by Calculated Risk on 7/09/2020 08:39:00 AM

The DOL reported:

In the week ending July 4, the advance figure for seasonally adjusted initial claims was 1,314,000, a decrease of 99,000 from the previous week's revised level. The previous week's level was revised down by 14,000 from 1,427,000 to 1,413,000. The 4-week moving average was 1,437,250, a decrease of 63,000 from the previous week's revised average. The previous week's average was revised down by 3,500 from 1,503,750 to 1,500,250.
emphasis added

The previous week was revised down.

This does not include the 1,038,905 initial claims for Pandemic Unemployment Assistance (PUA).  This was an increase from the previous week, and the previous week was revised up.

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 decreased to 1,437,250.

Initial weekly claims were below the consensus forecast of 1.4 million initial claims and the previous week was revised down.

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 decreased to 18,062,000 (SA) from 18,760,000 (SA) last week and will likely stay at a high level until the crisis abates.

Note: There are an additional 14,363,143 receiving Pandemic Unemployment Assistance (PUA). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.

by Calculated Risk on 7/08/2020 08:19:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for a 1.400 million initial claims, down from 1.427 million the previous week.

by Calculated Risk on 7/08/2020 07:31:00 PM

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 666,196 test results reported over the last 24 hours.

There were 62,197 positive tests. Most ever.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 9.3% (red line).

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

by Calculated Risk on 7/08/2020 02:28:00 PM

From the HAR: Houston Home Buyers Pump Up the Volume in June

A flurry of homes going under contract in May after COVID-19-related stay-at-home orders expired led to a surge of closings in June, driving home sales volumes back up to levels considered more normal for summertime in Houston – and even beyond 2019’s record pace. However, renewed coronavirus concerns, stemming from a spike in cases across greater Houston and in other parts of Texas, may bring this taste of normalcy to an end by the fall.

According to the latest Market Update from the Houston Association of Realtors (HAR), 9,328 single-family homes sold in June compared to 8,063 a year earlier. That translated to a 15.7 percent jump – a strong rebound from two straight months of declines brought on by coronavirus and ongoing strains in the energy industry.
...
Sales of all property types totaled 11,153, up 18.3 percent from June 2019. Total dollar volume for the month increased 15.1 percent to $3.3 billion. Leases of single-family homes were another bright spot in HAR’s monthly report, climbing more than 15 percent.
emphasis added

Inventory declined 17.5% year-over-year from 44,718 in June 2019 to 36,901 in June 2020.

Note that the closed sales in June were for contracts that were mostly signed in April and May.

by Calculated Risk on 7/08/2020 12:45:00 PM

Without further disaster relief, there will a significant housing and financial issue.

From the NMHC: NMHC Rent Payment Tracker Finds 77.4 Percent of Apartment Households Paid Rent as of July 6

The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 77.4 percent of apartment households made a full or partial rent payment by July 6 in its survey of 11.4 million units of professionally managed apartment units across the country.

This is a 2.3-percentage point decrease from the share who paid rent through July 6, 2019 and compares to 80.8 percent that had paid by June 6, 2020. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price.

“It is clear that state and federal unemployment assistance benefits have served as a lifeline for renters, making it possible for them to pay their rent,” said Doug Bibby, NMHC President. “Unfortunately, there is a looming July 31 deadline when that aid ends. Without an extension or a direct renter assistance program, that NMHC has been calling for since the start of the pandemic, the U.S. could be headed toward historic dislocations of renters and business failures among apartment firms, exacerbating both unemployment and homelessness.”
emphasis added

CR Note: It appears fewer people are paying their rent compared to last year (down 2.3 percentage points from a year ago).   In the previous surveys, over the last few months, people were paying their rents at about the same pace as last year.   The disaster relief has been key to helping people pay their bills, especially the extra unemployment benefits and the PPP.

by Calculated Risk on 7/08/2020 11:22:00 AM

Note: The details in the pulse survey this week are concerning - especially about loss in income and concern about housing.

First, from @ernietedeschi

The @uscensusbureau Household Pulse Survey, which performed admirably in anticipating the June jobs report, now shows employment has fallen by about 1.3 million cumulatively over the last 2 weeks.

Some of this may be seasonality or survey error, but it merits pause nonetheless.

This graph is from Ernie Tedeschi (former US Treasury economist).

Note: The question on lost income is always since March 13, 2020 - so this percentage will not decline.

From the Census Bureau: Measuring Household Experiences during the Coronavirus (COVID-19) Pandemic

The U.S. Census Bureau, in collaboration with five federal agencies, is in a unique position to produce data on the social and economic effects of COVID-19 on American households. The Household Pulse Survey is designed to deploy quickly and efficiently, collecting data to measure household experiences during the Coronavirus (COVID-19) pandemic. Data will be disseminated in near real-time to inform federal and state response and recovery planning.
…
Data collection for the Household Pulse Survey began on April 23, 2020. The Census Bureau will collect data for 90 days, and release data on a weekly basis.

This will be updated weekly, and the Census Bureau released the recent survey results last Wednesday. This survey asks about Loss in Employment Income, Expected Loss in Employment Income, Food Scarcity, Delayed Medical Care, Housing Insecurity and K-12 Educational Changes.

Click on graph for larger image.

The data was collected between June 25 and June 30, 2020.

Definitions:

Loss in employment income: "Percentage of adults in households where someone had a loss in employment income since March 13, 2020."

This number is since March 13, and has increased slightly.

Expected Loss in Employment Income: "Percentage of adults who expect someone in their household to have a loss in employment income in the next 4 weeks."

34.9% of households expect a loss in income over the next 4 weeks.   This is down from 38.8% in late April, but up from 32% the previous (the previous week was the reference week for the BLS employment report).   This might suggest the job gains stalled after the data was collected for the June employment report.

Food Scarcity: Percentage of adults in households where there was either sometimes or often not enough to eat in the last 7 days.

About 10% of households report food scarcity.

Delayed Medical Care: "Percentage of adults who delayed getting medical care because of the COVID-19 pandemic in the last 4 weeks."

41.5% of households report they delayed medical care over the last 4 weeks. This has not declined.

Housing Insecurity: "Percentage of adults who missed last month’s rent or mortgage payment, or who have slight or no confidence that their household can pay next month’s rent or mortgage on time."

25.9% of households reported they missed last month's rent or mortgage payment (or little confidence in making this month's payment).  This has increased from a low of 22.1% in the survey of June 4th - June 9th.

Without an extension of the extra unemployment benefits (expires at the end of July), we will likely see a significant increase in housing stress.

K-12 Educational Changes: "Percentage of adults in households with children in public or private school, where classes were taught in a distance learning format, or changed in some other way."

Essentially all households with children are reporting were not being taught in a normal format.

by Calculated Risk on 7/08/2020 09:38:00 AM

The following graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the June 2020 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new all time high of 575 thousand SAAR in September 2019.

However heavy truck sales started declining late last year due to lower oil prices.


Click on graph for larger image.

And then heavy truck sales really declined towards the end of March due to COVID-19 and the collapse in oil prices.

Heavy truck sales were at 305 thousand SAAR in June, up from 282 thousand SAAR in May, and down 42% from 527 thousand SAAR in June 2019.

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

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

Mortgage applications increased 2.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 3, 2020. This week’s results include an adjustment for the Fourth of July holiday.

... The Refinance Index increased 0.4 percent from the previous week and was 111 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 33 percent higher than the same week one year ago.

Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data, such as June factory orders and payroll employment. The 30-year fixed rate slipped to 3.26 percent – down 53 basis points since late March. Borrowers acted in response to these lower rates, after accounting for the July 4th holiday,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications continued their recovery, increasing 5 percent to the highest level in almost a month and 33 percent from a year ago. The average purchase loan size increased to $365,700 – also another high – as borrowers contend with limited supply and higher home prices.”

Added Kan, “Refinance applications increased slightly, driven by a 2 percent rise in conventional refinances. Overall refinance activity was up 111 percent from last year.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.26 percent from 3.29 percent, with points decreasing to 0.35 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.

The refinance index has been very volatile recently depending on rates and liquidity.

But the index is up signficantly from last year.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 33% year-over-year.

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

by Calculated Risk on 7/07/2020 05:42:00 PM

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 653,091 test results reported over the last 24 hours.

There were 51,888 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 7.9% (red line).

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

by Calculated Risk on 7/07/2020 04:00:00 PM

Note: To put these numbers in perspective, the MBA notes "For the week of March 2, only 0.25% of all loans were in forbearance."

From the MBA: Share of Mortgage Loans in Forbearance Decreases for Third Straight Week to 8.39%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 8 basis points from 8.47% of servicers’ portfolio volume in the prior week to 8.39% as of June 28, 2020. According to MBA’s estimate, almost 4.2 million homeowners are in forbearance plans.
...
“We learned last week that the job market improved more than expected in June. With that as background, it is not surprising that the forbearance numbers continue to improve as more people go back to their jobs,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The improvement in the forbearance data was broad-based, with declines for both GSE and Ginnie Mae loans. The decrease in new forbearance requests indicates that further declines are likely in the weeks ahead.”

Added Fratantoni, “Looking at the mix of loans that are exiting forbearance, we are seeing a higher share exiting into deferral options and modifications, and somewhat fewer simply opting out of a forbearance plan.”
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.

The MBA notes: "Weekly forbearance requests as a percent of servicing portfolio volume (#) decreased to 0.12 percent from 0.14 percent the previous week."