by Calculated Risk on 8/18/2020 08:49:00 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, the Bureau of Labor Statistics (BLS) will release the preliminary estimate of the upcoming annual benchmark revision.

• Also at 10:00 AM, Advance Services Report, Second Quarter 2020

• During the day, The AIA's Architecture Billings Index for July (a leading indicator for commercial real estate).

• At 2:00 PM, FOMC Minutes, Meeting of July 28-29, 2020

by Calculated Risk on 8/18/2020 06:04:00 PM

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 642,814 test results reported over the last 24 hours.

There were 40,458 positive tests.

There have been 18,184 COVID deaths in the first 18 days of August. 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 6.3% (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 8/18/2020 04:21:00 PM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.85 million in July, up 23.9% from June’s preliminary pace and up 8.5% from last July’s seasonally adjusted pace.

Local realtor/MLS data suggest that the median US existing single-family home sales price last month was up by about 8.4% from last July, a sharp YOY acceleration from June.

While not all realtor reports include data on new pending sales – and some that do often revise those data significantly – the limited data available suggest that the YOY increase in pending sales again exceeded the YOY gain in closed sales last month.

Projecting the NAR’s inventory estimate for July is tricky. Local realtor/MLS reports suggest that the “inventory” of homes for sale last month was down by about 30% nationwide in July. However, those same local reports for June would have suggested a much sharply YOY drop in inventories than the NAR reported.

Most of these local realtor/MLS reports utilize third-party software, and most exclude all pending contracts from the inventory number. These reports also differ from the reports sent to the NAR, and it is my understanding is that not all local realtors/MLS exclude all pending contracts from the inventory number in the NAR report.
...
The data do suggest, however, that the YOY decline in inventories in July was larger than it was in June.

Here are a few more observations: First, for local realtor/MLS reports which break sales out by type, single-family detached home sales continued to show stronger growth than condo/coop sales, and inventories of SFD homes were down MUCH more sharply YOY than condo/coop inventories (in fact, in some reports SFD inventories were down sharply while condo/coop sales were up a bit.

Second, home sales in counties with beach resorts were up extremely sharply from a year ago, at least on the East Coast.

Finally, I have heard anecdotally that “many” urban dwellers have been buying SFD homes in the suburbs without (at least yet) listing their urban property.

CR Note: The National Association of Realtors (NAR) is scheduled to release July existing home sales on Friday, August 21, 2020 at 10:00 AM ET. The consensus is for 5.39 million SAAR.

by Calculated Risk on 8/18/2020 11:22:00 AM

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 week of August 2nd through August 8th, there were 270,468 temp workers.

That was an increase of around 220,000. Last week was the BLS reference week, and it seems likely another 100,000 or more temporary workers were on the payroll last week (to be released next week).

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 8/18/2020 09:28:00 AM

As expected, housing starts increased further in July, and were up solidly year-over-year, but are still below the pre-recession level.

Earlier: Housing Starts increased to 1.496 Million Annual Rate in July

Total housing starts in July were above expectations, and revisions to prior months were positive.

Low mortgage rates and limited existing home inventory is giving a boost to housing starts.

The housing starts report showed starts were up 22.6% in July compared to June, and starts were up 23.4% year-over-year compared to July 2019 (easy comparison).

Single family starts were up 7.4% year-over-year.

This first graph shows the month to month comparison for total starts between 2019 (blue) and 2020 (red).

Click on graph for larger image.

Starts were up 22.6% in July compared to July 2019.

Last year, in 2019, starts picked up towards the end of the year, so the comparisons were easy in the first seven months of the year..

Starts, year-to-date, are up 4.7% compared to the same period in 2019. This is below my forecast for 2020, but I didn't expect a pandemic!

I expect a further increase in starts in August, but the growth rate will slow.

Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

The blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) increased steadily for several years following the great recession - then mostly moved sideways.  Completions (red line) had lagged behind - then completions caught up with starts- although starts picked up a little again lately.

The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

Note the relatively low level of single family starts and completions.  The "wide bottom" was what I was forecasting following the recession, and now I expect some further increases in single family starts and completions once the crisis abates.

by Calculated Risk on 8/18/2020 08:37:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,496,000. This is 22.6 percent above the revised June estimate of 1,220,000 and is 23.4 percent above the July 2019 rate of 1,212,000. Single-family housing starts in July were at a rate of 940,000; this is 8.2 percent above the revised June figure of 869,000. The July rate for units in buildings with five units or more was 547,000.

Building Permits:
Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,495,000. This is 18.8 percent above the revised June rate of 1,258,000 and is 9.4 percent (±1.5 percent) above the July 2019 rate of 1,366,000. Single-family authorizations in July were at a rate of 983,000; this is 17.0 percent above the revised June figure of 840,000. Authorizations of units in buildings with five units or more were at a rate of 467,000 in July.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) were up in July compared to June.   Multi-family starts were up solidly year-over-year in July.

Single-family starts (blue) increased in July, and were up 7.4% year-over-year.

The second graph shows total and single unit starts since 1968.

The second graph shows the huge collapse following the housing bubble, and then eventual recovery (but still historically low).

Total housing starts in July were above expectations, and starts in May and June were revised up.

I'll have more later …

by Calculated Risk on 8/17/2020 08:29:00 PM

From Matthew Graham at Mortgage News Daily: Still Reeling From Last Week, Mortgage Rates Tiptoe Lower

Mortgage rates managed to improve modestly for the average lender today, but they remain significantly higher than they were before last week's regulatory drama. By the time we consider the size, scope, and the precipitous imposition of the new refi fee, we've never seen anything remotely similar. Lenders were definitely taken by surprise and they'll definitely be paying dearly for all refis that were already locked.

When lenders get big, negative surprises concerning profitability or new cost requirements, they tend to raise rates very quickly and by a larger-than-necessary amount. [Top Tier Scenarios 30YR FIXED: 3.12%]
emphasis added

Tuesday:
• At 8:30 AM ET, Housing Starts for July. The consensus is for 1.237 million SAAR, up from 1.186 million SAAR in June.

by Calculated Risk on 8/17/2020 06:19:00 PM

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 647,372 test results reported over the last 24 hours.

There were 37,759 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 5.8% (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 8/17/2020 04:00:00 PM

Note: This is as of August 9th.

From the MBA: Share of Mortgage Loans in Forbearance Decreases for the Ninth Straight Week to 7.21%

he Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 23 basis points from 7.44% of servicers’ portfolio volume in the prior week to 7.21% as of August 9, 2020. According to MBA’s estimate, 3.6 million homeowners are in forbearance plans.
...
“More homeowners exited forbearance last week, leading to the ninth straight drop in the share of loans in forbearance. However, the decline in Ginnie Mae loans in forbearance was again because of buyouts of delinquent loans from Ginnie Mae pools, which result in these FHA and VA loans being reported in the portfolio category,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “In a sign that more FHA and VA borrowers are struggling with a very tough job market, more Ginnie Mae borrowers requested than exited forbearance.”

By stage, 38.80% of total loans in forbearance are in the initial forbearance plan stage, while 60.49% are in a forbearance extension. The remaining 0.70% are forbearance re-entries.
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April, and has been trending down for the last nine weeks.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week from 0.12% to 0.11%."

There hasn't been a pickup in forbearance activity related to the end of the extra unemployment benefits.

by Calculated Risk on 8/17/2020 12:58:00 PM

The CAR reported: California housing recovery continues in July as median home price sets another record high, C.A.R. reports

California’s housing market continued to recover as home sales climbed to their highest level in more than two and a half years in July, while setting another record-high median home price, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 437,890 units in July, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2020 if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

July’s sales total climbed above the 400,000 level for the first time since February 2020, before the COVID-19 crisis depressed the housing market, and was the highest level in more than two and a half years. July sales rose 28.8 percent from 339,910 in June and were up 6.4 percent from a year ago, when 411,630 homes were sold on an annualized basis. July marked the first time in five months that home sales posted an annual gain.

Housing inventory continued to trend downward on a year-over-year basis, with active listings falling more than 25 percent for the eighth consecutive month. The year-over-year 48 percent decline was the biggest drop in active listings since January 2013. The continued recovery in closed escrow sales, combined with a sharp drop in active listings, led to a plunge in the Unsold Inventory Index (UII) to 2.1 months in July, down from 3.2 months a year ago. The index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales. The July UII was the lowest level since November 2004.
emphasis added

CR Note: Existing home sales are reported when the transaction closes, so this was mostly for contracts signed in May and June.   Sales-to-date, through July, are down 10% compared to the same period in 2019.