by Calculated Risk on 12/10/2020 09:00:00 AM

From CoreLogic: Home Equity Reaches Record Highs: Homeowners Gained Over $1 Trillion in Equity in Q3 2020, CoreLogic Reports

CoreLogic® ... today released the Home Equity Report for the third quarter of 2020. The report shows U.S. homeowners with mortgages (which account for roughly 63% of all properties) have seen equity increase by 10.8% year over year, representing a collective equity gain of $1 trillion, and an average gain of $17,000 per homeowner, since the third quarter of 2019. This marks the largest average equity gain since the first quarter of 2014.

Despite the economic impact of the pandemic, home prices soared throughout the summer and fall. Appreciation reached its highest level since 2014 in the third quarter of 2020 as prospective homebuyers continued to compete for the low supply of homes on the market, pushing home equity to record levels. Equity gains are likely to persist over the next several months as strong home-purchase demand is expected to remain high and continue pushing prices up. However, the CoreLogic HPI Forecast shows home prices slowing over the next 12 months as new home construction and more existing for-sale homes ease supply pressures. This could moderate the pace of both home price growth and equity gains.

“Over the past year, strong home price growth has created a record level of home equity for homeowners,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The average family with a home mortgage loan had $194,000 in home equity in the third quarter. This provides an important buffer to protect families if they experience financial difficulties, and is one reason for the generational-low in foreclosure rates reported in September.”
...
Negative equity, also referred to as underwater or upside down, applies to borrowers who owe more on their mortgages than their homes are currently worth. As of the third quarter of 2020, negative equity share, and the quarter-over-quarter and year-over-year changes, were as follows:

• Quarterly change: From the second quarter of 2020 to the third quarter of 2020, the total number of mortgaged homes in negative equity decreased by 6.9% to 1.6 million homes or 3% of all mortgaged properties.

• Annual change: In the third quarter of 2019, 2 million homes, or 3.7% of all mortgaged properties, were in negative equity. This number decreased by 18.3%, or 370,000 properties, in the third quarter of 2020 to 1.6 million mortgaged properties in negative equity.

• National aggregate value: The national aggregate value of negative equity was approximately $283.3 billion at the end of the third quarter of 2020. This is down quarter over quarter by approximately $2.2 billion, or 0.8%, from $285.5 billion in the second quarter of 2020, and down year over year by approximately $21.4 billion, or 7%, from $304.7 billion in the third quarter of 2019.
emphasis added

Click on graph for larger image.

This graph from CoreLogic compares Q3 to Q2 2020 equity distribution by LTV. There are still quite a few properties with LTV over 125%.  But most homeowners have a significant amount of equity.  This is a very different picture than at the start of the housing bust when many homeowners had little equity.

On a year-over-year basis, the number of homeowners with negative equity has declined from 2.0 million to 1.6 million.

by Calculated Risk on 12/10/2020 08:45:00 AM

The DOL reported:

In the week ending December 5, the advance figure for seasonally adjusted initial claims was 853,000, an increase of 137,000 from the previous week's revised level. The previous week's level was revised up by 4,000 from 712,000 to 716,000. The 4-week moving average was 776,000, an increase of 35,500 from the previous week's revised average. The previous week's average was revised up by 1,000 from 739,500 to 740,500.
emphasis added

This does not include the 427,609 initial claims for Pandemic Unemployment Assistance (PUA) that was up from 288,234 the previous week.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 776,000.

The previous week was revised up.

The second graph shows seasonally adjust continued claims since 1967 (lags initial by one week).

At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined.

Continued claims increased to 5,757,000 (SA) from 5,527,000 (SA) last week and will likely stay at a high level until the crisis abates.

Note: There are an additional 8,555,763 receiving Pandemic Unemployment Assistance (PUA) that decreased from 8,869,502 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance. 

An additional 4,532,876 are receiving Pandemic Emergency Unemployment Compensation (PEUC) that decreased from 4,569,016 the previous week. These last two programs are set to expire on December 26th.

This was higher than expected.

by Calculated Risk on 12/10/2020 08:33:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in November on a seasonally adjusted basis after being unchanged in October, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.2 percent before seasonal adjustment.
...
The index for all items less food and energy increased 0.2 percent in November after being unchanged the prior month. The indexes for lodging away from home, household furnishings and operations, recreation, apparel, airline fares, and motor vehicle insurance all increased in November. The indexes for used cars and trucks, medical care, and new vehicles all declined over the month.

The all items index rose 1.2 percent for the 12 months ending November, the same increase as for the period ending October. The index for all items less food and energy rose 1.6 percent over the last 12 months, also the same increase as the period ending October. The food index rose 3.7 percent over the last 12 months, while the energy index fell 9.4 percent.
emphasis added

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

by Calculated Risk on 12/09/2020 09:28:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 700,000 initial claims, down from 712,000 last week.

• Also at 8:30 AM, The Consumer Price Index for November from the BLS. The consensus is for a 0.1% increase in CPI, and a 0.2% increase in core CPI.

• At 12:00 PM, Q3 Flow of Funds Accounts of the United States from the Federal Reserve.

by Calculated Risk on 12/09/2020 07:44:00 PM

I'm looking forward to not posting this data in a few months. Please stay healthy!

The US is now averaging over 1 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be well under 5% (probably close to 1%), 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 1,454,192 test results reported over the last 24 hours.

There were 209,822 positive tests.

Over 21,000 US deaths have been reported so far in December. 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 14.4% (red line is 7 day average).  The percent positive is calculated by dividing positive results by the sum of negative and positive results (I don't include pending).

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 and daily hospitalizations.

Note that there were very few tests available in March and April, and many cases were missed, so the hospitalizations was higher relative to the 7-day average of positive tests in July.

• Record Hospitalizations (Over 106,000)

• Record 7 Day Average Cases

• Record 7 Day Average Deaths

by Calculated Risk on 12/09/2020 01:11:00 PM

Note: I usually post this monthly, but I hesitated recently due to the COVID-19 pandemic. But I've received a number of requests lately - the recent numbers are ugly.

Here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, Fed Chair, or any other marker.

NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I'll just stick to the beginning of each term.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter and George H.W. Bush only served one term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (dark blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (dark red) took office.

There was a recession towards the end of President G.H.W. Bush (light purple) term, and Mr. Clinton (light blue) served for eight years without a recession.

Click on graph for larger image.

The first graph is for private employment only.

Mr. Trump is in Orange (46 months).

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 824,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 387,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased by 20,970,000 under President Clinton (light blue), by 14,714,000 under President Reagan (dark red), 9,039,000 under President Carter (dashed green), 1,511,000 under President G.H.W. Bush (light purple), and 11,849,000 under President Obama (dark blue).

During the 46 months of Mr. Trump's term, the economy has lost 2,128,000 private sector jobs.

 A big difference between the presidencies has been public sector employment.  Note: the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, 2010 and 2020. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).  However the public sector declined significantly while Mr. Obama was in office (down 277,000 jobs).

During the 46 months of Mr. Trump's term, the economy has lost 870,000 public sector jobs.

The third graph shows the progress towards the Trump goal of adding 10 million jobs over his 4 year term.

After 46 months of Mr. Trump's presidency, the economy has lost 2,998,000 jobs, about 12,581,000 behind the projection.

by Calculated Risk on 12/09/2020 10:05:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 6.7 million on the last business day of October, the U.S. Bureau of Labor Statistics reported today. Hires were little changed at 5.8 million while total separations increased to 5.1 million. Within separations, the quits rate was unchanged at 2.2 percent while the layoffs and discharges rate increased to 1.2 percent.
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 October, the most recent employment report was for November.

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.

The huge spikes in layoffs and discharges in March and April 2020 are labeled, but off the chart to better show the usual data.

Jobs openings increased in October to 6.652 million from 6.494 million in September.

The number of job openings (yellow) were down 9.0% year-over-year.

Quits were down 10% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Job openings were little changed in September, and are down YoY - and quits are down sharply YoY.

by Calculated Risk on 12/09/2020 07:00:00 AM

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

— Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 4, 2020. The previous week’s results included an adjustment for the Thanksgiving holiday.

... The Refinance Index increased 2 percent from the previous week and was 89 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index increased 29 percentcompared with the previous week and was 22 percent higher than the same week one year ago.

“Refinance activity increased last week in response to mortgage rates for 30-year, 15-year, and FHA loans hitting their lowest levels in MBA’s survey. The increase in refinance applications was driven by FHA and VA refinances, while conventional activity fell slightly. The ongoing refinance wave has continued through the fall, with activity last week up 89 percent from a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The purchase market is also poised to finish 2020 on a strong note. Applications fell slightly last week but were around 3 percent higher than the two weeks leading up to Thanksgiving. Reversing the recent trend, there was also a shift in the composition of purchase applications, with an increase in government loans pushing the average loan balance lower.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to a survey low of 2.90 percent from 2.92 percent, with points increasing to 0.35 from 0.31 (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 remains 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 unadjusted.

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

by Calculated Risk on 12/08/2020 09:53:00 PM

From Matthew Graham at Mortgage News Daily: Refi Rates Are Finally Back to All-Time Lows

For some lenders, it was last week. For others, it was today. After months of waiting and multiple successive reports of all-time lows from other sources, the average lender is now finally back in line with the actual all-time lows seen on August 4th, 2020. [Top Tier Scenarios 30YR FIXED: 2.80%]
emphasis added

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, Job Openings and Labor Turnover Survey for October from the BLS.

by Calculated Risk on 12/08/2020 07:50:00 PM

I'm looking forward to not posting this data in a few months. Please stay healthy!

The US is now averaging over 1 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be well under 5% (probably close to 1%), 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 1,398,336 test results reported over the last 24 hours.

There were 213,498 positive tests.

Over 18,000 US deaths have been reported so far in December. 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 15.3% (red line is 7 day average).  The percent positive is calculated by dividing positive results by the sum of negative and positive results (I don't include pending).

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 and daily hospitalizations.

Note that there were very few tests available in March and April, and many cases were missed, so the hospitalizations was higher relative to the 7-day average of positive tests in July.

• Record Hospitalizations (Over 104,000)

• Record 7 Day Average Cases

• Record 7 Day Average Deaths