by Calculated Risk on 7/23/2021 11:40:00 AM

Some interesting information from the REALTORS® Confidence Index Survey June 2021

Several metrics indicate that demand is softening although the market is still broadly strong. With limited supply in the market, homes typically sold within 17 days (24 days one year ago), as buyer competition continues. However, the REALTORS® Buyer Traffic Index decreased from 77 in May 2021 to 71 (moderately strong conditions) in June 2021 while the REALTORS® Seller Traffic Index remains below 50 which is “weak” traffic compared to the level one year ago. On average, a home sold had more than 4 offers, slightly lower than the average of 5 offers in last month’s survey. REALTORS® expect home prices in the next three months to increase nearly 4% from one year ago compared to 5% outlook in last month’s survey. Respondents expect sales in the next three months to increase nearly 1% from last year’s sales level compared to the 2% outlook in last month’s survey.
emphasis added

Click on graph for larger image.

This map, from the June NAR report, shows buyer traffic is still "moderately strong" to "very strong" just about everywhere.

However this is less demand than a few months ago.

As the NAR noted: "demand is softening although the market is still broadly strong".

The second map is from the April report.

In April, buyer traffic was very strong just about everywhere.

There has also been a shift in seller traffic, with more traffic in many states (compare map from April on page 3 to the map from June also on page 3).

by Calculated Risk on 7/23/2021 11:19:00 AM

The BEA will release the advance estimate of Q2 GDP next Thursday. The consensus forecast is for real GDP to increase 8.2% in Q2, from Q1, on a seasonally adjusted annual rate basis (SAAR).

From BofA:

We expect growth of 8.5% qoq saar in 2Q from 6.4% qoq saar in 1Q. [July 23 estimate]
emphasis added

From Goldman Sachs:

We left our Q2 GDP tracking estimate unchanged at +8¼% (qoq ar). [July 22 estimate]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 3.2% for 2021:Q2 and 4.1% for 2021:Q3. [July 23 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2021 is 7.6 percent on July 20, up from 7.5 percent on July 16. [July 20 estimate]

by Calculated Risk on 7/23/2021 08:55:00 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 July 20th.

From Andy Walden at Black Knight: Forbearances Flat for Second Consecutive Week

Not much to report with this week’s snapshot of our McDash Flash daily Forbearance Tracker data, as we’ve come to expect in the mid-month period.

Last week’s slight net decline of just 1,000 was matched by a 2,000 increase in the number of active forbearance plans over the past seven days, leaving volumes essentially flat for the second week in a row.

As of July 20, 1.86 million borrowers remain in COVID-19 forbearance plans, making up 3.5% of all active mortgages and 2.1% of GSE, 6.2% of FHA/VA and 4.1% of Portfolio/PLS loans.

What weekly improvement there was – among GSE forbearance plans (-8,000) – was more than offset by a 9,000 rise among portfolio/PLS forbearances and 1,000 additional FHA plans.

Click on graph for larger image.

All in, this puts the number of loans in active forbearance down 198,000 (-9.6%) from the same time last month. Some 230,000 plans are still scheduled to be reviewed for extension/removal in July, down from roughly 400,000 last week.

Restarts remained elevated this week, while new forbearance plan volumes continue remain low. Removals held steady week to week and remain on the lower end of the spectrum – as we typically see in the middle of the month – while plan extensions hit the lowest level since late February.
emphasis added

by Calculated Risk on 7/22/2021 06:46:00 PM

Note: The year-over-year occupancy comparisons are easy, since occupancy declined sharply at the onset of the pandemic.  So STR is comparing to the same week in 2019.

The occupancy rate is down 8.7% compared to the same week in 2019.

From CoStar: STR: Weekly US Hotel Occupancy Reaches Pre-Pandemic Level While ADR Drops Slightly

U.S. weekly hotel occupancy reached its highest level since October 2019, according to STR‘s latest data through July 17.

July 11-17, 2021 (percentage change from comparable week in 2019*):

• Occupancy: 71.0% (-8.7%)
• Average daily rate (ADR): US$139.19 (+1.8%)
• Revenue per available room (RevPAR): US$98.87 (-7.1%)

Despite a four-point, week-over-week improvement in occupancy, ADR dipped slightly from the all-time high achieved the previous 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, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

Occupancy is well above the horrible 2009 levels and weekend occupancy (leisure) has been solid.

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

With solid leisure travel, the Summer months should have decent occupancy - but it is uncertain what will happen in the Fall with business travel.  In another recent article, a CoStar analyst points out "Leisure Demand Continues To Do the Heavy Lifting for Industry".

by Calculated Risk on 7/22/2021 06:21:00 PM

The 7-day average cases is the highest since May 8th.

The 7-day average hospitalizations is the highest since May 28th.

This data is from the CDC.

According to the CDC, on Vaccinations.

Total doses administered: 339,763,765, as of a week ago 336,054,953. Average doses last week: 0.53 million per day.

COVID Metrics
	Today	Yesterday	Week Ago	Goal
Percent over 18, One Dose	68.6%	68.4%	67.9%	≥70.0%1,2
Fully Vaccinated✅ (millions)	162.2	161.9	160.4	≥1601
New Cases per Day3🚩	40,246	37,642	27,443	≤5,0002
Hospitalized3🚩	21,153	20,286	15,712	≤3,0002
Deaths per Day3🚩	223	206	204	≤502
1 America's Short Term Goals, 2my goals to stop daily posts, 37 day average for Cases, Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met (even if late).

KUDOS to the residents of the 20 states and D.C. that have achieved the 70% goal (percent over 18 with at least one dose): Vermont, Hawaii, Massachusetts and Connecticut are at 80%+, and Maine, New Mexico, New Jersey,  Rhode Island, Pennsylvania, California, Maryland, Washington, New Hampshire, New York, Illinois, Virginia, Delaware, Minnesota, Oregon, Colorado and D.C. are all over 70%.

Next up are Utah at 67.1%, Florida at 66.9%, Wisconsin at 66.6%, Nebraska at 66.4%, South Dakota at 65.4%, and Iowa at 64.9%.

Click on graph for larger image.

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

Over 50,000 new cases reported today.

This data is from the CDC.

by Calculated Risk on 7/22/2021 03:44:00 PM

Earlier: NAR: Existing-Home Sales Increased to 5.86 million in June

Two key points:

1) Existing home sales are still somewhat above pre-pandemic levels. Seasonally adjusted (SA) sales for May were the highest since 2006, and sales Not Seasonally Adjusted (NSA) in June 2021 were also the highest since 2006. 

Some of the increase over the previous eleven months was probably related to  record low mortgage rates, strong second home buying, a strong stock market and favorable demographics.

Also, the delay in the 2020 buying season pushed the seasonally adjusted number to very high levels over the winter.   This means there are going to be some difficult comparisons in the second half of 2021!

2) Inventory is very low, and was down 18.8% year-over-year (YoY) in May.  Also, as housing economist Tom Lawler has noted, the local MLS data shows even a larger decline in active inventory (the NAR appears to include some pending sales in inventory). Lawler noted:

"As I’ve noted before, the inventory measure in most publicly-released local realtor/MLS reports excludes listings with pending contracts, but that is not the case for many of the reports sent to the NAR (referred to as the “NAR Report!”), Since the middle of last Spring inventory measures excluding pending listings have fallen much more sharply than inventory measures including such listings, and this latter inventory measure understates the decline in the effective inventory of homes for sale over the last several months."

It seems likely that active inventory is down close to 40% year-over-year.

Months-of-supply at 2.6 months is still very low, but above the record low of 1.9 months set in December 2020 and January 2021.  Inventory will be important to watch in 2021, see: Some thoughts on Housing Inventory

Click on graph for larger image.

This graph shows existing home sales by month for 2020 and 2021.

The year-over-year comparison will be more difficult in the second half of the year.   

The second graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), since 2005.

Sales NSA in June (614,000) were 21.1% above sales in June 2020 (507,000).

This was the highest sales for June, NSA, since 2006.

by Calculated Risk on 7/22/2021 02:01:00 PM

Note: At the beginning of the pandemic, the delinquency rate increased sharply (see table below).   Loans in forbearance are counted as delinquent in this survey, but those loans are not reported as delinquent to the credit bureaus.

From Black Knight: Black Knight: 1.55 Million Serious Delinquencies Remain; At Current Rate of Reduction, 1 Million Still Likely As September's Wave of Forbearance Expirations Begins

• The national delinquency rate hit its lowest level since the onset of the pandemic and is now back below its pre-Great Recession average

• Despite the improvement, there are more than 1.5 million homeowners 90 or more days past due on their mortgages but who are not in foreclosure, still nearly four times pre-pandemic levels

• Serious delinquency rates remain elevated by more than a full percentage point across all 50 states, with Hawaii and Nevada serious delinquency rates remaining elevated by 3.4 percentage points

• Though serious delinquencies remain significantly elevated, the share of mortgages in active foreclosure fell to yet another record low in June at 0.27%

• Recent pullbacks in interest rates resulted in prepayment activity edging upward for the first time in three months
emphasis added

According to Black Knight's First Look report, the percent of loans delinquent decreased 7.6% in June compared to May, and decreased 42% year-over-year.

The percent of loans in the foreclosure process decreased 1.7% in June and were down 24% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.37% in June, down from 4.73% in May.

The percent of loans in the foreclosure process decreased in June to 0.27%, from 0.28% in May.

The number of delinquent properties, but not in foreclosure, is down 1,714,000 properties year-over-year, and the number of properties in the foreclosure process is down 47,000 properties year-over-year.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	June  2021	May 2021	June 2020	June 2019
Delinquent	4.37%	4.73%	7.59%	3.73%
In Foreclosure	0.27%	0.28%	0.36%	0.50%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	2,320,000	2,511,000	4,034,000	1,950,000
Number of properties in foreclosure pre-sale inventory:	145,000	148,000	192,000	259,000
Total Properties	2,466,000	2,659,000	4,226,000	2,209,000

by Calculated Risk on 7/22/2021 12:13:00 PM

The National Multifamily Housing Council (NMHC) released their July report: July Apartment Market Conditions Showed Improvement Across All Metrics

Apartment market conditions showed continued improvement in the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for July 2021. For the first time since October 2015, the Market Tightness (96), Sales Volume (79), Equity Financing (69), and Debt Financing (71) indexes all came in above the breakeven level (50).

“We are witnessing strong, broad-based demand for apartments as the U.S. economy continues to recover,” noted NMHC Chief Economist Mark Obrinsky. “Many U.S. gateway metros, which were among those hardest hit during the coronavirus pandemic, have now seen their occupancy rates return to near-pre-pandemic levels. Meanwhile, rent growth remains particularly strong in a number of Sun Belt and Mountain markets.”

“Nearly all (92 percent) respondents this quarter observed tighter conditions in their apartment markets, signaling that the worst of the pandemic could be behind us. Apartment sales volume is strong as well, bolstered by continued low interest rates and strong availability of equity financing.”
...
The Market Tightness Index increased from 81 to 96 – the highest index number on record – indicating widespread agreement among respondents that market conditions have become tighter. Nearly all (92 percent) respondents reported tighter market conditions than three months prior, compared to only 1 percent who reported looser conditions. Seven percent of respondents felt that conditions were no different from last quarter.
emphasis added

Click on graph for larger image.

This graph shows the quarterly Apartment Tightness Index. Any reading above 50 indicates tighter conditions from the previous quarter. 

This indicates market conditions tightened further in July, after being especially weak during the early months of the pandemic.

by Calculated Risk on 7/22/2021 10:11:00 AM

From the NAR: Existing-Home Sales Expand 1.4% in June

Existing-home sales increased in June, snapping four consecutive months of declines, according to the National Association of Realtors®. Three of the four major U.S. regions registered small month-over-month gains, while the fourth remained flat. However, all four areas notched double-digit year-over-year gains.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 1.4% from May to a seasonally adjusted annual rate of 5.86 million in June. Sales climbed year-over-year, up 22.9% from a year ago (4.77 million in June 2020).
...
Total housing inventory at the end of June amounted to 1.25 million units, up 3.3% from May's inventory and down 18.8% from one year ago (1.54 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, modestly up from May's 2.5-month supply but down from 3.9 months in June 2020.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in June (5.86 million SAAR) were up 1.4% from last month, and were 22.9% above the June 2020 sales rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.25 million in June from 1.21 million in May.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was down 18.8% year-over-year in June compared to June 2020.

Months of supply increased to 2.6 months in June from 2.5 months in May.

This was slightly below the consensus forecast. I'll have more later.

by Calculated Risk on 7/22/2021 08:35:00 AM

The DOL reported:

In the week ending July 17, the advance figure for seasonally adjusted initial claims was 419,000, an increase of 51,000 from the previous week's revised level. The previous week's level was revised up by 8,000 from 360,000 to 368,000. The 4-week moving average was 385,250, an increase of 750 from the previous week's revised average. The previous week's average was revised up by 2,000 from 382,500 to 384,500.
emphasis added

This does not include the 96,362 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 100,590 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 increased to 385,250.

The previous week was revised up.

Regular state continued claims decreased to 3,236,000 (SA) from 3,265,000 (SA) the previous week.

Note: There are an additional 5,133,938 receiving Pandemic Unemployment Assistance (PUA) that decreased from 5,687,188 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 4,134,716 receiving Pandemic Emergency Unemployment Compensation (PEUC) down from 4,710,359.

Weekly claims were higher than the consensus forecast.