by Calculated Risk on 7/10/2019 07:00:00 AM

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

Mortgage applications decreased 2.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 5, 2019. This week’s results include an adjustment for the Fourth of July holiday.

... The Refinance Index decreased 7 percent from the previous week and was 88 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index decreased 18 percent compared with the previous week and was 6 percent higher than the same week one year ago.
...
“Mortgage applications were down slightly, even after adjusting for the July 4th holiday, as we saw opposing moves in purchase and refinance applications over the week. Purchase applications increased from the previous week and were up 5 percent from a year ago, a continuation of the strong annual growth that we saw in the first half of 2019. Refinance activity decreased over 6 percent and the refinance share of applications fell back below 50 percent, even as the 30-year, fixed-rate declined 3 basis points to 4.04 percent," said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. "Borrowers have been less sensitive to low rates as many borrowers have either recently refinanced or are likely waiting for rates to fall even further. Other mortgage rates in our survey were unchanged or slightly higher than in the previous week.”
...
The average contract interest rate for 30-year, fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.04 percent from 4.07 percent, with points increasing to 0.37 from 0.36 (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.

Mortgage rates have declined from close to 5% late last year to around 4% now.

Just about anyone who bought or refinanced over the last year or so can refinance now.   But it would take another significant decline in rates for a further large increase in refinance activity.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 6% year-over-year.

by Calculated Risk on 7/09/2019 06:37:00 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, Testimony, Fed Chair Jerome Powell, Semiannual Monetary Policy Report to the Congress, Before the House Financial Services Committee, Washington, D.C

• At 2:00 PM, FOMC Minutes, Meeting of June 18-19, 2019

by Calculated Risk on 7/09/2019 11:54:00 AM

This is a key former distressed market to follow since Las Vegas saw the largest price decline, following the housing bubble, of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported Local home prices increase slightly after three-month holding pattern, GLVAR housing statistics for June 2019

Local home prices broke out of a three-month holding pattern to post a slight increase during June, according to a report released Tuesday by the Greater Las Vegas Association of REALTORS® (GLVAR).
...
The total number of existing local homes, condos and townhomes sold during June was 3,626. Compared to one year ago, June sales were down 11.1% for homes and down 12.0% for condos and townhomes.
...
At the current sales pace, Carpenter said Southern Nevada still has less than a three-month supply of homes available for sale. While the local housing supply is up from one year ago, she said it’s still below what would normally be considered a balanced market.

By the end of June, GLVAR reported 7,815 single-family homes listed for sale without any sort of offer. That’s up 80.3% from one year ago. For condos and townhomes, the 1,937 properties listed without offers in June represented a 135.6% jump from one year ago.
...
The number of so-called distressed sales remains near historically low levels. GLVAR reported that short sales and foreclosures combined accounted for just 2.2% of all existing local property sales in June. That compares to 2.6% of all sales one year ago and 6.3% two years ago.
emphasis added

1) Overall sales were down 11.3% year-over-year to 3,626 in June 2019.

2) Active inventory (single-family and condos) is up sharply from a year ago, from a total of 5,157 in June 2018 to 9,752 in June 2019. Note: Total inventory was up 89% year-over-year.   This is a significant increase in inventory, although months-of-supply is still somewhat low.

3) Low level of distressed sales.

by Calculated Risk on 7/09/2019 10:09:00 AM

Notes: In May there were 7.449 million job openings, and, according to the May Employment report, there were 5.888 million unemployed. So, for the fifteenth consecutive month, there were more job openings than people unemployed. Also note that the number of job openings has exceeded the number of hires since January 2015 (over 4 years).

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 7.3 million on the last business day of May, the U.S. Bureau of Labor Statistics reported today. Over the month, hires fell to 5.7 million and separations edged down to 5.5 million. Within separations, the quits and the layoffs and discharges rates were unchanged at 2.3 percent and 1.2 percent, respectively. ...

The number of quits was little changed in May at 3.4 million. The quits rate was 2.3 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 May, the most recent employment report was for June.

Click on graph for larger image.


Note that hires (dark blue) and total separations (red and light blue columns stacked) are 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.

Jobs openings decreased in May to 7.323 million from 7.372 million in April.

The number of job openings (yellow) are up 3% year-over-year.

Quits are up 2% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Job openings remain at a high level, and quits are still increasing year-over-year. This was a solid report.

by Calculated Risk on 7/09/2019 08:58:00 AM

CR Note: Most of this survey is noise, but there is some information, especially on the labor market and the "Single Most Important Problem".

From the National Federation of Independent Business (NFIB): June 2019 Report: Small Business Optimism Index

Optimism faded modestly in June, with the Small Business Optimism Index slipping 1.7 points to 103.3, reversing the gain posted in May but still leaving optimism at historically high levels.
..
Thirty-six percent of all owners reported job openings they could not fill in the current period, down 2 points from May but still high. A seasonally-adjusted net 19 percent plan to create new jobs, down 2 points.
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index decreased to 103.3 in June.

Note: Usually small business owners complain about taxes and regulations (currently 2nd and 3rd on the "Single Most Important Problem" list).  However, during the recession, "poor sales" was the top problem. Now the difficulty of finding qualified workers is the top problem.

by Calculated Risk on 7/08/2019 08:41:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Under Some Pressure

Mortgage rates began the day in slightly lower territory compared to last Friday afternoon, but they'd risen noticeably from Wednesday to Friday. The recovery seen this morning wasn't enough to get them back in line with Wednesday's levels. To make matters slightly worse, by the afternoon, rates started to move up yet again. [Most Prevalent Rates 30YR FIXED - 3.875%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for June.

• At 10:00 AM, Job Openings and Labor Turnover Survey for May from the BLS.