by Calculated Risk on 7/07/2020 12:54:00 PM

The Northwest Multiple Listing Service reported Northwest MLS brokers report robust activity amid low interest rates, tight inventory, changing lifestyles

Historically low interest rates and lifestyle changes are fueling housing activity around Washington state, according to Dean Rebhuhn, president of Village Homes and Properties in Woodinville. Commenting on just-released June statistics from Northwest Multiple Listing Service, he and other brokers say multiple offers are common “especially in the median price range.”
…
“Multiple offers are back with a vengeance as buyers are handicapped by having only about half the inventory of a year ago,” noted Dick Beeson, managing broker at RE/MAX Northwest in Tacoma-Gig Harbor. “The refrain, ‘Sorry to tell you, but the seller has accepted another offer,’ is heard with regularity,” he stated, adding, “If a buyer finds a home they like, it’s likely 20 other people will be vying for it, and the battle is on.”
emphasis added

There were 8,312 sales in June 2020, down 12% from 9,474 sales in June 2019.

The press release is for the Northwest. In King County, sales were down 17.1% year-over-year, and active inventory was down 41.5% year-over-year.

In Seattle, sales were down 8.3% year-over-year, and inventory was down 31.6% year-over-year..  This puts the months-of-supply in Seattle at just 1.6 months.

The closed sales are for contracts mostly signed in April and May.   There will likely be some rebound in the July report.

by Calculated Risk on 7/07/2020 11:06:00 AM

This report is for closed sales in June; sales are counted at the close of escrow, so the contracts for these homes were mostly signed in April and May.

The Las Vegas Realtors reported Southern Nevada home prices holding their ground during crisis, LVR housing statistics for May 2020

LVR reported that a total of 2,934 existing local homes, condos and townhomes were sold during June – the third full month since Nevadans were ordered on March 17 to “stay home for Nevada.” Compared to the same time last year, June sales were down 15.1% for homes and down 35.0% for condos and townhomes. However, sales were up significantly from the previous month.
...
By the end of June, LVR reported 5,079 single-family homes listed for sale without any sort of offer. That’s down 35.0% from one year ago. For condos and townhomes, the 1,616 properties listed without offers in June represented a 16.6% drop from one year ago.
…
Despite the coronavirus crisis, the number of so-called distressed sales in June remained near historically low levels. The association reported that short sales and foreclosures combined accounted for 2.2% of all existing local property sales in June. That compares to 2.2% of all sales one year ago, 2.6% two years ago and 6.3% three years ago.
emphasis added

1) Overall sales were down 19.1% year-over-year to 2,934 in June 2020 from 3,626 in June 2019.

2) Active inventory (single-family and condos) is down from a year ago, from a total of 9,752 in June 2019 to 6,695 in June 2020. Note: Total inventory was down 31.3% year-over-year.   And months of inventory is still low.

3) Low level of distressed sales.

by Calculated Risk on 7/07/2020 10:07:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of hires increased by 2.4 million to a series high of 6.5 million in May, the U.S. Bureau of Labor Statistics reported today. This was the largest monthly increase of hires since the series began. Total separations decreased by 5.8 million to 4.1 million, the single largest decrease since the series began. Within separations, the quits rate rose to 1.6 percent while the layoffs and discharges rate fell to 1.4 percent. Job openings increased to 5.4 million on the last business day of May. These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it.
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 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.

Jobs openings increased in May to 5.397 million from 4.996 million in April.

The number of job openings (yellow) were down 26% year-over-year.

Quits were down 41% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Job openings increased in May, but were still down sharply YoY.

by Calculated Risk on 7/07/2020 08:00:00 AM

Notes: This CoreLogic House Price Index report is for May. The recent Case-Shiller index release was for April. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: Prepare for a Cooldown: CoreLogic Reports Home Prices Were Up in May, but Could Slump Over the Summer

Nationally, home prices increased by 4.8%, compared with May 2019. Home prices increased 0.7% in May 2020 compared with April of this year.

Strong home purchase demand in the first quarter of 2020, coupled with tightening supply, has helped prop up home prices through the coronavirus (COVID-19) crisis. However, the anticipated impacts of the recession are beginning to appear across the housing market. Despite new contract signings rising year over year in May, home price growth is expected to stall in June and remain that way throughout the summer. CoreLogic HPI Forecast predicts a month-over-month price decrease of 0.1% in June and a year-over-year decline of 6.6% by May 2021.

Unlike the Great Recession, the current economic downturn is not driven by the housing market, which continues to post gains in many parts of the country. While activity up until now suggests the housing market will eventually bounce back, the forecasted decline in home prices will largely be due to elevated unemployment rates. This prediction is exacerbated by the recent spike in COVID-19 cases across the country.
emphasis added

CR Note: The overall impact on house prices will depend on the duration of the crisis.

by Calculated Risk on 7/06/2020 08:47:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Staying Very Flat and Very Low

Mortgage rates barely budged for the third straight day, which is welcome news considering they are at all-time lows. [Top Tier Scenarios 30YR FIXED - 2.94]
emphasis added

Tuesday:
• At 8:00 AM ET, Corelogic House Price index for May

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

by Calculated Risk on 7/06/2020 05:41:00 PM

Note: There might be some missing or late reporting today due to the holiday weekend.

The US is now conducting over 600,000 tests per day, and that might be enough to allow test-and-trace in some areas. 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.

According to Dr. Jha of Harvard's Global Health Institute, the US might need more than 900,000 tests per day.

There were 518,392 test results reported over the last 24 hours.

There were 47,375 positive tests.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 9.1% (red line).

For the status of contact tracing by state, check out testandtrace.com.

by Calculated Risk on 7/06/2020 02:31:00 PM

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

U.S. rail volumes in June weren’t close to where they would have been absent the pandemic, but for the most part they were better than in April and May, so at least they’re heading in the right direction. Whether that continues is, of course, a separate question, but the worst may be behind us.
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 2018, 2019 and 2020:

Total originated U.S. rail carloads fell 22.4% in June 2020 from June 2019, a troubling result but better than the 25.2% decline in April and 27.7% decline in May. Average weekly total carloads in June were 198,564, the third lowest of any month in records going back to January 1988. Of

The second graph shows the six week average of U.S. intermodal in 2018, 2019 and 2020: (using intermodal or shipping containers):

U.S. intermodal originations were down 6.6% in June 2020 from June 2019, their smallest percentage decline since January 2020 and much better than the 13.0% decline in May 2020 and the 17.2% decline in April 2020. An average of 251,233 containers and trailers were originated each week in June, the most since November 2019 and up from a recent low of 219,085 in April 2020.

Note that rail traffic was weak prior to the pandemic.

by Calculated Risk on 7/06/2020 01:20:00 PM

The second graph is the so-called "scariest job chart" ever. That graph shows the percent job losses for all recessions since WWII.

Joe Weisenthal at Bloomberg asked if I could make a similar graph showing percent permanent job losers.

Click on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the June report.

This data is only available back to 1994, so there is only data for three recessions.

As temporary job losses become permanent, the percent of permanent job losers will probably continue to increase for some time.

The second graph shows the job losses from the start of the employment recession, in percentage terms.

The current employment recession is by far the worst recession since WWII in percentage terms, and the worst in terms of the unemployment rate.

by Calculated Risk on 7/06/2020 12:03:00 PM

Black Knight released their Mortgage Monitor report for May today. According to Black Knight, 7.76% of mortgages were delinquent in May, up from 6.45% in April, and up from 3.36% in May 2019. Black Knight also reported that 0.38% of mortgages were in the foreclosure process, down from 0.49% a year ago.

This gives a total of 8.14% delinquent or in foreclosure.

Press Release: Black Knight’s May 2020 Mortgage Monitor

Today, the Data & Analytics division of Black Knight, Inc. (NYSE:BKI) released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage performance, housing and public records datasets. As Black Knight Data & Analytics President Ben Graboske explained, despite record-low interest rates and record-high levels of tappable equity – the amount available to homeowners with mortgages to borrow against before reaching a maximum combined loan-to-value ratio of 80% – both the number of cash-out refinances and the volume of equity withdrawn via such loans fell in Q1 2020.

“Tappable equity rose by 8% year-over-year in the first quarter of 2020 to a record high of $6.5 trillion,” said Graboske. “What’s more, with mortgage interest rates hitting record lows, 90% of homeowners with tappable equity now have first lien rates above the prevailing market average. But while Q1 2020 saw overall refinance lending climb to a 7-year high, the number of cash-out refinances, as well as the dollar value of equity withdrawn via refinance, fell for the first time since early 2019. All in, cash-outs accounted for just 42% of refinance loans in the first quarter, roughly half of what was seen at the recent high in Q4 2018 and the lowest such share since Q1 2016. Likewise, the $38.7 billion in equity withdrawn from the market via cash-out refinances was down 8% from the prior quarter. Further, rate lock data – a good indicator of lending activity – suggests the trend is likely to continue, as the cash-out share of refinance activity has continued to fall throughout the second quarter.
emphasis added

Click on graph for larger image.

Here is a graph from the Mortgage Monitor that shows the National Delinquency Rate.

From Black Knight:

• The national delinquency rate jumped again in May, climbing another 1.3 percentage points to its highest level since December 2011

• May’s increase would have been the worst single month ever recorded if it weren’t for the 3.1 percentage point increase in the month prior

• All in, the national delinquency rate of 7.8% is now up 4.5 percentage points from the record low of 3.2% in January 2020

• There are now 4.3 million homeowners past due on their mortgages, including 200,000 currently in foreclosure

• That number has ballooned by more than 2.3 million in recent months after falling below 2 million earlier in the year for the first time since 2005

There is much more in the mortgage monitor.

by Calculated Risk on 7/06/2020 10:05:00 AM

The June ISM Non-manufacturing index was at 57.1%, up from 45.4% in May. The employment index increased to 43.1%, from 31.8%. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: June 2020 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in June after two consecutive months of contraction, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee: “The NMI® registered 57.1 percent, 11.7 percentage points higher than the May reading of 45.4 percent. This reading represents growth in the non-manufacturing sector after a two-month period of contraction preceded by 122 straight months of expansion. This is the largest single-month percentage-point increase in the NMI® since its debut in 1997. (In April, the index suffered its biggest one-month decrease, a 10.7-percent drop.) The Business Activity Index registered 66 percent, up 25 percentage points from May’s figure of 41 percent. The New Orders Index registered 61.6 percent; 19.7 percentage points higher than the reading of 41.9 percent in May. The Employment Index increased to 43.1 percent; 11.3 percentage points higher than the May reading of 31.8 percent.
emphasis added