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Homebuilders Waiting to See Impact of NLRB Ruling

A ruling last week from the National Labor Relations Board (NLRB) has sent many companies who rely on contract labor into a bit of a panic.  While there is one school of thought that says the ruling may impact homebuilding, it is not clear that it would affect that traditional subcontractor relationship.

The ruling, the first of two that will probably come from the board, concerns Browning-Ferris Industries, a Milpitas, California recycling company.  Browning-Ferris uses contract workers from a temporary staffing agency called Leadpoint.   The Teamsters Union tried to organize Leadpoint's employees but wanted the ability to also negotiate with Browning Ferris.  Its rational was that collective borrowing would be more effective if it also included the larger company which actually has control over the employees' working conditions.  It asked NLRB to designate Browning-Ferris as a "joint employer."

 

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Mortgage Rates Rise; Volatility Builds Throughout Week

Mortgage rates moved moderately higher today as bond traders adjusted their holdings for the end of the month.  Mortgage rates are dictated by trading levels of mortgage-backed securities (which in turn, tend to move in step with US Treasuries, generally speaking).  Many traders are tasked with making certain trades by the end of the month.  Sometimes that has a noticeable effect on how rates move, and today was one of those days. 

Unfortunately, it wasn't in a friendly direction.  The day began with promise, however.  In fact, many lenders were in better shape this morning vs Friday afternoon.  But the market volatility began to take its toll as the PM hours approached, and virtually all lenders recalled initial rate sheets and moved higher.

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Mortgage Rates Varied by Lender Thanks to Volatility

Mortgage rates didn't move much today.  Depending on the lender, effective rates were either slightly higher or lower vs yesterday, with the average lender being just microscopically lower in rate.  Keep in mind that the improvement would only be detectable in the form of lower closing costs, if at all.  In most any case, the actual contract rate would be the same as yesterday.  As such the losing streak (of higher rates) over the previous 3 days is now essentially over.  This doesn't mean rates can't rise any more from here, just that they'd need to find a new reason to do so, instead of merely cooling off after a big spike lower.

 

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MBA Forecasts Housing Demand Over Next 10 Years

We have been reading for several years now about two trends that appear troubling for the housing industry - a declining rate of homeownership and a stalled out rate of household formation.  The latter has recently begun to reverse itself as the huge millennial generation has reached maturity, found jobs, and moved out on their own, but homeownership rates continue to decline, reaching the lowest rate since tracking began.

The Mortgage Bankers Association (MBA) has just released a paper forecasting housing demand over the next ten years.  The paper, Demographics and the Numbers Behind the Coming Multi-Million increase in Households was written by Lynn M.  Fisher Vice President, Research & Economics and Jamie Woodwell Vice President of Commercial/Multifamily Research

 

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Renters Largely Satisfied to Remain that way

It appears that people who are currently renting their homes are not necessarily merely homebuyers in waiting as conventional wisdom has held.  Freddie Mac said its recent research shows that 55 percent of renters have no plans to buy in the next three years.  Renters are overall fairly satisfied with their rental experience the company says, and it is those who are dissatisfied who are most likely to be being driven toward wanting to buy.  In the U.S. about 15 million households rent a single-family house and 25 million rent an apartment, according to U.S. Census Data.

 

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More Relatively Big Changes in Most Recent Fannie Selling Guide

Fannie Mae has published a set of changes to its Selling Guide.  The changes affect verification of self-employed income, Home-Style Renovation loans, eligibility reviews for Planned Unit Developments (PUDs), use of new disclosure forms, and cash-back pair-offs on mandatory whole loan commitments.

Self-Employment Income

The changes to self-employment income policies affect calculation and documentation of business income where the borrower does not have a history of business income distributions.  The Guide has been updated to provide an alternative approach in which the lender can verify by confirming the borrower has (1) access to the business income and (2) there is adequate liquidity in the business to support withdrawal of earnings.  The previous method of verification remains in effect as an alternative lenders may use.

 

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Dodd-Frank – a Five Year Summary

The debate over whether the Dodd-Frank Wall Street Reform and Consumer Protection Act was desperately needed or a pox upon the land survives even as its fifth birthday passed in late July and is likely to become more heated as the 2016 election nears.  The structure and even the existence of its most controversial outcome, creation of the Consumer Financial Protection Bureau (CFPB), is constantly threatened by both legislation and court action.

CoreLogic's current edition of MarketPulse, its on-line magazine, attempts to take a measured and objective look at the Dodd-Frank Act "The Lingering and Lasting Effects".  Policy research and strategy analyst Stuart Quinn says of the act, "The half-decade (of the Act) has further amplified its divisiveness, with legislators from both sides of the House hitting the speaking circuits to either magnify the blemishes or, tout the progress."

 

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Mortgage Rate Losing Streak Loses Steam

Mortgage rates were just barely higher today, greatly decreasing the momentum in a now 3-day losing streak.  The timing of these movements is important as it relates to Freddie Mac's widely disseminated mortgage rate report.  Freddie's weekly rate report is gospel, and indeed it's very accurate given the limitations of its methodology.  Sometimes those limitations come to the surface and create confusion.

For instance, Freddie is reporting mortgage rates at the lowest levels since May.  The catch is that Freddie's data never includes Thursday or Friday rate sheets, and rarely captures Wednesday movement.  That matters because Thursday and Friday of last week were the actual 3-month lows (as we discussed last week). 

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Housing Data: Some Highs, Some Lows, All Good

RealtyTrac's July U.S. Home Sales report is a tale of extremes. July sales of properties in foreclosure and all-cash transactions both dipped to multi-year lows while home sales for the first six month of 2015 and July home prices hit seven and eight year highs.

There were 1.34 million single family homes and condos sold in the first six months of the year.  This was the highest number of sales in the first half of any year since 2007. 

The median price of a home sold in July was $189,500 a 2 percent increase both from June and from July 2014.  It was the highest median price since September 2008.

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Pending Sales Index Ekes out Marginal Gain

The index measuring pending home sales held on to its winning streak in July, but its grip slipped a bit.  The National Association of Realtors® (NAR) said today that its Pending Home Sales Index (PHSI) eked out a marginal 0.5 percent increase, making the month the sixth out of seven when contract signings gained compared to the previous month.  

The PHSI registered 110.9 in July, the third highest reading this year, lagging only April and May.  The June index as an upwardly revised 110.4.  The July level was 7.4 percent higher than a year earlier and the index has increased year over year for 11 consecutive months.

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