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Archive for the ‘MND NewsWire’ Category

Fannie Mae Research: Housing, What a Drag?

Fannie Mae's monthly Economic Development papers always have the best headlines, pithy and to the point. The August one reads. "Growth Picks Up as Expected, No Thanks to Housing."  Sort of says it all. The company's Economic and Strategic Research (ESR) Team is upgrading its estimate of third quarter growth based on the acceleration of headline economic growth in the second quarter.  Consumer spending and net exports drove the action although business inventories declined and dragged on growth. So too did residential investment, which had a negative impact for the fourth time in five quarters, subtracting 0.04 percentage point from the GDP. The residential investment component includes homebuilding, renovations, and brokerage commissions. 

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Second Quarter Loan Performance Shows Steady Improvement

Loan performance continued to improve in the second quarter. The overall delinquency rate on one-to-four-unit residential properties fell to a seasonally adjusted rate of 4.36 percent of all loans outstanding at the end of that period, a 27-basis point (bp) decline from the first quarter of this year.  The National Delinquency Survey conducted by the Mortgage Bankers Association (MBA) found delinquencies in all stages were lower than during the first quarter; the 30-day delinquency rate dropped 2 bps while the 60-day and 90-delinquency buckets dropped by 8 and 18 bps respectively.  The overall rate, however was up 12 bps from the second quarter of 2017.

 

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Construction Numbers Post Sluggish Recovery

As analysts had predicted, both housing permits and starts recovered, albeit only slightly, in July after a poor showing the previous month. The U.S. Census Bureau and the Department of Housing and Urban Development now report that housing permits are being issued at a pace higher than in 2017, but housing starts are still lagging the earlier number. Permits for privately owned residential construction were issued in July at a seasonally adjusted annual rate of 1,311,000 units. This is an increase of 1.5 percent from the June rate of 1,292,000 (revised from 1,273,000 units).  July's permitting rate is now 4.2 percent higher than that of July 2017.

 

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Economic Environment Depressing Millennal Homeownership

It shouldn't be news to anyone that the homeownership rate of the Millennial generation continues to be anemic.  While it has improved slightly since 2015, the Urban Institute's (UI's) new research shows that, at that point it was 37 percent, 8 percentage points lower than the homeownership rate of Gen Xers and baby boomers at the same age. This translates into 3.4 million fewer homeowners among these 75 million young adults.

UI researchers Laurie Goodman, Jung Hyun Choi, Jun Zhu, writing in the Institute's Urban Wire blog, say that demographic and lifestyle choices, delayed marriage, increasing diversity, have played a role in the decline, it is the economic environment that has been most determinative.

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Builder Confidence Retreats Once Again

Rising concerns about costs and labor shortages continue to take a toll on home builder sentiment according to the August Housing Market Index (HMI). The Index, a joint product of the National Association of Home Builders (NAHB) and Wells Fargo, dipped another point to 67. The HMI has been moving in a narrow range between 68 and 70 since March. The index scored an 18 year high in of 74 last December and has trended lower since. The August number is the lowest so far this year. The index is a distillation of information gathered through a monthly survey that NAHB has been conducting for 30 years.

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Mortgage Applications: Purchase Volume Decline, Refis Stabilize

It was another week of decline for mortgage applications as those for home purchase slid for the fifth week in a row. The overall volume of applications, as measured by the Mortgage Bankers Association's (MBA's) Market Composite Index, declined by 2.0 percent on a seasonally adjusted basis during the week ended August 10.  On an unadjusted basis the volume lost 3 percent compared to the prior week.The seasonally adjusted Purchase Index decreased by 3 percent and was down 4 percent unadjusted.  The unadjusted version was also 3 percent lower than during the corresponding week in 2017.

 

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Florida, Houston Delinquencies Still Reflecting 2017 Storms

The effects of Hurricane Irma continue to be felt in the Southeast, with Florida the only state to report an increase in its delinquency rate in May.  The rate in the state was up 1 percentage point compared to May 2017 and gave Florida the third highest rate in the nation at 6.2 percent. CoreLogic, in its Loan Performance Insights Report, said the rest of the nation continues to improve, although Texas, still impacted by Hurricane Harvey, saw rates remain the same as a year earlier.  The national rate was 4.2 percent compared to 4.5 percent in May 2017, the lowest rate for a May in 12 years and within 0.1 percent of the previous low in May 2006. The rate is also well below the pre-crisis period of 2000 to 2006 when the share of delinquent mortgages averaged 4.7 percent.

 

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Affordability at 10-Year Low, Tariffs and Rate Hikes Made It Worse

We now have an unfortunate sign that the recovery is complete. The National Association of Homebuilders (NAHB) says housing affordability is the lowest level since just before the housing crisis hit.  The NAHB says the Wells Fargo Housing Opportunity Index (HOI) shows that a combination of rising home prices and higher mortgage rates now means that only 57.1 percent of new and existing homes sold during the second quarter of 2017 were affordable to families earning the U.S. median income of $71,900.  This is down from the 61.6 percent of homes sold in the first quarter that were affordable to median-income earners and is the lowest reading since mid-2008.

 

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MBA Says New Home Purchase Apps Reflect Housing Start Surge

The Mortgage Bankers Association (MBA) says that responses to its recent Mortgage Builder Applications Survey indicates an increase of 3.6 percent in applications for financing newly constructed homes in July compared to the same month in 2017.  That is an 0.2 percent uptick from June. Based on the survey results, which are not seasonally adjusted, and other assumptions about factors that include market coverage, MBA estimates that new single-family home sales were running at a seasonally adjusted annual rate of 637,000 in July.  This is an 8.5 percent increase from MBA's June estimate of 587,000 units. On an unadjusted basis, MBA estimates that there were 53,000 new home sales during the month, the same number as in June.

 

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Freddie Mac Announces Wildfire Forbearance Policy

Some are saying that 2018 may be the worst year in history for wildfires in California and other states are threatened by blazes as well so Freddie Mac is reaffirming its disaster relief policies.  The policies apply to borrowers with homes in Federal Emergency Management Agency (FEMA)-declared disaster areas where individual assistance programs have been made available to affected individuals and households. The options include suspending foreclosures by providing forbearance for up to 12 months and waiving penalties or late fees for borrowers with disaster damaged homes.  Areas with FEMA programs are listed on FEMA's website.

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