by Calculated Risk on 6/30/2021 04:38:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency decreased to 2.25% in May, from 2.38% in April. The serious delinquency rate is up from 0.89% in May 2020.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59% following the housing bubble, and peaked at 3.32% in August 2020 during the pandemic.

Click on graph for larger image

By vintage, for loans made in 2004 or earlier (2% of portfolio), 5.27% are seriously delinquent (down from 5.44% in April). For loans made in 2005 through 2008 (2% of portfolio), 9.09% are seriously delinquent (down from 9.33%), For recent loans, originated in 2009 through 2021 (96% of portfolio), 1.82% are seriously delinquent (down from 1.94%). So Fannie is still working through a few poor performing loans from the bubble years.

Mortgages in forbearance are 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 they are employed.

Note: Freddie Mac reported earlier.

by Calculated Risk on 6/30/2021 02:35:00 PM

From the Las Vegas Visitor Authority: May 2021 Las Vegas Visitor Statistics

The upward trajectory of tourism indicators continued in May as the destination welcomed nearly 2.9M visitors, + 11.8% MoM and down roughly -22% vs. May 2019.

Hotel occupancy reached nearly 71%, up 5.3 pts MoM, as Weekend occupancy approached 88%, coming within 8.6 pts of May 2019 levels. Midweek occupancy saw gains as well, reaching 62.8%, up 4.9 pts MoM and down 25.3 pts vs. May 2019.

Click on graph for larger image.

The first graph shows visitor traffic for 2019 (blue), 2020 (orange) and 2021 (red).

Visitor traffic was down 22.0% compared to the same month in 2019.

Convention traffic was non-existent again in May, and was down 100% compared to May 2019.

There has been no convention traffic since March 2020.  

I'll add a graph of convention traffic once conventions start to reopen.

Note: Conventions started again in June.

by Calculated Risk on 6/30/2021 12:14:00 PM

Here is another monthly update on framing lumber prices.  

This graph shows CME framing futures through June 30th.

Lumber is currently at $722 per 1000 board feet.  

This is down from a peak of $1,733, but up from $448 a year ago.

Click on graph for larger image in graph gallery.

Lumber price are up 60% year-over-year.

There are supply constraints, for example, sawmills cut production and inventory at the beginning of the pandemic, and the West Coast fires in 2020 damaged privately-owned timberland.  

The supply constraints are easing.

And there has been a huge surge in demand for lumber.

by Calculated Risk on 6/30/2021 09:55:00 AM

From the NAR: Pending Home Sales Bounce Back 8.0% in May

Pending home sales rebounded strongly in May, reaching the highest reading ever for the month of May since 2005, according to the National Association of Realtors®. All four U.S. regions registered both month-over-month increases and year-over-year gains for pending home sales contract transactions for the month of May.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 8.0% to 114.7 in May. Year-over-year, signings increased 13.1%. An index of 100 is equal to the level of contract activity in 2001.
...
The Northeast PHSI increased 15.5% to 98.5 in May, a 54.6% climb from a year ago. In the Midwest, the index grew 6.7% to 107.7 last month, up 7.8% from May 2020.

Pending home sales transactions in the South rose 4.9% to an index of 135.5 in May, up 6.1% from May 2020. The index in the West increased 10.9% in May to 102.0, up 12.5% from a year prior.
emphasis added

This was well above expectations of a 0.8% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in June and July.

by Calculated Risk on 6/30/2021 08:19:00 AM

From ADP:

Private sector employment increased by 692,000 jobs from May to June according to the June ADP® National Employment ReportTM. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by the ADP Research Institute® in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.

“The labor market recovery remains robust, with June closing out a strong second quarter of jobs growth,” said Nela Richardson, chief economist, ADP. “While payrolls are still nearly 7 million short of pre-COVID19 levels, job gains have totaled about 3 million since the beginning of 2021. Service providers, the hardest hit sector, continue to do the heavy lifting, with leisure and hospitality posting the strongest gain as businesses begin to reopen to full capacity across the country
emphasis added

This was above the consensus forecast of 600,000 for this report.

The BLS report will be released Friday, and the consensus is for 675 thousand non-farm payroll jobs added in June. The ADP report has not been very useful in predicting the BLS report.

by Calculated Risk on 6/30/2021 07:00:00 AM

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

Mortgage applications decreased 6.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 25, 2021.

... The Refinance Index decreased 8 percent from the previous week and was 15 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 17 percent lower than the same week one year ago.

“Mortgage application volume fell to the lowest level in almost a year and a half, with declines in both refinance and purchase applications. Mortgage rates were volatile last week, as investors tried to gauge upcoming moves by the Federal Reserve amidst several divergent signals, including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market that has led to rapid home-price growth,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Purchase applications for conventional loans declined last week to the lowest level since last May. The average loan size for total purchase applications increased, indicating that first-time homebuyers, who typically get smaller loans, are likely getting squeezed out of the market due to the lack of entry-level homes for sale.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.20 percent from 3.18 percent, with points decreasing to 0.39 from 0.48 (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.

With low rates, the index remains elevated.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 17% year-over-year unadjusted.

Note: The year ago comparisons for the unadjusted purchase index are now more difficult since purchase activity picked up in late May 2020.

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

by Calculated Risk on 6/29/2021 09:00:00 PM

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

• At 8:15 AM, The ADP Employment Report for June. This report is for private payrolls only (no government). The consensus is for 600,000 payroll jobs added in June, down from 978,000 lost in May.

• At 9:45 AM, Chicago Purchasing Managers Index for June.

• At 10:00 AM, Pending Home Sales Index for May. The consensus is for a 0.8% increase in the index.

by Calculated Risk on 6/29/2021 05:32:00 PM

The Case-Shiller house price indexes for April were released today. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Matthew Speakman at Zillow: April 2021 Case-Shiller Results & Forecast: No Sign of Slowing

Mortgage rates remain near historic lows, a demographic wave of households aging into prime homeownership years continues to swell, and despite showing some signs of bottoming, the number of available homes for sale remains historically small, particularly given the elevated demand for housing. Prices have skyrocketed as a result, and price growth continues to set new record highs. What’s more, despite sharply rising prices, demand for homes remains very strong. Bidding wars for the relatively few houses available remain common and homes are going under contract at an increasingly fast pace. Inventory upticks in recent weeks suggest that a respite from these red-hot market conditions may be starting to form. But a return to a balanced market remains a long way off, and there are few, if any, signs that home price appreciation will start to subside anytime soon.

Monthly and annual growth in May as reported by Case-Shiller is expected to accelerate from April and Mary 2020 in all three main indices. S&P Dow Jones Indices is expected to release data for the May S&P CoreLogic Case-Shiller Indices on Tuesday, July 27.
emphasis added

The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be at 16.2% in May, up from 14.6% in April.

The Zillow forecast is for the 20-City index to be up 16.5% YoY in April from 14.9% in April, and for the 10-City index to increase to be up 16.1% YoY compared to 14.4% YoY in April.

by Calculated Risk on 6/29/2021 03:36:00 PM

This data is from the CDC.

According to the CDC, on Vaccinations.

Total doses administered: 325,152,847, as of a week ago 319,223,844. Average doses last week: 0.85 million per day.

COVID Metrics
	Today	Yesterday	Week Ago	Goal
Percent over 18, One Dose	66.2%	66.1%	65.5%	≥70.0%1,2
Fully Vaccinated (millions)	154.2	153.8	150.4	≥1601
New Cases per Day3,4🚩	11,707	11,817	11,344	≤5,0002
Hospitalized3	11,837	11,287	12,633	≤3,0002
Deaths per Day3,4🚩	286	312	284	≤502
1 America's Goal by July 4th, 2my goals to stop daily posts, 37 day average for Cases, Hospitalized, and Deaths 4Cases and Deaths updated Mon - Fri 🚩 Increasing week-over-week

KUDOS to the residents of the 16 states and D.C. that have already achieved the 70% goal: Vermont, Hawaii and Massachusetts are at 80%+, and Connecticut, Maine, New Jersey,  Rhode Island, Pennsylvania, New Mexico, Maryland, California, Washington, New Hampshire, New York, Illinois, Virginia and D.C. are all over 70%.

Next up are Delaware at 69.8%, Minnesota at 69.7%, Colorado at 69.6%, Oregon at 69.4%, Wisconsin at 65.2%, Nebraska at 65.1%, and Florida at 64.3%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

This data is from the CDC.

by Calculated Risk on 6/29/2021 12:42:00 PM

Watching existing home "for sale" inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing.

And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here.

And in 2015, it appeared the inventory build in several markets was ending, and that boosted price increases.  

In 2020, with the pandemic, inventory dropped to record lows, and prices really increased (record low mortgage rates and demographics were factors too).

I don't have a crystal ball, but watching inventory helps understand the housing market.

Click on graph for larger image.

This graph below shows existing home months-of-supply (inverted, from the NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999 through March 2021).

There is a clear relationship, and this is no surprise (but interesting to graph).  If months-of-supply is high, prices decline. If months-of-supply is very low (like now), prices rise quickly.

In April, the months-of-supply was at 2.4 months, and the Case-Shiller National Index (SA) increased 1.6% month-over-month (a month-over-month record).  The black arrow points to the April dot.

In the May existing home sales report released last week, the NAR reported months-of-supply increased to 2.5 month in May. There is a seasonal pattern to inventory, but this is still very low - and prices are increasing sharply.