Housing Starts

Apache is functioning normally

Apache is functioning normally

Real estate finished November as the second best performing group in the S&P 500 Index adding 12%, trailing slightly behind tech’s 13% gain. The momentum was fueled by bets the central bank may begin cutting rates as early as next year.

RELATED: Mortgage rates will decline further, economic signs indicate

In November, the interest-rate sensitive sector was a market outperformer as investors poured capital into the group. A pullback in Treasury yields has also supported trader optimism that the worst of it could be over. Additionally, U.S. real estate investment trusts, which have been beaten-down by surging interest rates and economic uncertainty, are now flashing signs of strength.

The group rallied 12% in November versus the S&P 500’s 9% gain, notching its best month since 2011. Bank of America said it’s overweight the real estate sector ahead of 2024, with Jeffrey Spector calling the REIT sector equity’s “diamond in the rough.” He listed American Homes 4 Rent, Americold Realty Trust, Empire State Realty Trust, Kimco Realty Corp., Prologis Inc. and Welltower Inc. as his top picks in a note to clients Friday.

Battered office landlord stocks have placed a overcast on the REIT sector as a whole, though office only represents a sliver of the group. Investors have been fleeing the office sector as fears of remote work and elevated borrowing costs destabilize the sector.

“Real estate has seen the biggest de-rating since 2021 among all industries on concerns over office, but office is less than 5% of real estate’s market cap,” he said.

While Bank of America remains cautious on the market entering 2024, it still sees real estate as underappreciated. 

For homebuilding stocks, the bulk of the monthly advance was made during the first three sessions of November after the Federal Reserve announced it would hold its benchmark rate steady for a second meeting. The index posted three back-to-back gains of more than 4%, ultimately sending the index to post its biggest monthly gain since 2020.

The recent pullback in mortgage rates is likely to further support the sector’s gains, enabling builders to buy down rates to 5.5%, a level that has previously helped demand, Bloomberg Intelligence analyst Drew Reading said. 

“This would actually make new home payments more favorable versus resales heading into the spring selling season, so the timing is great for the group,” he noted.

Although builder confidence has been on the decline, Capital Economics U.S. Property Economist Thomas Ryan says the sentiment is a misrepresentation of where larger public builders actually stand, as the gauge is largely comprised of smaller private builders. 

As such, the typical strong correlation between NAHB homebuilder confidence and housing starts has broken down recently, he said. That divergence was underscored in November after the confidence gauge fell to its lowest level this year, despite housing starts unexpectedly rising to the highest in three months.

“While smaller homebuilders are finding it increasingly difficult to access the credit required to maintain construction activity, their giant competitors are in an extremely strong financial position,” Ryan wrote. 

The real estate sector still lags behind the broader market year-to-date, but according to Bank of America, the group may be a bright spot heading into 2024.

Source: nationalmortgagenews.com

Apache is functioning normally

TPO and Correspondent, Non-Agency Best Ex, Verification; Equity Figures for Refis; STRATMOR on Customer Experience

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TPO and Correspondent, Non-Agency Best Ex, Verification; Equity Figures for Refis; STRATMOR on Customer Experience

By:
Rob Chrisman

Fri, Nov 17 2023, 11:13 AM

Talk can be humorous. “That lowdown scoundrel deserves to be kicked to death by a jackass, and I’m just the one to do it.” (Attributed to a congressional candidate in Texas.) Here in Dallas, mortgage talk is certainly wide-ranging and varied as there’s a lot going on out there as we head toward Thanksgiving week, including cost cutting, M&A, and Fair Lending. Today’s Rundown features Feliks Viner, VP of Capital Markets with First World Mortgage discussing rate volatility at 3PM ET. We have the Wall Street Journal story about the union between hoops and loans: “Mortgage King Wants the NBA Crown, Too.” Some housing industry observers may only think it was “only a flesh wound,” but the Realtors™ antitrust case decision in Missouri, coupled with other recent settlements and an onslaught of new cases, likely portend real changes for how homes are bought and sold in the US with the assistance of real estate brokers. Attorney Brian Levy, breaks it down and offers his view of the crumbling dam for buyer broker commissions and the Realtors’ control over local listings in his most recent Levy’s Mortgage Musings. (Today’s podcast can be found here, sponsored by LoanCare, the mortgage subservicer known for delivering superior customer experience through personalization and convenience. Its award-winning portfolio management tool, LoanCare Analytics, supports MSR investors with a focus on customer engagement, liquidity, and credit risk. Interview with Calque’s Chandra Srivastava on the inner workings of a mortgage marketing department and how companies justify ROI on marketing spend.)

Lender and Broker Software, Products, and Services

“Truv is saving Lenders 60-80 percent over competitors. That’s the savings of multiple full-time employees. For example, Compass Mortgage saved roughly 60 percent in verification costs and maintained their same conversion rate. “Truv has given us the ability to lower costs, all while speeding up the verification process and providing better employment data” said Justin Venhousen, COO, Compass Mortgage. Stop wasting money. Contact TRUV today to discuss how we can help you with your income, employment, insurance, and asset verifications.”

The Work Number® can help streamline processes and provide greater value to employment and income verification processes. Wider data coverage can help streamline lending processes. The Work Number is the largest commercial repository for consolidated income and employment data with access to 641 million instantly returned records, updated each pay cycle, provided directly by employers and payroll providers, so there’s no need to collect an applicant’s private banking or payroll credentials, potentially exposing them and yourself to risk. Lenders and brokers have a choice: access The Work Number directly from Equifax OR through our pre-built integrations with over 60 Point of Sale (POS) and Loan Origination Systems (LOS). Not all methods for verification of income and employment are created equal. Discover why The Work Number is the leading choice for seamless, swift, and automated verifications.

In this market, hustle is everything. You can’t afford to waste a single deal, or a single minute. That’s why ReadyPrice has launched Shop, Lock, Deliver, an innovative platform designed to help independent mortgage brokers and their lenders save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders, all on a single platform, at no cost to brokers. It’s already helping brokers around the country thrive and compete in the toughest market. Multiple lenders. One platform. Zero b.s. Come check us out today.

Join MAXEX at 2 p.m. ET on Thursday, December 7, for a special webinar on how the company is expanding its role as the cash window for the non-agency market. MAXEX’s multi-buyer-to-multi-seller exchange now provides more than 300 originators with access to more than 25 leading jumbo, non-QM, DSCR, Agency-eligible (NOO and 2nd Homes), and scratch & dent investors through a single clearinghouse. Join this event to learn about how MAXEX can help your business stay nimble and prepare for profitable, efficient growth in 2024.

Homebot is making a move towards an even more connected consumer experience through its launch of the Homebot Mobile App, allowing clients to connect with their trusted home advisors in a single tap right from their mobile device. With this announcement, every Homebot customer has the opportunity to engage their clients more deeply while generating more relationships with first-time homebuyers. See full story here.

Broker and Correspondent Products

Spring EQ Wholesale is now offering investment property HELOCs for 1st and 2nd lien positions! There is high demand for this product, and now is a great time to reach out to your clients who own investment properties and offer a way to access the equity in those homes. Need help with pricing? Click here to submit a scenario to Spring EQ’s team of Account Executives. Don’t forget, with Spring EQ you can earn up to 2.5 percent in traditional broker compensation on HELOCs and HELOANs. Looking for new opportunities in the mortgage space? We’d love to speak with you! Explore our job postings and come join our growing team of fun and experienced mortgage professionals! At Spring EQ our primary focus is second mortgages. So, think of us first for all your seconds. Become a partner now or contact your Account Executive to learn more.

“Now is the perfect time to align yourself with a top-tier correspondent partner like Newrez Correspondent. How are you going to meet and exceed your 2024 goals in this challenging market? By choosing a partner with the strength, size, and quality of Newrez. We provide competitive pricing, an expansive product line and an unwavering commitment to service. Don’t take it from us. Visit our website to read what our valued clients have to say. More reasons? We offer multiple affordable lending options, a comprehensive monthly client training calendar and access to marketing materials you can customize on The Marketplace by Newrez. Non delegated/Non-QM product availability with access to LoanNEX (pricing and product eligibility platform). Contact your RSM to learn more by clicking here. At Newrez, there is much to be thankful for: our team, our clients, and our families. Wishing you and yours a safe and Happy Thanksgiving.”

What if you had a powerful tool that could help you close your purchase pipeline at four times the rate? Rocket Pro TPO’s Verified Approval (VAL) goes beyond typical pre-approvals by providing a fully underwritten solution that includes a review of your client’s credit, income, and assets. As a result, you will realize the benefit of more committed clients with a clear picture of affordability and the confidence to start shopping. And partners can rely on fast Verified Approval reviews to jump start the purchase process: VALs are available to partners from their portal in as little as 24 hours after the request. Plus, clients using a VAL have the option to lock their rate before finding their new home! Interested in learning more about a Broker or Non-Delegated Correspondent partnership? Contact Rocket Pro TPO to learn more.

STRATMOR on Customer Relationships

What if our response to the prolonged market downturn was less about waiting it out, and more about learning and improving? What if we became learners and doers, not just survivors? In his November Customer Experience Tip, STRATMOR CX Director Mike Seminari talks about the need for being active in the downtime, building relationships, gaining product knowledge, reading books and listening to podcasts, always in pursuit of self-betterment and excellence in customer care. He shares three lessons that 2023 has taught us and how we can parlay them into success in 2024. Check out, “Top Three CX Lessons That Will Drive 2024 Success.”

M&A is not Lender-Exlusive

Lenders are not the only ones in our biz with shrinking balance sheets, competitive pressures, and owners looking at strategic alternatives to battling it out every day.

Stavvy, a fintech firm specializing in digital and remote collaboration for lending and real estate companies, acquired SigniaDocuments, a technology suite from Texas-based lender Evolve Mortgage Services. “Stavvy will acquire assets, including eClosing tools, eNote and eVault services, eRegistry capabilities for agency and non-agency loans and SigniaDocuments’ SMART Doc technology – a data-driven electronic document engine.” Stavvy will offer eNote, SMART Doc disclosures and loan documents for all 50 states across all loan programs and Evolve’s Charlie Epperson and Tim Anderson will join Stavvy as chief product officer and EVP of digital mortgage strategy, respectively. Recall that in August, Stavvy acquired digital mortgage servicing tech firm Brace to provide a streamlined platform for mortgage servicers and homeowners.

Equity and the Future of Refinance

A report from ATTOM shows that in Q3 2023, fewer homes were equity-rich, meaning their loan balances were less than half of their market values. The share of equity rich mortgaged homes was 47.4 percent. This is a drop from 49.2 percent in Q2 2023, making it the largest quarterly decline since 2019. The decline in equity-rich properties happened despite recent home value rebounds. That said, the percentage of seriously underwater mortgaged homes continued to improve. Only 2.5 percent were considered seriously underwater in Q3 2023. That’s the lowest point in the past four years. It’s down from 1 in 36 homes in Q2 2023 and 1 in 35 homes in Q3 2022.

Elliot F. Eisenberg, Ph.D. writes, “As of 9/23, the percentage of home mortgage holders with negative equity is just 383,000 or 0.7 percent, less than half the percentage prior to Covid and prior to the Housing Bust. The percentage peaked in 2009 at 30 percent. Currently, the city with the highest percentage of underwater mortgage holders is Austin at 2.1 percent, because prices are 14 percent off 2022 peaks, followed by Las Vegas at 1.7% and Phoenix at 1.6 percent.”

Capital Markets

Have you stopped your spending? Inflationary price tags, high interest rates and the return of student loan payments were thought to prompt many Americans to hold back on opening their wallets, but that doesn’t appear to be the case. A strong labor market has helped keep spending afloat across the economy, with new revisions even showing that the blowout retail reports from the summer were even better than initially estimated. Those trends are expected to continue with Black Friday only a week away, followed by the traditional holiday spending spree.

But as the fabled “soft landing” for the U.S. economy comes more and more into focus, we have seen mortgage rates and other bond yields drop as of late. Yesterday morning’s batch of data showed a larger than expected increase in weekly jobless claims coupled with a two-year high in continuing claims, fitting the Fed’s preferred script of seeing some softening in the labor market. Initial claims are at their highest levels since August and continuing jobless claims are at their highest level since November 2021. Export prices were down 1.1 percent month-over-month in October and down 4.9 percent year-over-year. Import prices were down 0.8 percent month-over-month and down 2.0 percent year-over-year. And total industrial production declined 0.6 percent month-over-month in October while the capacity utilization rate fell to 78.9 percent, though all figures were adversely affected by the UAW strike. Today’s calendar kicked off with housing starts and building permits for October (+1.9 percent and +1.1 percent, respectively). As has been the case all week, there are plenty of Fed speakers, and today features Boston President Collins, Vice Chair for Supervision Barr, San Francisco President Daly, and Chicago President Goolsbee. Today is also 48-hour notification for Class D MBS. We begin the day with Agency MBS prices better by .125-.250 and the 10-year yielding 4.40 after closing yesterday at 4.45 percent.

Employment

“If you are looking for a lifeline to save your people and your business in this challenging rate environment, you have an opportunity to partner with a well-capitalized independent mortgage company with over 40 years of experience. We offer a portfolio product line that gives our origination team the opportunity to quote unique scenarios for DPA, 2nd liens, ARMs, non-owner, Jumbo, Doctor/Professional, and more. Our proprietary coaching program is free to all Loan Officers. Even in this market, we’ve doubled-down on the support we provide, from a dollar-for-dollar marketing match to in-house creative & design services, video marketing, social media, training, and credit services. With unmatched operations support at the branch and corporate levels, your clients and referral partners will be more than impressed. Our company is Fannie and Freddie seller/servicer, FHA, VA, and USDA approved. For a confidential conversation, please contact Anjelica Nixt and mention this opportunity.”

“It’s all part of the Plan! Operating as MWF Home Loans in Tennessee, Mountain West Financial is continuing our expansion plans in Tennessee. Throughout this year, we have continued our growth with recent launches in North Carolina, South Carolina, Florida, and several other states east of Texas. The expansion is part of our overall growth strategy to expand our footprint. EVP and Board member, Ben Holloway has relocated to Tennessee in an effort to help drive our expansion. For more information about our growth plans and career opportunities, contact Ed Adams or Ben Holloway. Or visit us here for more information.”

“At Evergreen Home Loans™, we’ve always believed in supporting our associates and team members in their commitment to local causes. With the establishment of the Evergreen Cares Foundation, we’ve provided a powerful tool to help them do just that. The Evergreen Cares Foundation is our way of enabling our team to make a difference in the community. Whether it’s addressing hunger, promoting education, or providing assistance during crises, this foundation reflects our dedication to community well-being. Our associates are passionate about giving back, and this foundation allows them to channel their energy and resources toward causes they care deeply about. By doing so, we strengthen our community and embody our core values of empathy and support. Learn more about the Evergreen Cares Foundation and the remarkable impact it’s making. Together, we can build a brighter future for everyone.”

“Explore Spring EQ’s job postings and come join our growing team of fun and experienced mortgage professionals! At Spring EQ our primary focus is second mortgages.”

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

Both of the key metrics for residential construction, housing permits, and housing starts, beat analysts’ expectations in October. The U.S. Census Bureau and Department of Housing and Urban Development said permits rose 1.1 percent compared to September while housing starts increased by 1.5 percent.

Permits were issued at a seasonally adjusted annual rate of 1.487 million units compared to 1.471 million units in September. The September estimate was only a slight revision from the 1.473 million originally reported. Analysts polled by Econoday had estimated that permits would come in at 1.463 million units.

The permits issued in October 2023 were 4.4 percent fewer than the 1.555 million permits authorized in October 2022.

The annual rate of permitting for single-family houses was 968,000 units, 0.5 percent higher than the 963,000 units in September and an improvement of 13.9 percent year-over-year.  Multifamily permits increased by 2.2 percent to 469,000 but dropped 27.9 percent compared to October 2022.

On a non-adjusted basis, there were 124,000 permits issued last month, 79,700 of which were for single-family houses, an improvement on the relative numbers in September of 116,700 and 76,500. Permits for the first nine months of 2023 total 1.252 million, down 13.8 percent from the same period last year. The 773,600 permits for single-family houses are a reduction of 10.6 percent from the same period last year and the 432,300 multifamily represent a decrease of 20.1 percent.

Privately-owned housing starts were at a seasonally adjusted annual rate of 1.372 million units compared to 1.346 million units in September, a downward revision from the 1.358 million units reported in October. Starts remained lower on an annual basis, in this case by 4.2 percent. Analysts had estimated that housing starts would be at a 1.350 million annual rate.

Single-family construction starts were at an annualized rate of 970,000 units, annualized, compared to 968,000 units in September and 858,000 units in October 2022, gains of 0.2 and 13.1 percent, respectively. Multifamily starts increased by 4.9 percent compared to September but were 31.8 percent lower year-over-year.

There were 115,400 residential construction starts in October, units 900 fewer than in September. Single-family starts were flat at 81,400.  

Thus far in 2023, there have been 1.194 million residential units started, 11.3 percent fewer than by the end of October 2022. Single-family starts have declined from 884,200 to 790,600 and multifamily starts at 392,00 are down 12.4 percent.

Robert Dietz, chief economist of the National Association of Home Builders (NAHB) commented on the Census Bureau report. “Despite higher interest rates in October, the lack of existing home inventory supported demand for new construction in the fall. NAHB is forecasting improving conditions for single-family home building, as the 10-year Treasury rate has returned to near 4.5 percent, with an outright gain for single-family starts in 2024.” NAHB, however, is forecasting a decline for multifamily construction in 2024.

There were 122,200 homes completed in October, including 85,400 single-family houses and 36,000 multifamily units. Completions for the year-to-date total 1.190 million units, a 5.0 percent annual increase. Single-family completions are down 1.7 percent to 819,600 units but 361,000 multifamily units have come online, a 23.6 percent increase.

At the end of October, there were 1.674 million residential units under construction, 669,000 of which were single-family houses. There were an additional 281,000 permits outstanding, exactly half of which were for single-family units.

In the Northeast region, permits were 15.6 percent higher than in September and 12.5 percent above the October 2022 rate. Starts dropped by 14.5 percent from the previous month and 24.5 percent compared to a year earlier. Completions were 1.0 percent higher than the prior October.

The Midwest saw a decline in permits of 10.6 percent for the month and 21.8 percent year-over-year. Starts were 28.4 percent and 5.2 percent higher than the two earlier periods. Nine percent fewer units came online than in October 2022.

Permitting rose in the South by 3.1 percent but lagged the prior October rate by 5.3 percent. Construction starts fell 6.8 percent and 8.1 percent. Completions were down 1.7 percent on an annual basis.

There was a 1.7 percent dip in permitting in the West, but the rate rose 3.6 percent on an annual basis. Starts grew 12.5 percent from the prior month’s level and were 4.7 percent higher than in October 2022. Completions dropped 16.6 percent year-over-year.

Source: mortgagenewsdaily.com

Apache is functioning normally

Solid End to a Solid Week

By:
Matthew Graham

Fri, Nov 17 2023, 4:30 PM

Solid End to a Solid Week

With essentially nothing meaningful on the economic or event calendar, the bond market did a good job sticking to a logical script of “more sideways and less volatile after CPI.”  It remains to be seen if that script will remain in force all the way until the first full week of December, but there’s nothing in terms of scheduled events that promises to derail it.  The only exception might be the weird trading dynamics occasionally seen on Thanksgiving week, but those must be taken with a grain of salt (or an ounce of gravy?) until being confirmed or rejected by more active markets in the following weeks.  All we know right now is that this was a solid week that ended on a solid note.  

    • Housing Starts
      • 1.372m vs 1.35m f’cast, 1.358m prev
    • Building Permits
      • 1.487m vs 1.45m f’cast, 1.471m prev

12:09 PM

Stronger overnight thanks to Europe, but weaker as domestic session progresses, possibly finding support now.  MBS down 3 ticks (0.09) and 10yr up half a bp at 4.445.

02:53 PM

Decent recovery for MBS into the close with 6.0s up 1 tick (0.03).  10yr yields are unchanged at 4.441.

04:27 PM

Heading out near unchanged levels with MBS down only 1 tick (0.03) and 10yr yields perfectly unchanged at 4.441.

 Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.

Source: mortgagenewsdaily.com

Apache is functioning normally

On the construction side, homebuilders as well as land developers found it hard to finance projects because of high short-term interest rates. On the consumer side, a large number of prospective buyers sat on the sidelines as housing affordability worsened.

Shelter remained the largest contributor to inflation in October, according to the CPI report. However, the rate of housing inflation is steadily falling and there are high hopes that interest rates will fall in 2024. 

“While builder sentiment was down again in November, recent macroeconomic data point to improving conditions for home construction in the coming months,” NAHB Chief Economist Robert Dietz said in a statement.

“In particular, the 10-year Treasury rate moved back to the 4.5% range for the first time since late September, which will help bring mortgage rates close to or below 7.5%. Given the lack of existing home inventory, somewhat lower mortgage rates will price-in housing demand and likely set the stage for improved builder views of market conditions in December.”

NAHB forecasts approximately a 5% increase for single-family housing starts in 2024 as financial conditions ease.

Homebuilders continued to make adjustments to boost their sales

According to the survey, 36% of builders cut home prices, up from 32% in the previous two months. It was the highest share of builders cutting prices recorded in one year.

According to the NAHB, the average price discount remained at 6%, unchanged from the previous month. 

All three major HMI indices posted declines in November. Homebuilders’ gauge of current sales conditions fell to 40. The gauge measuring traffic of prospective buyers declined to 21. And the component charting sales expectations over the next six months fell to 39.

The three-month moving averages for HMI all declined across the four major regions in November. The Northeast fell one point to 49; the Midwest dropped three points to 36; the South fell seven points to 42; and the West posted a six-point decline to 35. 

Source: housingwire.com

Apache is functioning normally

Weekly housing inventory data

All I wanted for Thanksgiving and Christmas was just a few weeks of active inventory growth between 11,000 – 17,000. But even with mortgage rates getting as high as 8%, we’ve yet to hit within that range. With seasonality kicking in, it doesn’t look good for me this year.   

Last year, according to Altos Research, the seasonal peak for housing inventory was Oct. 28. We might have reached the peak in inventory this week. 

  • Weekly inventory change (Nov. 3-Nov. 10): Inventory rose from 566,882 to 566,941
  • Same week last year (Nov. 4-Nov 11): Inventory fell from  575,798 to 572,347
  • The inventory bottom for 2022 was 240,194
  • The inventory peak for 2023 so far is 566,941
  • For context, active listings for this week in 2015 were 1,135,887

The one positive data line for inventory in 2023 is that new listing data has formed a bottom, and no matter how high mortgage rates have gone, we haven’t seen a brand-new low. Seven weeks ago, I said on CNBC that we should be forming a bottom with some flat year-over-year growth prints coming in the second half of 2023. We saw some good growth this week, and hopefully, in 2024, we can close the gap and get back to 2021-2022 data on new listings. That is the critical period for new listing data to grow; remember, most sellers are buyers.

Traditionally, one-third of all homes take price cuts before they sell. When mortgage rates rise and demand decreases, the percentage of homes with price cuts can grow. This is the crazy stat for 2023: even with higher home prices and rates recently, we haven’t been able to catch up to price cuts in 2022 when home prices were falling month to month.

Even as mortgage rates got to 8%, we have consistently been 4% below last year’s levels of price cuts. This explains why home prices fell last year, with crashing sales and a higher percentage of price cuts. This year’s home sales have been falling more slowly, and we have fewer price cuts, so prices have stayed firmer compared to 2022 levels. 

  • 2023: 39%
  • 2022: 43%
  • 2021: 28%

Mortgage rates and the 10-year yield

Mortgage rates started to fall on Oct. 23 and went from 8% to 7.38% on Nov. 3. Last week, mortgage rates rose toward 7.56%. We did have a lousy bond auction that sent the 10-year yield higher along with mortgage rates. The 10-year yield got as low as 4.48% before heading 18 basis points higher. In addition, Federal Reserve Chairman Powell gave a presentation where people believed his talking points were hawkish, but still, the real deal this week was the bad bond auction. 

The history of mortgage rates and the 10-year yield has been that once the Fed is done hiking rates, the bond market rallies and mortgage rates head lower. So the question is, have mortgage rates peaked and the next move will be to under 7%, not over 8%? I believe this will be the case if the economic and labor data gets softer because the Fed has expressed concern about long-term rates being this high. However, this has always been about the labor market and jobless claims data.

Purchase application data

Purchase application data was up 3% versus last week, making the year-to-date count 19 positive prints, 23 negative prints, and one flat week. If we start from Nov. 9, 2022, it’s been 26 positive prints versus 23 negative prints and one flat week. Now that we are past Nov. 9, 2023, we can retire this data, as this was the date I believed the housing market dynamics shifted last year.

The week ahead: It’s inflation week and housing starts

We will get CPI and PPI inflation data this week, and the core CPI data might be a bit more firm than some people want to see due to an uptick in medical services data. We will also have retail sales, which came in a big beat last month.

For housing, the builder’s confidence and housing starts are also on tap this week, so it should be a fun week! Another variable to deal with: Moody’s downgraded the U.S. debt to negative on Friday night so let’s see what reaction we get from that move on Monday. We might see some bond market volatility Monday morning from the downgrade, but this should be a short-term event.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

Just Another “Worst Day Since…” Type of Day

By:
Matthew Graham

Wed, Oct 18 2023, 4:45 PM

Just Another “Worst Day Since…” Type of Day

In a rising rate environment where long term boundaries have recently been broken, it doesn’t necessarily take big news in order to say things like “highest mortgage rates in 23 years” or “highest bond yields since 2007.”  In fact, we’ve been forced to say such things on multiple occasions recently and today wasn’t special among them.  It would be a mistake to give any credit to this morning’s housing data as a market mover.  If there was any connection between events and bonds, the best candidate was a Biden speech calling for big spending on overseas war efforts.  Bottom line: markets are increasingly willing to react to any new implications for Treasury issuance.

    • Housing Starts
      • 1.358m vs 1.38m f’cast, 1.269m prev
    • Building Permits
      • 1.473m vs 1.45m f’cast, 1.541m prev

09:12 AM

Sideways to slightly stronger overnight, but giving up gains early.  10yr up 3.4bps at 4.872.  MBS down a quarter point.

12:24 PM

Additional weakness into mid-day.  10yr up 7.3bps at 4.911.  MBS down 10 ticks (.31).

04:33 PM

Yet again, a flat afternoon after AM weakness.  Both MBS and Treasuries unchanged from the last update. 

 Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.

Source: mortgagenewsdaily.com

Apache is functioning normally

Apache is functioning normally

Mortgage rates and the 10-year yield

The bond market has gone so wild lately that we have had eight Fed presidents and Treasury Secretary Janet Yellen try to talk down this last big move in bond yields, which sent mortgage rates spiking to a new 23-year high.

Last week was another intense week: Real yields are high enough now that the Fed can actively talk about stopping rate hikes and try to keep the economy from recession as the core inflation growth rate is heading lower. Bond yields spiked Thursday after the CPI report, solid jobless claims data and a bad bond auction, then headed lower on Friday.  

Mortgage rates went from a recent high of 7.81% to 7.60%, ending the week at 7.66%. Outside of the obvious affordability hit with higher rates, volatile mortgage rates add more uncertainty to the housing market. This isn’t a good trend; it’s been so painful that the National Association of Realtors, Mortgage Banking Association, and the National Association of Home Builders wrote to Fed Chair Jay Powell asking him to clarify the Fed’s rate path and find a way to bring the spreads down.

Right now, I am watching the 10-year yield and the 4.87% level as a short-term top, much like last year when we hit 4.25%. If this top in the bond market stays true, we’ll also see the top in mortgage rates in the short term. The Fed can try to talk the market down all it wants, but If it wanted to change the game, it would just say it is done hiking rates and will stop quantitative tightening — but don’t hold your breath. We typically see wild action at bottoms and short-term tops in the 10-year yield.

Weekly housing inventory data

The story of 2023 on the inventory side has been one of slower growth in active listing and new listings data trending at the lowest levels ever in history. However, as mortgage rates got above 7%, I had anticipated we would see at least a few weeks of active inventory growth between 11,000-17,000. 

Inventory growth hasn’t reached those levels, but there has been some good growth for October as higher rates are slowing the housing market down. Look for the HousingWire Daily podcast on Monday morning, where I explain why higher rates — not lower rates — will create more inventory in an expanding economy. 

Last year, the seasonal peak for inventory was Oct. 28. Last week, according to Altos Research:

  • Weekly inventory change (Oct. 6-Oct. 13): Inventory rose from  537,032 to 546,450
  • Same week last year (Oct. 7-Oct. 14): Inventory rose from to 562,249 to 567,452
  • The inventory bottom for 2022 was 240,194
  • The inventory peak for 2023 so far is 546,450
  • For context, active listings for this week in 2015 were 1,177,353

While trending at the lowest levels ever recorded in U.S. history, new listings data remains on an orderly seasonal decline. We saw a slow week-to-week decline last week and a negative year over year, but not by a lot.

Price cuts are common with housing data, as one third of all homes typically have a price cut throughout the year. Last year, the price cuts were trending 4% higher than this year.

Higher mortgage rates can create more price cuts. Last year, the mortgage rate increase was so high and so fast that more and more people had to cut prices to sell their homes. The market is different this year as inventory is still negative year over year. 

The percentage of price cuts for the same week over the last few years:

  • 2021: 29%
  • 2022: 42%
  • 2023: 38%

Purchase application data

Purchase application data was up 1%  last week versus the previous week, making the year-to-date count 18 positive prints, 20 negative prints and one flat week. If we start from Nov. 9, 2022, it’s been 25 positive prints versus 20 negative prints and one flat week. However, the week-to-week data has been weaker once rates passed 7%, and we will see that in the data lines going out in the future. 

The week ahead: Housing and economic reports

This week, we have several key housing and economic data lines to track. The builder’s survey has been getting weaker lately as the builders have resorted to paying more money to get lower mortgage rates for their buyers, so that’s one to watch. We also have housing starts data, which took a big dive last month, and existing home sales, which should break under 4 million, which is very rare post-1996. In addition. we have retail sales and the leading economic index this week, too, so there will be plenty of housing and economic data to move the bond market this week. 

Source: housingwire.com