RSS Feed by Calculated Risk on 9/28/2020 04:05:00 PM
Monday, September 28, 2020
MBA Survey: "Share of Mortgage Loans in Forbearance Declines to 6.87%"
Note: This is as of September 20th.
From the MBA: Share of Mortgage Loans in Forbearance Declines to 6.87%
The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 6 basis points from 6.93% of servicers’ portfolio volume in the prior week to 6.87% as of September 20, 2020. According to MBA’s estimate, 3.4 million homeowners are in forbearance plans.
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“The share of loans in forbearance continues to decline and is now at a level not seen since mid-April. Many homeowners with GSE loans are exiting forbearance into a deferral plan and resuming their original mortgage payment, but waiting to pay the forborne amount until the end of the loan,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “However, the overall picture is still somewhat of a mixed bag. The recent uptick in forbearance requests, particularly for those with FHA or VA loans, is leaving the Ginnie Mae share elevated, as the pace of new requests meets or exceeds the pace of exits.”
Added Fratantoni, “The continued churn in the job market is likely keeping many homeowners who have been in forbearance reluctant to exit, given the level of economic uncertainty.”
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By stage, 30.26% of total loans in forbearance are in the initial forbearance plan stage, while 68.37% are in a forbearance extension. The remaining 1.37% 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 few months.
The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.10% to 0.11%"
There hasn't been a pickup in forbearance activity related to the end of the extra unemployment benefits.
New Home Prices
by Calculated Risk on 9/28/2020 01:57:00 PM
As part of the new home sales report released last week, the Census Bureau reported the number of homes sold by price and the average and median prices.
From the Census Bureau: "The median sales price of new houses sold in August 2020 was $312,800. The average sales price was $369,000."
The following graph shows the median and average new home prices.
Click on graph for larger image.
During the housing bust, the builders had to build smaller and less expensive homes to compete with all the distressed sales. When housing started to recovery - with limited finished lots in recovering areas - builders moved to higher price points to maximize profits.
The average price in August 2020 was $369,000, down 0.8% from July, and down 8.4% from the peak in 2017. The median price was $312,800, down 4.6% from July, and down 8.9% from the peak in 2017.
The average and median house prices have mostly moved sideways since 2017 due to home builders offering more lower priced homes.
The second graph shows the percent of new homes sold by price.
Very few new homes sold were under $150K in August 2020 ("Less than 500 units" in August 2020, rounded down to zero). This is down from 30% in 2002. In general, the under $150K bracket is going away.
The $400K+ bracket increased significantly since the housing recovery started, but has been holding steady recently - and declined over the last year. A majority of new homes (about 66%) in the U.S., are in the $200K to $400K range.
Dallas Fed: "Texas Manufacturing Recovery Picks Up Steam" in September
by Calculated Risk on 9/28/2020 10:40:00 AM
From the Dallas Fed: Texas Manufacturing Recovery Picks Up Steam
Texas factory activity expanded in September for the fourth month in a row following a record contraction due to the COVID-19 pandemic, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose nine points to 22.3, its highest reading in two years.This was the last of the regional Fed surveys for September.
Other measures of manufacturing activity point to above-average growth this month. The new orders index advanced five points to 14.7, and the growth rate of orders index held fairly steady at 13.2. The capacity utilization index rose from 10.9 to 17.5, while the shipments index was largely unchanged at 21.5.
Perceptions of broader business conditions continued to improve in September. The general business activity index pushed up six points to 13.6, its highest reading since November 2018. The company outlook index held mostly steady at 14.9, a reading well above average. Uncertainty regarding companies’ outlooks continued to rise, with the index positive but largely unchanged at 6.7.
Labor market measures indicated stronger employment growth and a continued increase in workweek length. The employment index pushed up from 10.6 to 14.5, suggesting more robust hiring.
emphasis added
Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
Click on graph for larger image.The New York and Philly Fed surveys are averaged together (yellow, through September), and five Fed surveys are averaged (blue, through September) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through August (right axis).
The ISM manufacturing index for September will be released on Thursday, October 1st. The consensus is for the ISM to be at 56.2, up from 56.0 in August. Based on these regional surveys, the ISM manufacturing index will likely increase in September from the August level.
Note that these are diffusion indexes, so readings above 0 (or 50 for the ISM) means activity is increasing (it does not mean that activity is back to pre-crisis levels).
Seven High Frequency Indicators for the Economy
by Calculated Risk on 9/28/2020 08:15:00 AM
These indicators are mostly for travel and entertainment - some of the sectors that will recover very slowly.
The TSA is providing daily travel numbers.
Click on graph for larger image.This data shows the seven day average of daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red).
The dashed line is the percent of last year for the seven day average.
This data is as of September 27th.
The seven day average is down 68% from last year (32% of last year).
There has been a slow increase from the bottom.
The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.
Thanks to OpenTable for providing this restaurant data:This data is updated through September 26, 2020.
This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."
Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.
The 7 day average for New York is still off 63% YoY, and down 33% in Arizona. There was a surge in restaurant dining around Labor Day - hopefully mostly outdoor dining.
This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years. Data is from BoxOfficeMojo through September 24th.Note that the data is usually noisy week-to-week and depends on when blockbusters are released.
Movie ticket sales have picked up over the last few weeks, and were at $9 million last week (compared to usually under $200 million per week in the late Summer / early Fall).
Some movie theaters are reopening (probably with limited seating at first).
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels - prior to 2020).
This data is through September 19th.
Hotel occupancy is currently down 31.9% year-over-year (and that is boosted by fires and a hurricane).
Notes: Y-axis doesn't start at zero to better show the seasonal change.
The leisure travel season usually peaks at the beginning of August, and then the occupancy rate typically declines sharply in the Fall. With so many schools closed, the leisure travel season might have lasted longer than usual this year, but it is unlikely business travel will pickup significantly in the Fall.
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week last year of .At one point, gasoline supplied was off almost 50% YoY.
As of September 19th, gasoline supplied was only off about 8.9% YoY (about 91.1% of normal).
Note: I know several people that have driven to vacation spots - or to visit family - and they usually would have flown. So this might have boosted gasoline consumption and the expense of air travel.
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.
There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.
This data is through September 25th for the United States and several selected cities.The graph is the running 7 day average to remove the impact of weekends.
IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.
According to the Apple data directions requests, public transit in the 7 day average for the US is still only about 58% of the January level. It is at 51% in Los Angeles, and 58% in Houston.
Here is some interesting data on New York subway usage (HT BR).
This graph is from Todd W Schneider.This data is through Friday, September 25th.
Schneider has graphs for each borough, and links to all the data sources.
He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".
Sunday, September 27, 2020
Sunday Night Futures
by Calculated Risk on 9/27/2020 07:31:00 PM
Weekend:
• Schedule for Week of September 27, 2020
Monday:
• At 10:30 AM ET, Dallas Fed Survey of Manufacturing Activity for September. This is the last of the regional surveys for September.
From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 9 and DOW futures are up 89 (fair value).
Oil prices were down over the last week with WTI futures at $40.19 per barrel and Brent at $41.91 barrel. A year ago, WTI was at $58, and Brent was at $65 - so WTI oil prices are down about 30% year-over-year.
Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.18 per gallon. A year ago prices were at $2.65 per gallon, so gasoline prices are down $0.47 per gallon year-over-year.
September 27 COVID-19 Test Results
by Calculated Risk on 9/27/2020 06:53:00 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 700,898 test results reported over the last 24 hours.
There were 35,289 positive tests.
Over 21,000 Americans have died from COVID so far in September. 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 5.0% (red line is 7 day average).
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.
The second graph shows the 7 day average of positive tests reported.
The dashed line is the June low.
Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.
If people stay vigilant, the number of cases might drop to the June low some time in October (that would still be a large number of new cases, but progress).
Commercial Real Estate Scarring
by Calculated Risk on 9/27/2020 12:33:00 PM
Here is an article related to some of the commercial real estate (CRE) scarring from the pandemic recession.
From the Financial Times: Destruction of value in US real estate revealed by appraisal data. The article suggests some CRE valuations have declined 25% since early this year.
We will also see a decline in new CRE construction next year based on the recent architect billings, from the AIA: "Architectural billings in August still show little sign of improvement"
And hotel occupancy is down 32% year-over-year, and RevPAR (Revenue per available room) is down over 50% year-over-year.
The most significant damage will be to malls, hotels and some office properties, and also some losses for commercial mortgage-backed securities (CMBS) investors. The goods news is the CMBS market is much smaller than the residential MBS market, and loan-to-values (LTV) are typically much lower for commercial properties than residential. So this will not be a repeat of the housing bubble (or the S&L crisis of the 1980s and early '90s).
Saturday, September 26, 2020
September 26 COVID-19 Test Results
by Calculated Risk on 9/26/2020 06:08:00 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 933,873 test results reported over the last 24 hours.
There were 47,733 positive tests.
Almost 21,000 Americans have died from COVID so far in September. 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 5.1% (red line is 7 day average).
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.
The second graph shows the 7 day average of positive tests reported.
The dashed line is the June low.
Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.
If people stay vigilant, the number of cases might drop to the June low some time in October (that would still be a large number of new cases, but progress).
Schedule for Week of September 27, 2020
by Calculated Risk on 9/26/2020 08:07:00 AM
The key report this week is the September employment report on Friday.
Other key indicators include the third estimate of Q2 GDP, the September ISM manufacturing index, September auto sales, Personal Income and Outlays for August and Case-Shiller house prices for July.
10:30 AM: Dallas Fed Survey of Manufacturing Activity for September. This is the last of the regional surveys for September.
9:00 AM ET: S&P/Case-Shiller House Price Index for July.This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).
The consensus is for a 3.8% year-over-year increase in the Comp 20 index for July.
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.
8:15 AM: The ADP Employment Report for September. This report is for private payrolls only (no government). The consensus is for 605,000 jobs added, up from 428,000 in August.
8:30 AM: Gross Domestic Product, 2nd quarter 2020 (Third estimate). The consensus is that real GDP decreased 31.7% annualized in Q2, unchanged from the second estimate of -31.7%.
9:45 AM: Chicago Purchasing Managers Index for September. The consensus is for a reading of 52.0, up from 51.2 in August.
10:00 AM: Pending Home Sales Index for August. The consensus is 3.2% increase in the index.
8:30 AM: The initial weekly unemployment claims report will be released. Initial claims were 870 thousand the previous week.
8:30 AM: Personal Income and Outlays for August. The consensus is for a 2.2% decrease in personal income, and for a 0.7% increase in personal spending. And for the Core PCE price index to increase 0.3%.
10:00 AM: ISM Manufacturing Index for September. The consensus is for a reading of 56.2, up from 56.0 in August.Here is a long term graph of the ISM manufacturing index.
The PMI was at 56.0% in August, the employment index was at 46.3%, and the new orders index was at 67.6%.
10:00 AM: Construction Spending for August. The consensus is for a 0.7% increase.
All day: Light vehicle sales for September.The consensus is for sales of 16.2 million SAAR, up from 15.2 million SAAR in August (Seasonally Adjusted Annual Rate).
This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the current sales rate.
8:30 AM: Employment Report for September. The consensus is for 850 thousand jobs added, and for the unemployment rate to decrease to 8.2%.There were 1.371 million jobs added in August, and the unemployment rate was at 8.4%.
This graph shows the job losses from the start of the employment recession, in percentage terms.
The current employment recession was by far the worst recession since WWII in percentage terms, and the worst in terms of the unemployment rate.
10:00 AM: University of Michigan's Consumer sentiment index (Final for September). The consensus is for a reading of 92.0.
Friday, September 25, 2020
Freddie Mac: Mortgage Serious Delinquency Rate increased in August, Highest Since January 2013
by Calculated Risk on 9/25/2020 08:35:00 PM
Freddie Mac reported that the Single-Family serious delinquency rate in August was 3.17%, up from 3.12% in July. Freddie's rate is up from 0.61% in August 2019.
This is the highest serious delinquency rate since January 2013.
Freddie's serious delinquency rate peaked in February 2010 at 4.20%.
These are mortgage loans that are "three monthly payments or more past due or in foreclosure".
Click on graph for larger image
Mortgages in forbearance are being counted as delinquent in this monthly report, but they will not be reported to the credit bureaus.
This is very different from the increase in delinquencies following the housing bubble. Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes - and they will be able to restructure their loans once (if) they are employed.
Note: Fannie Mae will report for August soon.
