by Calculated Risk on 9/08/2021 03:56:00 PM

Some twitter comments in the newsletter from Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting (a must follow for housing on twitter!):

Homebuilder Comments in August: “Supply shortages are getting worse."

by Calculated Risk on 9/08/2021 03:40:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 376,955,132, as of a week ago 371,280,129. Average doses last week: 0.81 million per day. 

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	53.3%	52.6%	≥70.0%1
Fully Vaccinated (millions)	177.1	174.6	≥2321
New Cases per Day3	140,058	155,826	≤5,0002
Hospitalized3🚩	92,545	92,401	≤3,0002
Deaths per Day3	1,022	1,129	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of the 11 states that have achieved 60% of total population fully vaccinated: Vermont at 68.3%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland. New Jersey, Washington, New York, New Mexico, New Hampshire at 60.3%.

The following 13 states and D.C. have between 50% and 59.9% fully vaccinated: Oregon at 58.7%, District of Columbia, Virginia, Colorado, Minnesota, California, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, and Michigan at 50.9%.

Next up (total population, fully vaccinated according to CDC) are South Dakota at 49.8%, Kentucky at 49.5%, Arizona at 49.3%, Kansas at 49.1%, Ohio at 48.9%, Nevada at 48.7%, Texas at 48.5%, Utah at 48.3% and Alaska at 48.0%.

Click on graph for larger image.

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

by Calculated Risk on 9/08/2021 02:06:00 PM

Fed's Beige Book "This report was prepared at the Federal Reserve Bank of New York based on information collected on or before August 30, 2021."

Economic growth downshifted slightly to a moderate pace in early July through August. The stronger sectors of the economy of late included manufacturing, transportation, nonfinancial services, and residential real estate. The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions. The other sectors of the economy where growth slowed or activity declined were those constrained by supply disruptions and labor shortages, as opposed to softening demand. In particular, weakness in auto sales was widely ascribed to low inventories amidst the ongoing microchip shortage, and restrained home sales activity was attributed to low supply. Growth in non-auto retail sales slowed a bit in some Districts, rising at a modest pace, on balance, across the nation. Residential construction was up slightly, on balance, and nonresidential construction picked up modestly. Trends in loan volumes varied widely across Districts, ranging from down modestly to up strongly. Reports on the agriculture and energy sectors were mixed across Districts but, on balance, positive. Looking ahead, businesses in most Districts remained optimistic about near-term prospects, though there continued to be widespread concern about ongoing supply disruptions and resource shortages.
...
All Districts continued to report rising employment overall, though the characterization of the pace of job creation ranged from slight to strong. Demand for workers continued to strengthen, but all Districts noted extensive labor shortages that were constraining employment and, in many cases, impeding business activity. Contributing to these shortages were increased turnover, early retirements (especially in health care), childcare needs, challenges in negotiating job offers, and enhanced unemployment benefits. Some Districts noted that return-to-work schedules were pushed back due to the increase in the Delta variant. With persistent and extensive labor shortages, a number of Districts reported an acceleration in wages, and most characterized wage growth as strong—including all of the midwestern and western regions. Several Districts noted particularly brisk wage gains among lower-wage workers. Employers were reported to be using more frequent raises, bonuses, training, and flexible work arrangements to attract and retain workers.
emphasis added

by Calculated Risk on 9/08/2021 11:12:00 AM

Black Knight released their Mortgage Monitor report for July today. According to Black Knight, 4.14% of mortgage were delinquent in July, down from 4.37% of mortgages in June, and down from 6.91% in July 2020. Black Knight also reported that 0.26% of mortgages were in the foreclosure process, down from 0.36% a year ago.

This gives a total of 4.40% delinquent or in foreclosure.

Press Release: Black Knight: Tappable Equity Rises $1 Trillion in Q2 2021 Alone to Hit All-Time High of $9.1 Trillion; Quarter Also Sees Largest Volume of Cash-Out Refis in 15 Years

Today, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate and public records datasets. With full Q2 data in and analyzed, this month’s report looks at incredible growth in the nation’s levels of tappable equity – the amount available for homeowners with mortgages to borrow against while still retaining at least 20% equity in their homes. According to Black Knight Data & Analytics President Ben Graboske, continued heat in the housing market drove tappable equity levels to never-before-seen heights in the second quarter of 2021.

“Tappable equity grew an astonishing 37% year-over-year in Q2 2021, driven by increasing gains in home values over the quarter,” said Graboske. “According to our Black Knight HPI, as of the end of June, home values had risen nearly 20% from the year before and 7.4% in Q2 alone. As a result, already at a record high of $8.1 trillion at the end of Q1, U.S. homeowners with mortgages gained another $1 trillion in tappable equity in the second quarter alone. This is by far the strongest growth we’ve ever seen and equates to some $173,000 in equity available to the average mortgage holder, a $20,000 increase in just three months.

“A rising tide lifts all boats as they say, including homeowners in forbearance – whose ability to return to making payments when forbearance ends will likely be a key driver in the nation’s overall COVID-19 economic recovery. Some 98% of homeowners in forbearance now have at least 10% equity in their homes. Even when we add in 18 months of forborne payments – including principal, interest, taxes and insurance – the share with less than 10% equity only climbs to 7%, about 135,000 homeowners. This is a drastically different dynamic than during the worst of the Great Recession, when more than 40% of all mortgage holders had less than 10% equity and 28% were fully underwater. Such strong equity positions should help limit the volume of distressed inflow into the real estate market as well as provide strong incentive for homeowners to return to making mortgage payments – even if needing to be reduced through modification.”
emphasis added

Click on graph for larger image.

Here is a graph on delinquencies from Black Knight:

• The national delinquency rate saw a 5% reduction in July, and at 4.14% is within a single percentage point of its pre-pandemic level

• While overall delinquency volumes continue to edge closer to pre-pandemic levels, some 1.45 million borrowers remained 90 or more days past due – but not yet in foreclosure – at the end of July

And on tappable equity from Black Knight:

• Despite rising equity withdrawals, the housing market continues to drive skyrocketing borrower equity positions

• Tappable equity – the amount available for homeowners with mortgages to borrow against while still retaining at least 20% equity in their homes – was already at a record high of $8.1T at the end of Q1

• According to our Black Knight HPI, as of the end of June, home values had risen nearly 20% from the year before and 7.4% in Q2 alone

• As a result, U.S. homeowners with mortgages gained another $1T in tappable equity in Q2 alone to make an astonishing 37% year-over-year gain
...
• The 1.1M cash-outs originated in Q2 were the largest quarterly volume in nearly 15 years, with more than $63B in equity withdrawn in the quarter – the most since mid-2007

There is much more in the mortgage monitor.

by Calculated Risk on 9/08/2021 10:05:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings increased to a series high of 10.9 million on the last business day of July, the U.S. Bureau of Labor Statistics reported today. Hires and total separations were little changed at 6.7 million and 5.8 million, respectively. Within separations, the quits rate was unchanged at 2.7 percent while the layoffs and discharges rate was little changed at 1.0 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 July, the most recent employment report was for August.

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.

The huge spikes in layoffs and discharges in March  2020 are labeled, but off the chart to better show the usual data.

Jobs openings increased in July to 10.934 million from 10.185 million in June.  This is a new record high for this series.

The number of job openings (yellow) were up 63% year-over-year. 

Quits were up 25% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 9/08/2021 08:17:00 AM

At the Calculated Risk Newsletter: Forbearance Will Not Lead to a Huge Wave of Foreclosures

by Calculated Risk on 9/08/2021 07:00:00 AM

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

Mortgage applications decreased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 3, 2021.

... The Refinance Index decreased 3 percent from the previous week and was 4 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 18 percent lower than the same week one year ago.

“Mortgage application volume fell last week to its lowest level since mid-July, as mortgage rates have stayed just above 3% for several weeks. Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market,” said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. “Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) remained unchanged at 3.03 percent, with points decreasing to 0.33 from 0.34 (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.

With low rates, the index remains elevated.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 18% year-over-year unadjusted.

Note: The year ago comparisons for the unadjusted purchase index are now difficult since purchase activity picked up in late May 2020.

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

by Calculated Risk on 9/07/2021 09:00:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Begin The Week Slightly Higher

Mortgage rates moved slightly higher to begin the holiday-shortened week. ... The damage is minimal in the bigger picture. On average, lenders are quoting the same rates seen last week, but with slightly higher closing costs today. Most of the weakness in the underlying bond market is centered on US Treasuries as opposed to the mortgage-backed securities (MBS) that serve as the foundation for mortgage rates. The Treasury-specific weakness is likely due to the presence of several big Treasury auctions this week in addition to heavy corporate bond issuance (which tends to hurt Treasuries more than MBS). [30 year fixed 2.97%]
emphasis added

Tuesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

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

• At 2:00 PM, the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

by Calculated Risk on 9/07/2021 05:49:00 PM

The Northwest Multiple Listing Service reported Northwest MLS brokers say August housing activity follows patterns of seasonal slowing

August typically brings a dip in housing activity and this year was no different, according to representatives from Northwest Multiple Listing Service when commenting on newly-released statistics. Figures comparing July to August show month-to-month drops in new listings, total inventory, pending sales, close sales, and median prices.

"August showed a more traditional seasonal pattern with decreased activity as families took end-of-summer vacations and made back-to-school preparations," remarked Frank Wilson, Kitsap regional manager and branch managing broker at John L. Scott Real Estate.
...
NWMLS statistics show the volume of new listings added during August, including single family homes and condominiums, declined from both July (down 11.5%) and twelve months ago (down 4.2%). Total inventory for the 26 counties in the report also fell, shrinking about 6.6% from July and nearly 22.6% from a year ago. At month end, there were 7,425 active listings, down from the year-ago total of 9,591.
emphasis added

The press release is for the Northwest MLS area. There were 10,571 closed sales in August 2021, up 7.4% from 9,847 sales in August 2020.  Active inventory for the Northwest was down 22.6%.

In Seattle, sales were up 10.1% year-over-year, and inventory was down 43.9% year-over-year. This puts the months-of-supply in Seattle at just 0.40 months.

by Calculated Risk on 9/07/2021 04:00:00 PM

Note: This is as of August 29th.

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 3.23%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 2 basis points from 3.25% of servicers’ portfolio volume in the prior week to 3.23% as of August 29, 2021. According to MBA’s estimate, 1.6 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 3 basis points to 1.63%. Ginnie Mae loans in forbearance decreased 29 basis points to 3.63%, while the forbearance share for portfolio loans and private-label securities (PLS) increased 34 basis points to 7.52%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 1 basis point to 3.49%, and the percentage of loans in forbearance for depository servicers decreased 2 basis points to 3.33%.

“The share of loans in forbearance decreased by two basis points last week, with both new requests and exits remaining at a slow pace as we reached the end of August,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “There was another large shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools and moved onto servicer balance sheets. As a result, there was a sharp drop in the share of Ginnie Mae loans in forbearance, and an offsetting increase in the share of portfolio loans in forbearance. These buyouts enable servicers to stop advancing principal and interest payments, and work with borrowers to begin paying again before they are resecuritized into Ginnie Mae pools.”
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 2020, and has trended down since then.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.05% to 0.04%."