by Calculated Risk on 8/12/2020 07:09:00 PM

SPECIAL NOTE: North Carolina removed 220,000 tests from its cumulative total (a correction). I've added 220,000 to the total today to make the percent positive correct.

The US is now mostly reporting over 700,000 tests per day. 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 (or take actions to push down the number of new infections).

There were 683,291 test results reported over the last 24 hours.

There were 55,742 positive tests.

See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 8.2% (red line).

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

And check out COVID Exit Strategy to see how each state is doing.

by Calculated Risk on 8/12/2020 12:38:00 PM

From the HAR: July Home Sales Across Houston Reach Record Territory

A continued surge in closings from homes that went under contract after the lifting of COVID-19 stay-at-home measures propelled Houston real estate into record territory in July – surpassing June’s stronger-than-expected performance. However, a dwindling supply of homes caused by the burst of homebuying and home sellers holding back amid the ongoing COVID-19 crisis will make it difficult to keep up with the strong buyer demand.

According to the latest Houston Association of Realtors (HAR) Market Update, 10,975 single-family homes sold in July compared to 8,921 a year earlier. That translated to a 23.0 percent increase. That is a record sales volume for a single month and marks the first time that figure has surpassed 10,000.
...
Sales of all property types totaled 13,043 – another record high – up 25.0 percent from July 2019. Total dollar volume for the month leapt 33.8 percent to $4.1 billion. Consumers also sent lease properties into positive territory in July.
emphasis added

Inventory declined 19.4% year-over-year from 44,722 in July 2019 to 36,055 in July 2020.

Note that the closed sales in July were for contracts that were mostly signed in May and June.

by Calculated Risk on 8/12/2020 11:24:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% July. The 16% trimmed-mean Consumer Price Index rose 0.4% in July. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".

Note: The Cleveland Fed released the median CPI details for July here. Motor fuel increased at a 90% annualized rate in July.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.7%, the trimmed-mean CPI rose 2.4%, and the CPI less food and energy rose 1.6%. Core PCE is for June and increased 1.0% year-over-year.

Even with the sharp increase in inflation in July, overall inflation will not be a concern during the crisis.

by Calculated Risk on 8/12/2020 10:14:00 AM

The BLS reported this morning:

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.0 percent over the last 12 months to an index level of 252.636 (1982-84=100). For the month, the index rose 0.6 percent prior to seasonal adjustment.

CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U, and is not seasonally adjusted (NSA).

• In 2019, the Q3 average of CPI-W was 250.200.

The 2019 Q3 average was the highest Q3 average, so we only have to compare Q3 this year to last year.

Click on graph for larger image.

This graph shows CPI-W since January 2000. The red lines are the Q3 average of CPI-W for each year.

Note: The year labeled for the calculation, and the adjustment is effective for December of that year (received by beneficiaries in January of the following year).

CPI-W was up 1.0% year-over-year in July, and although this is very early - we need the data for August and September - my current guess is COLA will probably increase over 1% this year, but lower than the 1.6% last year, and the smallest increase since 2016.

Contribution and Benefit Base

The contribution base will be adjusted using the National Average Wage Index. This is based on a one year lag. The National Average Wage Index is not available for 2019 yet, but wages probably increased again in 2019. If wages increased the same as in 2018, then the contribution base next year will increase to around $142,700 in 2021, from the current $137,700.

Remember - this is an early look. What matters is average CPI-W for all three months in Q3 (July, August and September).

by Calculated Risk on 8/12/2020 08:31:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in July on a seasonally adjusted basis, the same increase as in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.0 percent before seasonal adjustment.

The gasoline index continued to rise in July after increasing sharply in June and accounted for about one quarter of the monthly increase in the seasonally adjusted all items index. ...

The index for all items less food and energy rose 0.6 percent in July, its largest increase since January 1991. ...

The all items index increased 1.0 percent for the 12 months ending July, a larger increase than the 0.6-percent rise for the period ending June. The index for all items less food and energy increased 1.6 percent over the last 12 months.
emphasis added

Overall inflation was above expectations in July. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 8/12/2020 07:00:00 AM

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

Mortgage applications increased 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 August 7, 2020.

... The Refinance Index increased 9 percent from the previous week and was 47 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 22 percent higher than the same week one year ago.

Mortgage rates fell across the board last week, as investors grew less optimistic of the economic rebound given the resurgence of virus cases. Loan types such as the 30-year fixed, 15-year fixed, and jumbo all reached survey lows. Refi activity responded to these lower rates, with the refi share reaching almost 66 percent of all applications, its highest level since May. And the refi index jumped 9 percent, reaching its highest level since April, as both conventional and government applications for refinances increased,” said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. “Home purchase activity continued its strong run with a 2 percent increase over the week and was up around 22 percent compared to the same week a year ago. While this was still positive news for the purchase market, the gradual slowdown in the improvement in the job market and tight housing inventory remain a concern for the coming months, even as low mortgage rates continue to provide support."
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.06 percent from 3.14 percent, with points decreasing to 0.33 from 0.39 (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.

The refinance index has been very volatile recently depending on rates and liquidity.

But with record low rates, the index is up significantly from last year.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 22% year-over-year.

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

by Calculated Risk on 8/11/2020 08:26:00 PM

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

• At 8:30 AM, The Consumer Price Index for July from the BLS. The consensus is for a 0.3% increase in CPI, and a 0.2% increase in core CPI.

by Calculated Risk on 8/11/2020 06:05:00 PM

Note: There are some states having reporting problems.

The US is now mostly reporting over 700,000 tests per day. 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 (or take actions to push down the number of new infections).

There were 739,083 test results reported over the last 24 hours.

There were 55,594 positive tests.

See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 7.5% (red line).

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

And check out COVID Exit Strategy to see how each state is doing.

by Calculated Risk on 8/11/2020 12:16:00 PM

In July, the BLS reported "A July job gain in federal government (+27,000) reflected the hiring of temporary workers for the 2020 Census."

The Census Bureau released an update today on 2020 Census Paid Temporary Workers

As of the July reference week, there were 50,404 decennial Census temporary workers. As of last week, there were 155,239 temp workers.

This is an increase of almost 105,000. This week is the BLS reference week, and it seems likely the number of temporary workers will increase further.

This means the August employment report will show a sharp increase in Federal employment. Since these are temporary, and only happen every ten years with the decennial Census, it makes sense to adjust the headline monthly Current Employment Statistics (CES) by Census hiring to determine the underlying employment trend.

The correct adjustment method is to take the headline number and subtract the change in the number of Census 2020 temporary and intermittent workers. For more, see: How to Report the Monthly Employment Number excluding Temporary Census Hiring

by Calculated Risk on 8/11/2020 08:57:00 AM

From CoreLogic: Clouds on The Horizon for Many U.S. Homeowners: Overall Delinquency Rates Beginning to Climb, According to CoreLogic Loan Performance Insights Report

On a national level, 7.3% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure). This represents a 3.7-percentage point increase in the overall delinquency rate compared to 3.6% in May 2019.

To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency, including the share that transition from current to 30 days past due. In May 2020, the U.S. delinquency and transition rates, and their year-over-year changes, were as follows:

• Early-Stage Delinquencies (30 to 59 days past due): 3%, up from 1.7% in May 2019.

• Adverse Delinquency (60 to 89 days past due): 2.8%, up from 0.6% in May 2019.

• Serious Delinquency (90 days or more past due, including loans in foreclosure): 1.5%, up from 1.3% in May 2019. This is the first year-over-year increase in the serious delinquency rate since November 2010.

• Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, down from 0.4% in May 2019. This is the second consecutive month the U.S. foreclosure rate was at its lowest level for any month since at least January 1999.

• Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 2.2%, up from 0.8% in May 2019. By comparison, in January 2007 — just before the start of the financial crisis — the current- to 30-day transition rate was 1.2%, while it peaked in November 2008 at 2%.

In the months leading up to the pandemic, U.S. mortgage performance was showing signs of sustained improvement. The national unemployment rate matched a 50-year low in February, and overall delinquency had been on an impressive 27 consecutive-month decline. However, by May 2020 — just two months after the coronavirus (COVID-19) was declared a global pandemic — U.S. unemployment surged past 13%, leaving over 4 million homeowners (accounting for more than 8% of all mortgages) little choice but to enter a COVID-19 mortgage forbearance program.

“The national unemployment rate soared from a 50-year low in February 2020, to an 80-year high in April,” said Dr. Frank Nothaft, chief economist at CoreLogic. “With the sudden loss of income, many homeowners are struggling to stay on top of their mortgage loans, resulting in a jump in non-payment.”

Absent further government programs and support, CoreLogic forecasts the U.S. serious delinquency rate to quadruple by the end of 2021, pushing 3 million homeowners into serious delinquency.

CR Note: Many of the delinquent borrowers are in forbearance plans, and, once they are employed, they will probably be able to pay their mortgages again.