by Calculated Risk on 6/09/2020 12:22:00 PM

From the NMHC: NMHC Rent Payment Tracker Finds 80.8 Percent of Apartment Households Paid Rent as of June 6

The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 80.8 percent of apartment households made a full or partial rent payment by June 6 in its survey of 11.5 million units of professionally managed apartment units across the country.

This is a 0.7-percentage point decrease in the share who paid rent through June 6, 2019 and compares to 80.2 percent that had paid by May 6, 2020. These data encompass a wide variety of professionally managed market-rate rental properties across the United States, which can vary by size, type and average rental price.

“These are trying times for the country, and we are reminded on a regular basis how crucial safe and secure housing is during a period of uncertainty and upheaval, so we are glad to see that residents who live in professionally managed properties continue to pay their rent,” said Doug Bibby, NMHC President. “While our Rent Payment Tracker metric continues to show the resilience and strength of the professionally managed apartment industry, it does not necessarily tell the whole story, as it doesn’t capture rent payments for smaller landlords or for affordable and subsidized properties, and according to Harvard, more than half of renters with at-risk wages due to the pandemic live in single-family and small multifamily rentals with 2–4 units.”

“At the beginning of the outbreak lawmakers took swift action to extend and enhance unemployment benefits as well as create other programs aimed at keeping individuals employed. Thanks to those forward-looking steps, millions of Americans have been able to continue to be able to afford healthcare, food and shelter,” said David Schwartz, NMHC Chair, and CEO and Chairman of Chicago-based Waterton. “However, those benefits will expire on July 31. Unless policymakers move to extend them, the families and individuals relying on them will find themselves without a safety net, undercutting the initial economic recovery. We urge lawmakers in both parties to continue to sustain and support Americans as our nation and the economy begin to recover.”
emphasis added

CR Note: It appears people are still paying their rent at about the same rate as last year (down just 0.7 percentage points from a year ago).   The disaster relief has been key to helping people pay their bills, especially the extra unemployment benefits and the PPP.  

by Calculated Risk on 6/09/2020 10:08:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of total separations decreased by 4.8 million to 9.9 million in April, the U.S. Bureau of Labor Statistics reported today. Despite the over the month decline, the total separations level is the second highest in series history. Within separations, the quits rate fell to 1.4 percent and the layoffs and discharges rate decreased to 5.9 percent. Job openings decreased to 5.0 million on the last business day of April. Over the month, hires declined to 3.5 million, a series low. The changes in these measures reflect the effects of the coronavirus (COVID-19) pandemic and efforts to contain it ...
emphasis added

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for April, the most recent employment report was for May.

Click on graph for larger image.


Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings decreased in April to 5.046 million from 6.011 million in March.

The number of job openings (yellow) were down 31% year-over-year.

Quits were down 49% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Job openings decreased sharply in April, and hires were at a series low.  Quits declined almost 50% YoY - as expected, a very weak report.

by Calculated Risk on 6/09/2020 08:22:00 AM

Most of this survey is noise, but there is some information, especially on the labor market.

From the National Federation of Independent Business (NFIB): May 2020 Report

The Small Business Optimism Index increased 3.5 points in May to 94.4, a strong improvement from April’s 90.9 reading. Eight of the 10 Index components improved in May and two declined. The NFIB Uncertainty Index increased seven points to 82. Reports of expected business conditions in the next six months increased 5 points to a net 34%, following a 24-point increase in April. Owners are optimistic about future business conditions and expect the recession to be short-lived.
.
May Survey respondents reduced employment by 0.17 workers per firm in the prior three months, down from an addition of 0.09 workers per firm in the April report. … May’s survey was bad news for job creation. A seasonally-adjusted net 8 percent plan to create new jobs, up 7 points.
emphasis added

Note that the "single biggest problem" is "poor sales".

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index increased to 94.4 in May.

by Calculated Risk on 6/08/2020 08:47:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Starting Strong This Week

After moving higher at a fairly quick pace last by last Friday, mortgage rates are off to a better start this week. Rates remain noticeably higher versus the best recent levels, seen on June 1st and 2nd, but the average lender offered slightly lower rates this morning and then ended up offering a mid-day price improvement as well. [30YR FIXED - 3.19%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for May.

• At 10:00 AM, Job Openings and Labor Turnover Survey for April from the BLS.

• At 2:30 PM, (11:30 AM PT) June 2020 Market & Economic Update. Free Registration Link for June 2020 Market & Economic Update.

by Calculated Risk on 6/08/2020 05:51:00 PM

Note: I started posting this graph when the US was doing a few thousand tests per day. Clearly the US was way under testing early in the pandemic. I'll continue posting this graph daily at least until the percent positive is continuously under 3% and the daily positive is significantly lower than today.

The US is now usually conducting over 400,000 tests per day, and that might be enough to allow test-and-trace in some areas. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US still needs to increase the number of tests per day significantly.

According to Dr. Jha of Harvard's Global Health Institute, the US might need more than 900,000 tests per day .

There were 379,625 test results reported over the last 24 hours.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 4.3% (red line).

For the status of contact tracing by state, check out testandtrace.com.

by Calculated Risk on 6/08/2020 04:19:00 PM

Note: To put these numbers in perspective, the MBA notes "For the week of March 2, only 0.25% of all loans were in forbearance."

From the MBA: Share of Mortgage Loans in Forbearance Increases to 8.53%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 8.46% of servicers’ portfolio volume in the prior week to 8.53% as of May 31, 2020. According to MBA’s estimate, almost 4.3 million homeowners are now in forbearance plans.
...
“The overall share of loans in forbearance increased by only 7 basis points compared to the prior week. With the job market beginning to gradually improve, more homeowners are exiting forbearance, and we are seeing declines in forbearance volume among some servicers,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “However, this week’s findings did reveal divergence among servicers. The share of loans in forbearance decreased for depository servicers but continued to increase for IMBs.”

Added Fratantoni, “While servicers reported only a 1-basis-point increase in the forbearance share for GSE and Ginnie Mae loans, the increase for private-label securities and portfolio loans rose to over 10 percent, which is higher than the rate on GSE loans.”
emphasis added

The MBA notes: "Forbearance requests as a percent of servicing portfolio volume (#) dropped across all investor types for the eighth consecutive week relative to the prior week: from 0.20% to 0.17%."

by Calculated Risk on 6/08/2020 02:13:00 PM

On June 9th, at 11:30 AM Pacific Time, UCI Finance Professor Christopher Schwarz and I will be discussing the June 2020 economic outlook.

This is a free event, and you can register at Registration Link for June 2020 Market & Economic Update.    The presentation will be about 30 minutes, followed by a Q&A period.

Click on banner for a larger image.

by Calculated Risk on 6/08/2020 01:21:00 PM

This was a quick call from NBER. Usually it takes many months, but this recession was obvious. Note that they think the recession will likely be shorter than previous recession (just meaning activity will start increasing from the bottom).

From NBER: Determination of the February 2020 Peak in US Economic Activity

Cambridge, June 8, 2020 - The Business Cycle Dating Committee of the National Bureau of Economic Research maintains a chronology of the peaks and troughs of U.S. business cycles. The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.

The committee also determined that a peak in quarterly economic activity occurred in 2019Q4. Note that the monthly peak (February 2020) occurred in a different quarter (2020Q1) than the quarterly peak. The committee determined these peak dates in accord with its long-standing policy of identifying the months and quarters of peak activity separately, without requiring that the monthly peak lie in the same quarter as the quarterly peak. Further comments on the difference between the quarterly and monthly dates are provided below.

A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide indicators of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.
…
The usual definition of a recession involves a decline in economic activity that lasts more than a few months. However, in deciding whether to identify a recession, the committee weighs the depth of the contraction, its duration, and whether economic activity declined broadly across the economy (the diffusion of the downturn). The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.
emphasis added

by Calculated Risk on 6/08/2020 01:07:00 PM

Black Knight released their Mortgage Monitor report for April today. According to Black Knight, 6.45% of mortgages were delinquent in April, up from 3.47% in April 2019. Black Knight also reported that 0.40% of mortgages were in the foreclosure process, down from 0.50% a year ago.

This gives a total of 6.85% delinquent or in foreclosure.

Press Release: Black Knight: Just One in 10 Homeowners in Forbearance Hold 10% or Less Equity in Their Homes; Share Much Higher Among FHA/VA Loans

Today, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage performance, housing and public records datasets. As Black Knight reported on June 5, forbearance volumes fell for the first time since the crisis began between May 26 and June 2. As Black Knight Data & Analytics President Ben Graboske explained, the focus of industry participants – especially servicers and mortgage investors – must now shift from pipeline growth to pipeline management and downstream performance of loans in forbearance.

“The first decline in the number of homeowners in active forbearance volumes is undoubtedly a good sign, particularly coming as it does on the heels of an overall trend of flattening inflow,” said Graboske. “Of course, the shift from pipeline growth to pipeline management presents its own set of challenges for servicers and investors. The good news is that equity positions among homeowners in forbearance are by and large strong. Nearly 80% of homeowners in active forbearance have 20% or more equity in their homes, providing homeowners, servicers and regulators with options for helping to avoid downstream foreclosure activity and default-related losses. Just 9% have 10% or less equity – typically enough to cover the cost of a sale of a property – with another 1% underwater on their mortgages. Of course, this leaves a population of nearly half a million homeowners who may lack the necessary equity to sell their homes to avoid foreclosure in a worst-case scenario. Looking at this population by investor, we see the share of low and negative equity borrowers in forbearance is much higher among FHA/VA loans. This segment – which has the highest forbearance rates overall – sees 19% of homeowners holding 10% or less equity in their homes.

“Despite 25% of the workforce filing for unemployment benefits, just 9% of mortgages are currently in forbearance. Further, in April, nearly half of homeowners in forbearance plans made their April mortgage payments. Just 22% of those in forbearance as of May 26 have made their May payment, signaling another rise in the national delinquency rate is likely to be reflected in May’s data. With expanded unemployment benefits set to end on July 31, it remains to be seen what impact that may have on both forbearance requests and overall delinquencies.”
emphasis added

Click on graph for larger image.

Here is a graph from the Mortgage Monitor that shows the National Delinquency Rate.

From Black Knight:

• Just three months after hitting a record low in January 2020, the national delinquency rate is now at its highest level since 2013

• After falling more than 1.5% below its pre-Great Recession average in early 2020, the national delinquency rate is now 2.25% above that benchmark and may be poised to climb higher in May

• April's rise - the largest single-month increase on record - was nearly 3X the previous record from November 2008, during the heart of the Great Recession

• During the Great Recession, it took more than two years for the national delinquency rate to increase by the 3.1% seen in April 2020 alone

The second graph shows the number of active forbearance plans:

• As of May 26th, the number of active forbearances had begun to flatten, with a net increase of 7,000 plans over the prior week

• That’s compared to a 325K net increase in the first week of May, and 1.4M in the first week of April

• In total, an estimated 4.76M homeowners (representing 9% of active first lien mortgages) were in forbearance as of May 26th

There is much more in the mortgage monitor.

by Calculated Risk on 6/08/2020 10:33:00 AM

Note: Las Vegas saw a significant decline in visitor and convention traffic due to COVID-19 in the 2nd half of March and in April. This report is for closed sales in May; sales are counted at the close of escrow, so the contracts for these homes were mostly signed in March and April.

The Las Vegas Realtors reported Southern Nevada home prices holding their ground during crisis, LVR housing statistics for May 2020

LVR reported that a total of 2,075 existing local homes, condos and townhomes were sold during May – the second full month since Nevadans were ordered on March 17 to “stay home for Nevada.” Compared to the same time last year, May sales were down 48.1% for homes and down 51.3% for condos and townhomes. Sales were also down from the previous month.
...
By the end of May, LVR reported 5,799 single-family homes listed for sale without any sort of offer. That’s down 26.2% from one year ago. For condos and townhomes, the 1,768 properties listed without offers in May represented a 5.8% drop from one year ago.
…
Despite the coronavirus crisis, the number of so-called distressed sales in May remained near historically low levels. The association reported that short sales and foreclosures combined accounted for 1.5% of all existing local property sales in May. That compares to 2.0% of all sales one year ago, 2.6% two years ago, and 6.8% three years ago.
emphasis added

1) Overall sales were down 48.7% year-over-year to 2,075 in May 2020 from 4,045 in May 2019.

2) Active inventory (single-family and condos) is down from a year ago, from a total of 9,261 in May 2019 to 7,567 in May 2020. Note: Total inventory was down 22.2% year-over-year.   And months of inventory is still low.

3) Low level of distressed sales.