by Calculated Risk on 2/26/2021 10:18:00 AM

Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.

This data is as of February 23rd.

From Black Knight

"The number of mortgages in active forbearance rose for the second week in a row, climbing by by 21K (+0.08) since last Tuesday, pushing the total back up above 2.7M after falling below that threshold for the first time since last April earlier this month. This week’s rise continues the trend of mid-month increases we’ve grown accustomed to seeing since the recovery began.

Despite the weekly increase, the monthly rate of decline held steady at -2%, continuing the trend of very slow but steady improvement in the number of outstanding forbearance cases. Remember: monthly declines have been averaging less than 2% since early December.

According our McDash Flash daily mortgage performance data set, as of February 23, 2.7M homeowners – 5.1% of all mortgage-holders – remain in active forbearance. This includes 9.3% of FHA/VA, 3.2% of GSE and 5.2% of portfolio/private mortgages"

Click on graph for larger image.

"Once again, portfolio held and privately securitized loans saw the largest increase in plans (+16K / +2.4%), followed FHA/VA loans, which saw active forbearance plans rise by 7K (+0.6%). As was the case last week, GSE loans were the only cohort to see any sort of decline (-2K; -0.2%).

Some 160K forbearance plans are set to hit scheduled expiration points at the end of February."
emphasis added

The number of loans in forbearance has declined slightly over the last few months.

by Calculated Risk on 2/26/2021 08:41:00 AM

The BEA released the Personal Income and Outlays report for January:

Personal income increased $1,954.7 billion (10.0 percent) in January according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $1,963.2 billion (11.4 percent) and personal consumption expenditures (PCE) increased $340.9 billion (2.4 percent).

Real DPI increased 11.0 percent in January and Real PCE increased 2.0 percent; goods increased 5.1 percent and services increased 0.5 percent. The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index also increased 0.3 percent
emphasis added

The January PCE price index increased 1.5 percent year-over-year and the January PCE price index, excluding food and energy, increased 1.5 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through January 2021 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was at expectations,  and the increase in PCE was slightly below expectations.

by Calculated Risk on 2/25/2021 09:00:00 PM

From Matthew Graham at MortgageNewsDaily: Mortgage Rates Are Now Well Over 3 Percent

Most any mortgage lender added another eighth of a percent to their 30yr fixed rate offerings. Over the course of the past week, most lenders are .25-.375% higher. And compared to the beginning of last week, many lenders are a full HALF POINT higher. In other words, what had been 2.75% is now 3.25%. What had been 2.875% is now 3.375%.

Friday:
• At 8:30 AM ET, Personal Income and Outlays for January. The consensus is for a 10.0% increase in personal income, and for a 2.5% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 9:45 AM, Chicago Purchasing Managers Index for February. The consensus is for a reading of 61.0, down from 63.8 in January.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Final for February). The consensus is for a reading of 76.2.

by Calculated Risk on 2/25/2021 06:47:00 PM

SPECIAL NOTE: The Covid Tracking Project will end daily updates on March 7th.

From Bloomberg on vaccinations as of Feb 25th.

"In the U.S., more Americans have now received at least one dose than have tested positive for the virus since the pandemic began. So far, 68.3 million doses have been given. In the last week, an average of 1.31 million doses per day were administered."

Here is the CDC COVID Data Tracker. This site has data on vaccinations, cases and more.

The US is averaged 1.45 million tests per day over the last week.  The percent positive over the last 7 days was 4.7%.

Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to below 1%, so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,837,743 test results reported over the last 24 hours.

There were 75,565 positive tests.

Over 66,000 US deaths have been reported in February. See the graph on US Daily Deaths here.

This data is from the COVID Tracking Project.

And check out COVID Act Now to see how each state is doing. (updated link to new site)

Click on graph for larger image.

This graph shows the 7 day average of positive tests reported and daily hospitalizations. 

The dashed line is the post-summer surge low for hospitalizations.

by Calculated Risk on 2/25/2021 04:48:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate in January was 2.56%, down from 2.64% in December. Freddie's rate is up from 0.60% in January 2020.

Freddie's serious delinquency rate peaked in February 2010 at 4.20% following the housing bubble, and peaked at 3.17% in August 2020 during the pandemic.

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

Click on graph for larger image

Mortgages in forbearance are being 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 (if) they are employed.

Also - for multifamily - delinquencies were at 0.16%, unchanged from 0.16% in December, and up double from 0.08% in January 2020.

by Calculated Risk on 2/25/2021 02:02:00 PM

From the Kansas City Fed: Tenth District Manufacturing Activity Climbed Higher

The Federal Reserve Bank of Kansas City released the February Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity climbed higher in February compared to a month ago and a year ago, and expectations for future activity increased.

“Regional factories reported higher activity in February,” said Wilkerson. “Most businesses reported more production and shipments, despite some difficulties due to the extreme weather events recently. However, rising materials prices and shipping delays have negatively affected 85% of firms.”
...
The month-over-month composite index was 24 in February, up from 17 in January and 14 in December. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity growth was driven by durable goods plants, specifically by primary and fabricated metals, machinery, and transportation equipment. Month-overmonth indexes for production and employment increased at a faster pace in February and supplier delivery time rose significantly. Shipments and new orders growth was positive in February, but slower than in recent months.
emphasis added

This was the last of the regional Fed surveys for February.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through February), and five Fed surveys are averaged (blue, through February) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through January (right axis).

Based on these regional surveys, it seems likely the ISM manufacturing index will be solid again in February.

by Calculated Risk on 2/25/2021 11:16:00 AM

From CoStar: STR: US Hotels Nearly Half Full During Week Ending Feb. 20

U.S. weekly hotel occupancy reached its highest level since late October, according to STR‘s latest data through Feb. 20.

Feb. 14-20, 2021 (percentage change from comparable week in 2020):

• Occupancy: 48.1% (-23.8%)
• Average daily rate (ADR): US$101.57 (-22.1%)
• Revenue per available room (RevPAR): US$48.82 (-40.6%)

Popular leisure markets in Florida, with leftover demand from the long holiday weekend, posted the week’s highest levels. ... Additionally, displaced Texans pushed week-over-week occupancy gains across STR-defined markets in the state. Texas’ occupancy added almost a point to overall U.S. occupancy for the week.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2021, black is 2020, blue is the median, and dashed light blue is for 2009 (the worst year since the Great Depression for hotels prior to 2020).

Even when occupancy increases to 2009 levels, hotels will still be hurting.

In a few weeks, the year-over-year comparisons will be easy - since occupancy declined sharply at the onset of the pandemic - but occupancy will still be down significantly from normal levels.

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

by Calculated Risk on 2/25/2021 10:04:00 AM

From the NAR: Pending Home Sales Retreat 2.8% in January, but Climb From Last Year

Pending home sales took a step backward in January as inventory constraints continue to hold back prospective buyers, according to the National Association of Realtors®. The South was the lone region with a modest gain from the month prior, while the other three major U.S. regions experienced month-over-month decreases in January. However, all four areas saw contract transactions increase from a year-over-year standpoint, including two regions reaching double-digit gains, spurring an all-time high for pending home sales in the month of January.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, dropped 2.8% to 122.8 in January. Year-over-year, contract signings rose 13.0%. An index of 100 is equal to the level of contract activity in 2001.
...
The Northeast PHSI fell 7.4% to 101.6 in January, a 9.6% rise from a year ago. In the Midwest, the index declined 0.9% to 113.2 last month, up 8.6% from January 2020.

Pending home sales transactions in the South inched up 0.1% to an index of 151.3 in January, up 17.1% from January 2020. The index in the West dropped 7.8% in January, to 104.6, up 11.5% from a year prior.
emphasis added

This was well below expectations for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in February and March.

by Calculated Risk on 2/25/2021 08:43:00 AM

From the BEA: Gross Domestic Product, Fourth Quarter and Year 2020 (Second Estimate)

Real gross domestic product (GDP) increased at an annual rate of 4.1 percent in the fourth quarter of 2020, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 33.4 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 4.0 percent. With the second estimate, upward revisions to residential fixed investment, private inventory investment, and state and local government spending were partly offset by a downward revision to personal consumption expenditures (PCE)
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was revised down to 2.4% from 2.5%. Residential investment was revised up from 33.5% to 35.8%. This was at the consensus forecast.

by Calculated Risk on 2/25/2021 08:38:00 AM

The DOL reported:

In the week ending February 20, the advance figure for seasonally adjusted initial claims was 730,000, a decrease of 111,000 from the previous week's revised level. The previous week's level was revised down by 20,000 from 861,000 to 841,000. The 4-week moving average was 807,750, a decrease of 20,500 from the previous week's revised average. The previous week's average was revised down by 5,000 from 833,250 to 828,250.
emphasis added

This does not include the 451,402 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 512,862 the previous week.

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 807,750.

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.

Regular state continued claims decreased to 4,419,000 (SA) from 4,520,000 (SA) the previous week and will likely stay at a high level until the crisis abates.

Note: There are an additional 7,518,951 receiving Pandemic Unemployment Assistance (PUA) that decreased from 7,685,857 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.  And an additional 5,065,890 receiving Pandemic Emergency Unemployment Compensation (PEUC) up from 4,062,189.

Weekly claims were much lower than the consensus forecast, and the previous week was revised down.