight-point drop to 45.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 58. The Midwest edged one point lower to 57, the South declined two points to 68 and the West dropped three points to 71.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was well below the consensus forecast, but still a decent reading.

by Calculated Risk on 11/18/2018 07:58:00 PM

Weekend:
• Schedule for Week of November 18, 2018

• Existing Home Sales for October: Take the Over

Monday:
• At 10:00 AM, The November NAHB homebuilder survey. The consensus is for a reading of  68, unchanged from 68. Any number above 50 indicates that more builders view sales conditions as good than poor.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 and DOW futures are down slightly (fair value).

Oil prices were down over the last week with WTI futures at $57.07 per barrel and Brent at $67.31 per barrel.  A year ago, WTI was at $56, and Brent was at $61 - so WTI oil prices are up slightly, and Brent prices up about 10% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.60 per gallon. A year ago prices were at $2.54 per gallon, so gasoline prices are up 6 cents per gallon year-over-year.

by Calculated Risk on 11/18/2018 11:46:00 AM

The NAR is scheduled to release Existing Home Sales for October at 10:00 AM on Wednesday, November 21st.

The consensus is for 5.20 million SAAR, up from 5.15 million in September. Housing economist Tom Lawler estimates the NAR will reports sales of 5.31 million SAAR for October and that inventory will be up 2.8% year-over-year. Based on Lawler's estimate, I expect existing home sales to be above the consensus for October.

Housing economist Tom Lawler has been sending me his predictions of what the NAR will report for 8+ years.  The table below shows the consensus for each month, Lawler's predictions, and the NAR's initially reported level of sales. 

Lawler hasn't always been closer than the consensus, but usually when there has been a fairly large spread between Lawler's estimate and the "consensus", Lawler has been closer.

Last month, in September 2018, the consensus was for sales of 5.30 million on a seasonally adjusted annual rate (SAAR) basis. Lawler estimated the NAR would report 5.20 million, and the NAR reported 5.15 million (as usual Lawler was closer than the consensus).

NOTE: There have been times when Lawler "missed", but then he pointed out an apparent error in the NAR data - and the subsequent revision corrected that error.  As an example, see: The “Curious Case” of Existing Home Sales in the South in April

Over the last eight years, the consensus average miss was 144 thousand, and  Lawler's average miss was 67 thousand.

Existing Home Sales, Forecasts and NAR Report millions, seasonally adjusted annual rate basis (SAAR)
Month	Consensus	Lawler	NAR reported1
May-10	6.20	5.83	5.66
Jun-10	5.30	5.30	5.37
Jul-10	4.66	3.95	3.83
Aug-10	4.10	4.10	4.13
Sep-10	4.30	4.50	4.53
Oct-10	4.50	4.46	4.43
Nov-10	4.85	4.61	4.68
Dec-10	4.90	5.13	5.28
Jan-11	5.20	5.17	5.36
Feb-11	5.15	5.00	4.88
Mar-11	5.00	5.08	5.10
Apr-11	5.20	5.15	5.05
May-11	4.75	4.80	4.81
Jun-11	4.90	4.71	4.77
Jul-11	4.92	4.69	4.67
Aug-11	4.75	4.92	5.03
Sep-11	4.93	4.83	4.91
Oct-11	4.80	4.86	4.97
Nov-11	5.08	4.40	4.42
Dec-11	4.60	4.64	4.61
Jan-12	4.69	4.66	4.57
Feb-12	4.61	4.63	4.59
Mar-12	4.62	4.59	4.48
Apr-12	4.66	4.53	4.62
May-12	4.57	4.66	4.55
Jun-12	4.65	4.56	4.37
Jul-12	4.50	4.47	4.47
Aug-12	4.55	4.87	4.82
Sep-12	4.75	4.70	4.75
Oct-12	4.74	4.84	4.79
Nov-12	4.90	5.10	5.04
Dec-12	5.10	4.97	4.94
Jan-13	4.90	4.94	4.92
Feb-13	5.01	4.87	4.98
Mar-13	5.03	4.89	4.92
Apr-13	4.92	5.03	4.97
May-13	5.00	5.20	5.18
Jun-13	5.27	4.99	5.08
Jul-13	5.13	5.33	5.39
Aug-13	5.25	5.35	5.48
Sep-13	5.30	5.26	5.29
Oct-13	5.13	5.08	5.12
Nov-13	5.02	4.98	4.90
Dec-13	4.90	4.96	4.87
Jan-14	4.70	4.67	4.62
Feb-14	4.64	4.60	4.60
Mar-14	4.56	4.64	4.59
Apr-14	4.67	4.70	4.65
May-14	4.75	4.81	4.89
Jun-14	4.99	4.96	5.04
Jul-14	5.00	5.09	5.15
Aug-14	5.18	5.12	5.05
Sep-14	5.09	5.14	5.17
Oct-14	5.15	5.28	5.26
Nov-14	5.20	4.90	4.93
Dec-14	5.05	5.15	5.04
Jan-15	5.00	4.90	4.82
Feb-15	4.94	4.87	4.88
Mar-15	5.04	5.18	5.19
Apr-15	5.22	5.20	5.04
May-15	5.25	5.29	5.35
Jun-15	5.40	5.45	5.49
Jul-15	5.41	5.64	5.59
Aug-15	5.50	5.54	5.31
Sep-15	5.35	5.56	5.55
Oct-15	5.41	5.33	5.36
Nov-15	5.32	4.97	4.76
Dec-15	5.19	5.36	5.46
Jan-16	5.32	5.36	5.47
Feb-16	5.30	5.20	5.08
Mar-16	5.27	5.27	5.33
Apr-16	5.40	5.44	5.45
May-16	5.64	5.55	5.53
Jun-16	5.48	5.62	5.57
Jul-16	5.52	5.41	5.39
Aug-16	5.44	5.49	5.33
Sep-16	5.35	5.55	5.47
Oct-16	5.44	5.47	5.60
Nov-16	5.54	5.60	5.61
Dec-16	5.54	5.55	5.49
Jan-17	5.55	5.60	5.69
Feb-17	5.55	5.41	5.48
Mar-17	5.61	5.74	5.71
Apr-17	5.67	5.56	5.57
May-17	5.55	5.65	5.62
Jun-17	5.58	5.59	5.52
Jul-17	5.57	5.38	5.44
Aug-17	5.48	5.39	5.35
Sep-17	5.30	5.38	5.39
Oct-17	5.30	5.60	5.48
Nov-17	5.52	5.77	5.81
Dec-17	5.75	5.66	5.57
Jan-18	5.65	5.48	5.38
Feb-18	5.42	5.44	5.54
Mar-18	5.28	5.51	5.60
Apr-18	5.60	5.48	5.46
May-18	5.56	5.47	5.43
Jun-18	5.45	5.35	5.38
Jul-18	5.43	5.40	5.34
Aug-18	5.36	5.36	5.34
Sep-18	5.30	5.20	5.15
Oct-18	5.20	5.31	---
1NAR initially reported before revisions.

by Calculated Risk on 11/17/2018 08:11:00 AM

The key economic reports this week are October Housing Starts and Existing Home Sales.

Happy Thanksgiving!

----- Monday, Nov 19th -----
10:00 AM: The November NAHB homebuilder survey. The consensus is for a reading of  68, unchanged from 68. Any number above 50 indicates that more builders view sales conditions as good than poor.

----- Tuesday, Nov 20th -----
8:30 AM: Housing Starts for October.

This graph shows single and total housing starts since 1968.

The consensus is for 1.240 million SAAR, up from 1.201 million SAAR.

----- Wednesday, Nov 21st -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 213 thousand initial claims, down from 216 thousand the previous week.

8:30 AM: Durable Goods Orders for October from the Census Bureau. The consensus is for a 2.4% decrease in durable goods orders.

10:00 AM: Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for 5.20 million SAAR, up from 5.15 million.

The graph shows existing home sales from 1994 through the report last month.

Housing economist Tom Lawler estimates the NAR will reports sales of 5.31 million SAAR for October and that inventory will be up 2.8% year-over-year.

10:00 AM: University of Michigan's Consumer sentiment index (Final for November). The consensus is for a reading of 98.3.

----- Thursday, Nov 22nd -----
All US markets will be closed in observance of the Thanksgiving Day Holiday.

----- Friday, Nov 23rd -----
The NYSE and the NASDAQ will close early at 1:00 PM ET.

by Calculated Risk on 11/16/2018 07:07:00 PM

This is a key housing market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.

The Arizona Regional Multiple Listing Service (ARMLS) reports ("Stats Report"):

1) Overall sales declined to 7,182 from 7,268 in October 2017. Sales were up 4.1% from September, and down -1.2% from October 2017.

2) Active inventory was at 18,193, down from 19,190 in October 2017.   This is down 5.2% year-over-year.  This is the smallest YoY decrease in almost two years.  In many cities, inventory is increasing YoY, but not yet in Phoenix.

This is the twenty-fourth consecutive month with a YoY decrease in inventory in Phoenix.

Months of supply increased from 2.93 in September to 3.03 in October. This is still low.

by Calculated Risk on 11/16/2018 03:23:00 PM

From housing economist Tom Lawler: Early Read on Existing Home Sales in October

Based on publicly-available local realtor/MLS reports from across the country released through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.31 million in October, up 3.1% from October’s preliminary estimate, and down 3.5% from last October’s seasonally adjusted pace. Unadjusted sales should show a smaller YOY decline, reflecting the higher business day count this October compared to last October.

On the inventory front, local realtor/MLS data, as well as data from other inventory trackers, suggest that the inventory of existing homes for sale in October was down slightly from September, and I project that the NAR’s estimate of the inventory of existing homes for sales at the end of October will be 1.85 million, down 1.6% from September and up 2.8% from a year ago.

Finally, local realtor/MLS data suggest that the median US existing single-family home sales price last month was up about 4.5% from last October.

CR Note: The NAR is scheduled to release October existing home sales on Wednesday, Nov 21st.  The early consensus is that the NAR will report sales of 5.18 million SAAR.

by Calculated Risk on 11/16/2018 11:09:00 AM

From the NY Fed: Total Household Debt Rises for 17th Straight Quarter

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which shows that total household debt increased by $219 billion (1.6%) to $13.51 trillion in the third quarter of 2018. It was the 17th consecutive quarter with an increase and the total is now $837 billion higher than the previous peak of $12.68 trillion in the third quarter of 2008. Furthermore, overall household debt is now 21.2% above the post-financial-crisis trough reached during the second quarter of 2013. The Report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.
...
Mortgage originations increased to $445 billion from $437 billion in the second quarter.

Mortgage delinquencies were roughly flat, with 1.1% of mortgage balances 90 or more days delinquent in the third quarter.
emphasis added

Click on graph for larger image.

Here are two graphs from the report:

The first graph shows aggregate consumer debt increased in Q3.  Household debt previously peaked in 2008, and bottomed in Q2 2013.

From the NY Fed:

Aggregate household debt balances increased in the third quarter of 2018 for the 17th consecutive quarter, and are now $837 billion higher than the previous (2008Q3) peak of $12.68 trillion. As of September 30, 2018, total household indebtedness was $13.51 trillion, a $219 billion (1.6%) increase from the second quarter of 2018. Overall household debt is now 21.2% above the 2013Q2 trough. Included in report is a new section disaggregating data by borrower age.

Mortgage balances shown on consumer credit reports on September 30 stood at $9.1 trillion, an increase of $141 billion from the second quarter of 2018. Balances on home equity lines of credit (HELOC), on a declining trend since 2009, decreased by $10 billion in the third quarter and are now at $422 billion, the lowest level seen in 14 years. Non-housing balances jumped by $88 billion in the third quarter, with auto loans increasing by $27 billion, credit card balances going up by $15 billion, and student loan balances seeing a seasonally typical $37 billion increase.

The second graph shows the percent of debt in delinquency. There is still a larger than normal percent of debt 90+ days delinquent (Yellow, orange and red).

The overall delinquency rate increased in Q3.  From the NY Fed:

Aggregate delinquency rates worsened in the third quarter of 2018. As of September 30, 4.7% of outstanding debt was in some stage of delinquency, an uptick from 4.5% in the second quarter and the largest in 7 years. Of the $638 billion of debt that is delinquent, $415 billion is seriously delinquent (at least 90 days late or “severely derogatory”). This increase was primarily due to a large increase in the flow into delinquency for student loan balances during the third quarter of 2018. The flow into 90+ day delinquency for credit card balances has been rising for the last year and remained elevated since then compared to its recent history, while the flow into 90+ day delinquency for auto loan balances has been slowly trending upward since 2012.

About 215,000 consumers had a bankruptcy notation added to their credit reports in 2018Q3, slightly higher than in the same quarter of last year. New bankruptcy notations have been at historically low levels since 2016.

There is much more in the report.