by Calculated Risk on 10/11/2021 04:05:00 PM

Note: This is as of October 3rd.

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 2.62%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 27 basis points from 2.89% of servicers’ portfolio volume in the prior week to 2.62% as of October 3, 2021. According to MBA’s estimate, 1.3 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 17 basis points to 1.21%. Ginnie Mae loans in forbearance decreased 41 basis points to 2.94%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 35 basis points to 6.42%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 37 basis points relative to the prior week to 2.82%, and the percentage of loans in forbearance for depository servicers decreased 24 basis points to 2.69%.

“Many borrowers reached the expiration of their forbearance term as we entered October. The pace of exits climbed to the fastest pace in over a year, and the share of loans in forbearance declined at the fastest rate since last October, dropping by 27 basis points. The decline was the largest for Ginnie Mae and portfolio/PLS loans,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Payment performance has remained steady for those who have exited forbearance and into a workout since 2020, with more than 85% of those borrowers current as of October. It also continues to be striking that so many homeowners in forbearance have continued to make their payments. Almost 16 percent of borrowers in forbearance as of October 3rd were current.”

Added Fratantoni, “Job growth was weaker than expected in September, reflecting the challenges from the Delta variant, ongoing supply-chain issues, and the resulting slowdowns in workplace and school reopenings. However, the drop in the unemployment rate, rising wages, and abundant job openings will continue to help support the housing market, including helping borrowers exit forbearance successfully in the weeks ahead.”
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 2020, and has trended down since then.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.04% to 0.05%."

by Calculated Risk on 10/11/2021 01:44:00 PM

A few excerpts from a Goldman Sachs research note: The Housing Shortage: Prices, Rents, and Deregulation

Of all the shortages afflicting the US economy, the housing shortage might last the longest. Earlier this year, we argued that constrained supply and sustainably robust demand would keep the US housing market very tight, pushing up home prices and rents sharply. The boom since then has surpassed even our lofty expectations, with home prices now up 20% over the last year. ...

The supply-demand picture that has been the basis for our call for a multi-year boom in home prices remains intact. Housing inventories remain historically tight, while homes remain relatively affordable despite the recent price increases, and surveys of home buying intentions remain at healthy levels. Our model now projects that home prices will grow a further 16% by the end of 2022.
emphasis added

by Calculated Risk on 10/11/2021 12:01:00 PM

Today, in the Newsletter: Mortgage Rates Highest in 6 Months

Excerpt:

The general rule of thumb is refinance activity will be strong if current mortgage rates are 50bps lower than the maximum of the previous year (this is just a general rule - but it works pretty well).

The following graph shows the MBA Refinance Index (Blue) and the change in mortgage rates (Red). The change is calculated as Maximum in Previous Year minus the current rate). When the red line is above 0.5% (more than 50bps decline in mortgage rates), then refinance activity generally picks up.

Please subscribe!

by Calculated Risk on 10/11/2021 10:32:00 AM

Tracking existing home inventory will be very important this year.

Click on graph for larger image in graph gallery.

This inventory graph is courtesy of Altos Research.

As of October 8th, inventory was at 426 thousand (7 day average), compared to 555 thousand for the same week a year ago.  That is a decline of 23.3%.

Compared to the same week in 2019, inventory is down 55% from 947 thousand.  A week ago, inventory was at 428 thousand, and was down 23.9% YoY.   

Seasonally, inventory bottomed in April (usually inventory bottoms in January or February). Inventory was about 39% above the record low in early April.

Now inventory may have peaked for the year in early September.   Five weeks ago inventory was at 437 thousand (the peak for the year so far), so inventory is currently off about 2.6% from the peak for the year.

Mike Simonsen discusses this data regularly on Youtube.  

Altos Research has also seen a significant pickup in price decreases - now well above the level of a year ago - but still below a normal rate for October.

by Calculated Risk on 10/11/2021 08:20:00 AM

These indicators are mostly for travel and entertainment.    It will interesting to watch these sectors recover as the pandemic subsides.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

This data is as of October 10th.

Click on graph for larger image.

This data shows the 7-day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Blue) and 2021 (Red).

The dashed line is the percent of 2019 for the seven day average.

The 7-day average is down 23.0% from the same day in 2019 (77.0% of 2019).  (Dashed line)

Note that the dashed line hit a pandemic high over the Labor Day weekend - probably due to leisure travel, but is now below pre-holiday levels.

The red line usually increases seasonally after Labor Day due to business travel.

----- Restaurants: OpenTable -----
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.

IMPORTANT: OpenTable notes: "we’ve updated the data including downloadable dataset from January 1, 2021 onward to compare seated diners from 2021 to 2019, as opposed to year over year." Thanks!

Thanks to OpenTable for providing this restaurant data:

This data is updated through October 9, 2021.

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.

Dining picked up for the Labor Day weekend, but declined after the holiday - but might be picking up a little again.  The 7-day average for the US is down 6% compared to 2019.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue).  

Blue is 2020 and Red is 2021.  

The data is from BoxOfficeMojo through October 7th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales were at $159 million last week, down about 13% from the median for the week.

----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

This data is through October 2nd. The occupancy rate was down 9.2% compared to the same week in 2019.

Notes: Y-axis doesn't start at zero to better show the seasonal change.

The Summer months had decent occupancy with solid leisure travel, and occupancy was only off about 7% in July and August compared to 2019.  But it is uncertain what will happen over the next couple of months with business travel.  Usually weekly occupancy increases to around 70% in the weeks following Labor Day due to renewed business travel.

----- Gasoline Supplied: Energy Information Administration -----
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020.  Red is for 2021.

As of October 1st, gasoline supplied was down 0.3% compared to the same week in 2019.

There have been six weeks so far this year when gasoline supplied was up compared to the same week in 2019 - and consumption is running close to 2019 levels now.

----- Transit: Apple Mobility -----
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 October 9th 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 at 116% of the January 2020 level. 

New York City is doing well by this metric, but subway usage in NYC is down sharply (next graph).

----- New York City Subway Usage -----
Here is some interesting data on New York subway usage (HT BR).

This graph is from Todd W Schneider. This is weekly data since 2015. 

Most weeks are between 30 and 35 million entries, and currently there are close to 15 million subway turnstile entries per week - and moving up recently.

This data is through Friday, October 8th.

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".

by Calculated Risk on 10/10/2021 08:00:00 PM

Weekend:
• Schedule for Week of October 10, 2021

Monday:
• Columbus Day Holiday: Banks will be closed in observance of Columbus Day. The stock market will be open. No economic releases are scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 23 and DOW futures are down 152 (fair value).

Oil prices were up over the last week with WTI futures at $79.74 per barrel and Brent at $82.65 per barrel. A year ago, WTI was at $40, and Brent was at $42 - so WTI oil prices are UP 100% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.26 per gallon. A year ago prices were at $2.18 per gallon, so gasoline prices are up $1.08 per gallon year-over-year.

by Calculated Risk on 10/10/2021 08:11:00 AM

Reis reported the office vacancy rate was at 18.2% in Q3, down from 18.5% in Q2, and up from 17.4% in Q3 2020. 

The previous quarter (back in Q2) saw the highest vacancy rate for offices since the early '90s (following the S&L crisis).

Click on graph for larger image.

The first graph shows the office vacancy rate starting in 1980 (prior to 1999 the data is annual).

The office vacancy rate was elevated prior to the pandemic, and moved up during the pandemic.

Reis also reported that office effective rents increased slightly in Q3; this followed five consecutive quarter with declining rents.

The second graph shows the regional and strip mall vacancy rate starting in 1980 (prior to 2000 the data is annual).

For Neighborhood and Community malls (strip malls), the vacancy rate was 10.4% in Q3, down from 10.5% in Q2, and unchanged from 10.4% in Q3 2020.

For Regional malls, the vacancy rate was 11.2% in Q3, down from 11.5% in Q2, and up from 10.1% in Q3 2020.

Reis reported that mall effective rents increased slightly in Q3, after stabilizing in Q2.  This followed five consecutive quarters will declining rents.

All vacancy data courtesy of Reis

by Calculated Risk on 10/09/2021 02:11:00 PM

At the Calculated Risk Newsletter this week:

• Measuring Rents How quickly are rents increasing? And how will this impact measures of inflation?

• On Private Lenders Raising the "Conforming Loan Limit" The Official Announcement for 2022 will be in Late November.

• 1st Look at Local Housing Markets in September Denver, Las Vegas and San Diego.

• Homebuilder Comments in September: “Supply chain, supply chain, supply chain." "Monthly price hikes no longer the norm. Some of the hottest markets sounding toppy."

• 2nd Look at Local Housing Markets in September Adding Memphis, Nashville, North Texas (Dallas), Northwest (Seattle), Sacramento and Santa Clara (San Jose).

This will usually be published several times a week, and will provide more in-depth analysis of the housing market.

The blog will continue as always!

You can subscribe at https://calculatedrisk.substack.com/  Currently all content is available for free - and some will always be free - but please subscribe!.

by Calculated Risk on 10/09/2021 08:11:00 AM

The key economic reports this week are September CPI and Retail Sales.

For manufacturing, the October New York Fed survey will be released this week.

----- Monday, October 11th -----
Columbus Day Holiday: Banks will be closed in observance of Columbus Day. The stock market will be open. No economic releases are scheduled.

----- Tuesday, October 12th -----
6:00 AM: NFIB Small Business Optimism Index for September.

10:00 AM: Job Openings and Labor Turnover Survey for August from the BLS.

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

Jobs openings increased in July to 10.934 million from 10.185 million in June.  This is a new record high for this series.

The number of job openings (yellow) were up 63% year-over-year. Quits were up 25% year-over-year.

----- Wednesday, October 13th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

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

2:00 PM: FOMC Minutes, Meeting of September 21-22, 2021

----- Thursday, October 14th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 315 thousand initial claims, down from 326 thousand last week.

8:30 AM: The Producer Price Index for September from the BLS. The consensus is for a 0.6% increase in PPI, and a 0.5% increase in core PPI.

----- Friday, October 15th -----
8:30 AM ET: Retail sales for September will be released.  The consensus is for a 0.2% decrease in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

8:30 AM ET: The New York Fed Empire State manufacturing survey for October. The consensus is for a reading of 27.0, down from 34.3.

10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for October).

by Calculated Risk on 10/08/2021 04:19:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

Rail traffic in September 2021 was a mix of good and could-be-better, reflecting continuing broad supply chain issues and an economy that doesn’t appear sure where it’s going.

U.S. intermodal volume in September 2021 was down 6.7% from last year and down 0.1% from September 2019. The smooth functioning of intermodal terminals depends on consistent freight outflows to make room for new freight inflows. Unfortunately, that’s not happening right now because of supply chain capacity constraints, with predicable impacts on intermodal. U.S. intermodal in 2021 through September was the second most ever, fractionally behind the first nine months of 2018.

Total U.S. carloads in September were up 4.3% over last year, their seventh straight monthly gain
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows the six week average of U.S. Carloads in 2019, 2020 and 2021:

U.S. railroads originated 1.17 million total carloads in September 2021, up 4.3% (47,858 carloads) over September 2020 but down 5.8% (71,773 carloads) from September 2019. Total carloads averaged 233,536 per week in September 2021. That’s more than in September 2020, but otherwise it’s the lowest weekly average for September in our data that go back to 1988.

The second graph shows the six week average (not monthly) of U.S. intermodal in 2019, 2020 and 2021: (using intermodal or shipping containers):

U.S. railroads originated 1.33 million intermodal containers and trailers in September 2021, down 6.7% from September 2020 and down 0.1% from September 2019. The 6.7% decline in September follows a 3.3% decline in August, which in turn followed a year of monthly intermodal gains. Intermodal volume averaged 265,705 containers and trailers per week in September 2021, the fewest since February 2021 (when a freakishly severe winter storm in Texas and surrounding states decimated rail traffic) and, before that, since July 2020.