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NAR – existing-home sales retreat 1.8% in June

Existing-home sales slipped in June as low supply kept homes selling at a near record pace but ultimately ended up muting overall activity, according to the National Association of Realtors (NAR). Only the Midwest saw an increase in sales last month. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.8% to a seasonally adjusted annual rate of 5.52 million in June from 5.62 million in May. Despite last month’s decline, June’s sales pace is 0.7% above a year ago, but is the second lowest of 2017 (February, 5.47 million). The median existing-home price for all housing types in June was $263,800, up 6.5% from June 2016 ($247,600). Last month’s median sales price surpasses May as the new peak and is the 64rd straight month of year-over-year gains. Total housing inventory at the end of June declined 0.5% to 1.96 million existing homes available for sale, and is now 7.1% lower than a year ago (2.11 million) and has fallen year-over-year for 25 consecutive months. Unsold inventory is at a 4.3-month supply at the current sales pace, which is down from 4.6 months a year ago. First-time buyers were 32% of sales in June, which is down from 33% both in May and a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35%. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage declined for the third consecutive month, dipping to 3.90% in June from 4.01% in May. The average commitment rate for all of 2016 was 3.65%.

Properties typically stayed on the market for 28 days in June, which is up from 27 days in May but down from 34 days a year ago. Short sales were on the market the longest at a median of 102 days in June, while foreclosures sold in 57 days and non-distressed homes took 27 days. Fifty-four% of homes sold in June were on the market for less than a month. Inventory data from reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in June were Seattle-Tacoma-Bellevue, Wash., 23 days; Salt Lake City, Utah, 26 days; San Jose-Sunnyvale-Santa Clara, Calif., 27 days; San Francisco-Oakland-Hayward, Calif., 29 days; and Denver-Aurora-Lakewood, Colo., at 30 days. “Prospective buyers who postponed their home search this spring because of limited inventory may have better luck as the summer winds down,” said President William E. Brown. “The pool of buyers this time of year typically begins to shrink as households with children have likely closed on a home before school starts. Inventory remains extremely tight, but patience may pay off in coming months for those looking to buy.” All-cash sales were 18% of transactions in June, down from 22% both in May and a year ago, and the lowest since June 2009 (13%). Individual investors, who account for many cash sales, purchased 13% of homes in June, down from 16% in May and unchanged from a year ago. Fifty-six% of investors paid in cash in June.

Distressed sales – foreclosures and short sales – were 4% of sales in June, down from both May (5%) and a year ago (6%) and matching last September as the lowest share since NAR began tracking in October 2008. Three% of June sales were foreclosures and 1% were short sales. Single-family home sales dipped 2.0% to a seasonally adjusted annual rate of 4.88 million in June from 4.98 million in May, but are still 0.6% above the 4.85 million pace a year ago. The median existing single-family home price was $266,200 in June, up 6.6% from June 2016. Existing condominium and co-op sales were at a seasonally adjusted annual rate of 640,000 units in June (unchanged from May), and are 1.6% higher than a year ago. The median existing condo price was $245,900 in June, which is 6.5% above a year ago. June existing-home sales in the Northeast fell 2.6% to an annual rate of 760,000, but are still 1.3% above a year ago. The median price in the Northeast was $296,300, which is 4.1% above June 2016. In the Midwest, existing-home sales rose 3.1% to an annual rate of 1.32 million in June (unchanged from June 2016). The median price in the Midwest was $213,000, up 7.7% from a year ago. Existing-home sales in the South decreased 4.7% to an annual rate of 2.23 million (unchanged from a year ago). The median price in the South was $231,300, up 6.2% from a year ago. Existing-home sales in the West declined 0.8% to an annual rate of 1.21 million in June, but remain 2.5% above a year ago. The median price in the West was $378,100, up 7.4% from June 2016.

Average US gas prices rise first time in 11 weeks

The average price of a gallon of regular-grade gasoline rose about a penny nationally over the past two weeks, to $2.32. Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that the slight increase comes after 11 weeks of decline. The current price is about 10 cents above where it was a year ago. Gas in Reno, Nevada, was the most expensive in the contiguous United States at an average of $2.99 a gallon. The cheapest was in Jackson, Mississippi, at $1.97 a gallon. The US average diesel price is $2.51, the same as it was two weeks ago.

CoreLogic – US housing policy outlook: July 2017

Recently, we released our first quarter CoreLogic National Fraud Risk Index and, as we expected, the index hit a new high of 132. This was up from 122 in the fourth quarter and 113 a year ago. Keep in mind, the index is relatively new… it was started in 2010, after the high risk levels that contributed to the mortgage crisis. So today’s heightened number doesn’t necessarily mean that we’re seeing a lot more fraud. What it does show, however, is that conditions are present for fraud to grow. The shift from a refi to a more traditional purchase market is a big driver of the change in the index. That’s because you have more moving parts and players in a purchase transaction and more opportunities for financial gain…and for fraud. Housing affordability is another factor. Rising home prices and bidding wars mean that buyers have to stretch in order to qualify for a loan. We’re seeing the early signs of this in the percentages of applicants that are reporting income that is high relative for their area. Also, the higher debt-to-income ratios that we’re seeing suggest that applicants are at the maximums that they qualify for. These conditions historically have supported fraud for housing schemes. Speaking of fraud schemes, we’re hearing about a new one and the return of an old one. The new scheme involves reverse occupancy or investment income misrepresentation. Here’s the way it works: the applicant says that he or she intends to buy a property as an investment and rent it out. The future rental income is used to qualify the borrower. But the borrower doesn’t rent it and moves in instead. This scheme is gaining traction in New York and other large metro areas, like Los Angeles. The old scheme, which appears to be making a comeback, is aimed at out-of-state investors, usually from high-cost states. Home flippers pitch low-cost, rust-belt properties—often priced under $100,000. The flippers try to get investors to buy sight unseen and promise to manage the properties for them. Of course they dangle the prospect of very high returns. All too often the prices and returns are inflated.

Wall St flat as tech earnings awaited

US stock indexes opened little changed on Monday, ahead of Google parent Alphabet’s earnings report and a two-day Federal Reserve meeting, which kicks off on Tuesday. Analysts have raised their expectations for S&P 500 earnings to 9.6%, compared with an 8% rise projected at the start of the month, according to Thomson Reuters I/B/E/S.”With indices trading at record highs and central banks favoring a less accommodative stance, earnings will become increasingly important in maintaining or expanding on these levels,” said Craig Erlam, senior market analyst at online forex broker Oanda. Alphabet reports results after market close, while Amazon and Facebook are due to report results later this week. Tech continues to be the best performing S&P sector this year, despite investors worrying about stretched valuations. At 9:35 a.m. ET (1335 GMT), the Dow Jones Industrial Average was down 13.28 points, or 0.06%, at 21,566.79, the S&P 500 was down 1.69 points, or 0.06%, at 2,470.85. The Nasdaq Composite was up 1.45 points, or 0.02%, at 6,389.20. Eight of the 11 major S&P 500 sectors were lower, with the materials index’s 0.18% fall leading the decliners. The market will also keep an eye on political developments in Washington, with rising doubts about President Donald Trump’s ability to legislate his pro-growth policies after the failure of the healthcare bill.

The International Monetary Fund shaved its forecasts for US growth to 2.1% for both 2017 and 2018 from its earlier estimates of 2.3% and 2.5%, respectively, citing lack of details on the Trump administration’s stimulus measures.The Fed is not expected to tighten its monetary policy when it meets on Tuesday, but the market is awaiting its statement for clues on future interest rate hikes. Shares of Halliburton were up 0.2% after the oilfield services provider swung to a quarterly profit. Egg producer Cal-Maine Foods fell 8.6% after its quarterly results fell below expectations. Hasbro was down 6.7% after the toymaker posted the smallest sales beat in one and a half years. WebMD Health jumped 19.7% after KKR & Co agreed to buy the US online health publisher in a deal valued at about $2.8 billion. KKR was off 0.7%. Declining issues outnumbered advancers on the NYSE by 1,366 to 1,128. On the Nasdaq, 1,165 issues rose and 1,068 fell.

Forest fires and building prices

Canadian lumber prices continue to rise, this time because of forest fires. The US Commerce department proposed a tariff on Canadian softwood lumber this spring to right what it said was a trade imbalance. An additional tariff proposed in June could mean up to 30% in duties on lumber, affecting the ability of US homebuilders to increse their inventory in this tight housing market. Now, prices are set to rise again after devastating forest fires forced three large lumber producers in British Columbia to shut down in July. From a Wall Street Journal article on Sunday: “Lumber futures at the Chicago Mercantile Exchange, an indicator of price expectations for the months ahead, rose above $400 per 1,000 board feet in mid-July. That was near a 12-year high reached in April before the Trump administration accused Canada of unfairly subsidizing its forestry industry and started slapping tariffs as high as 30% on some timber imports to the US Canadian officials deny the allegations.” The lumber shortage has already affected US hombuilders, with a fifth reporting a shortage of framing lumber in May, the article said. And confidence among homebuilders fell to an eight-month low in July amid concerns over rising lumber costs.

Black Knight Financial Services – First Look at June 2017    

The Data and Analytics division of Black Knight Financial ​Services reports the following “first look” at June 2017 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.

–  Despite upward seasonal pressure, mortgage delinquencies held steady at 3.8% in June

–  While total non-current inventory saw a three% seasonal rise over Q2 2017, the inventory of serious delinquencies (loans 90 or more days past due) and active foreclosures fell by seven%

–  In total, serious delinquencies and active foreclosures have declined by 17% (nearly 200,000 loans) this year

–  Low interest rates helped push prepayment activity up another 5.3% in June, following May’s 23% rise

–  Though hitting calendar-year highs for two consecutive months, the national prepayment rate remains over 20% below last year’s levels

Student loan debt up more than 450% since 2003

While total US household debt in the first quarter of 2017 surpassed its $12.68 trillion peak reached during the recession, according to data from the New York Fed, it’s the astronomical increase in student loan debt that is perhaps the most shocking. Outstanding student loan balances have increased more than 457% since 2003, according to a FOX Business analysis of statistics from the Federal Reserve Bank of New York’s Center for Microeconomic Data. In the first quarter of 2003, $241 billion in student loans were outstanding, compared with the first quarter of 2017, when that number jumped to $1.34 trillion. In the first quarter of 2017 alone, student loan debt jumped 2.6%. The New York Fed notes in a recent report that student loan balances have increased each of the 18 years it has been releasing the analysis, while other household dues have been less consistent. From the first quarter of 2003 to the first quarter of 2017, student loan debt rose the fastest out of all types of household debt. Mortgage debt, for example, increased only 74% to $8.6 trillion. Auto loan debt jumped 82% to more than $1.16 trillion. Overall household debt was up 75% over the same timeframe. Not only that, but student loan delinquencies have also remained high. According to the New York Fed, 11% of total student loan debt was at least 90 days delinquent or in default during the first quarter of this year. The amount of balances transitioning into delinquency has averaged about 10% annually over the past five years. Meanwhile, the price of higher education continues to skyrocket. For the 2016-2017 school year, the average cost for a private, nonprofit four-year degree, including room and board, was more than $45,300, according to data from The College Board Opens a New Window. – a 3.4% increase over the previous year. For a public, four-year in-state education over the same time period, that number increased 2.7% to $20,090.

NAR – foreign US home sales dollar volume surges 49% to record $153 billion

Fueled by a substantial increase in sales dollar volume from Canadian buyers, foreign investment in US residential real estate skyrocketed to a new high, as transactions grew in each of the top five countries where buyers originated. This is according to an annual survey of residential purchases from international buyers released today by the National Association of Realtors (NAR), which also revealed that nearly half of all foreign sales were in three states: Florida, California and Texas. NAR’s 2017 Profile of International Activity in US Residential Real Estate found that between April 2016 and March 2017, foreign buyers and recent immigrants purchased $153.0 billion of residential property, which is a 49% jump from 2016 ($102.6 billion) and surpasses 2015 ($103.9 billion) as the new survey high1. Overall, 284,455 US properties were bought by foreign buyers (up 32% from 2016), and purchases accounted for 10% of the dollar volume of existing-home sales (8% in 2016). “The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of US property over the past year,” said Lawrence Yun, NAR chief economist. “While the strengthening of the US dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the US is a safe and secure place to live, work and invest.”

Although China maintained its top position in sales dollar volume for the fourth straight year, the significant rise in foreign investment in the survey came from a massive hike in activity from Canadian buyers. After dipping in the 2016 survey to $8.9 billion in sales ($11.2 billion in 2015), transactions from Canadians this year totaled $19.0 billion – a new high for Canada. Yun attributes this notable rise in activity to Canadians opting to buy property in US markets that are expensive but still more affordable than in their native land. While much of the US continues to see fast price growth, home price gains in many cities in Canada have been steeper, especially in Vancouver and Toronto. “Inventory shortages continue to drive up US home values, but prices in five countries, including Canada, experienced even quicker appreciation2,” said Yun. “Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the US and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future.” Foreign buyers typically paid $302,290, which was a 9.0% increase from the median sales price in the 2016 survey ($277,380) and above the sales price of all existing homes sold during the same period ($235,792). Approximately 10% of foreign buyers paid over $1 million, and 44% of transactions were all-cash purchases (50% in 2016).

Buyers from China exceeded all countries by dollar volume of sales at $31.7 billion, which was up from last year’s survey ($27.3 billion) and topped 2015 ($28.6 billion) as the new survey high. Chinese buyers also purchased the most housing units for the third consecutive year (40,572; up from 29,195 in 2016). Rounding out the top five, the sales dollar volume from buyers in Canada ($19.0 billion), the United Kingdom ($9.5 billion), Mexico ($9.3 billion) and India ($7.8 billion) all increased from their levels one year ago. This year’s survey once again revealed that foreign buying activity is mostly confined to three states, as Florida (22%), California (12%) and Texas (12%) maintained their position as the top destinations for foreigners, followed by New Jersey and Arizona (each at 4%). Florida was the most popular state for Canadian buyers, Chinese buyers mostly chose California, and Texas was the preferred state for Mexican buyers. The upswing in foreign investment came from both recent immigrants and non-resident foreign buyers3 as each increased substantially to new highs. Sales to foreigners residing in the US reached $78.1 billion (up 32% from 2016) and non-resident foreign sales spiked to $74.9 billion (up 72% from 2016).“Although non-resident foreign purchases climbed over the past year, it appears much of the activity occurred during the second half of 2016,” said Yun. “Realtors® in some markets are reporting that the effect of tighter regulations on capital outflows in China and weaker currencies in Canada and the U.K. have somewhat cooled non-resident foreign buyer interest in early 2017.”

Oil dives as consultant sees OPEC crude output rise in July

Oil prices fell about 2% on Friday after a consultant forecast a rise in OPEC production for July despite the group’s pledge to curb output, reigniting concerns the global market will stay awash with crude. Petro-Logistics, which tracks OPEC supply forecasts, said OPEC crude production would rise by 145,000 barrels per day (bpd) this month, taking the group’s combined output above 33 million bpd. Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month’s gains, it said. Benchmark Brent crude futures were down 92 cents or about 1.9% at $48.38 a barrel at 12:16 p.m. (1616 GMT), while US West Texas Intermediate (WTI) crude futures traded at $45.99 a barrel, down 93 cents or 1.98%. OPEC and some non-OPEC states, such as Russia, pledged to cut production by 1.8 million bpd between January this year and the end of March 2018. The UAE energy minister, whose country’s oil output has been rising, said he was committed to the output cut and he hoped the deal would have a significant impact in the third and fourth quarters. “We have the OPEC meeting in Russia on Monday and that’s going to be top of mind,” said Dan Katzenberg, Senior Exploration and Production analyst at Baird and Company in New York. The meeting gathers several ministers from OPEC and non-OPEC member countries in St. Petersburg. Kuwaiti Oil Minister Essam al-Marzouq, whose country heads the joint ministerial committee, said attendees would discuss steps for continuing the production cuts. The committee, known as the JMMC, can make recommendations to OPEC and other producers to adjust the deal, if necessary. However analysts expressed skepticism that the group will address rising production from Nigeria and Libya, two OPEC members exempted from the cuts.

NAHB – remodeling market indicator remains in positive territory

The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 55 in the second quarter of 2017, down three points from the first quarter of 2017. For 17 consecutive quarters, the RMI has been at or above 50, which indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity. “While remodelers continue to see robust demand across the country, the lack of skilled labor continues to be a serious issue,” said NAHB Remodelers Chairman Dan Bawden, CAPS, GMB, CGR, CGP, a remodeler from Houston. “Remodelers are finding they have to decline projects because they can’t hire enough skilled staff to keep up with the demand.” An overwhelming majority of respondents—84%—stated that the cost/availability of labor is the most significant challenge residential remodelers are currently facing. At 55, current market conditions declined three points from the first quarter of 2017. Among its three major components, major additions and alterations waned three points to 54, minor additions and alterations decreased six points to 53, and the home maintenance and repair component fell three points to 57. The future market indicators index stood at 55, also slipping three points from the previous quarter. Calls for bids fell three points to 56, amount of work decreased five points to 53, and the backlog of remodeling jobs dropped four points to 58. Meanwhile, appointments for proposals rose one point to 55. “The RMI has remained above 50 for the past four years, indicating strong demand for remodeling work,” said NAHB Chief Economist Robert Dietz. “However, the challenges posed by rising labor and material costs will constrain remodelers’ ability to increase production at a faster pace.”

Olick – These are the top ZIP codes for rental returns

–  HomeUnion is one of several companies helping landlords narrow down the best rental areas for their investments.

–  The list considers a range of variables, including nearby school rankings and area job growth.

More Americans are renting homes today than at any time in more than half a century. As a result, more investors are looking to cash in on that trend as landlords of single family rental homes. If you’re one of them, you want to know where you’ll get the most bang for your buck. Try this ZIP code: 33434. That is the finding of HomeUnion, one of several companies that help investors find, purchase, renovate, manage and sell single-family rental homes. With so much real estate data available now, most of these companies are compiling lists of best bets. HomeUnion is offering a list of projections for investors looking to hold and rent properties over the next five years. Its analysts are considering factors beyond just vacancies and rent appreciation, examining permitting activities for both apartments and single-family homes, as well as area job growth and school rankings. HomeUnion updates its data each quarter. “We’re looking at the supply-and-demand factors in each market and all of the neighborhoods within those markets,” said Steve Hovland, director of research. “As we get new information, we apply that to our methodology.” Historically, most mom-and-pop landlords choose homes in their backyards. It’s a practical choice, as they often manage the properties themselves and need to be nearby should a pipe break or a basement flood. With the recent growth of rental management companies to do the dirty work, investors are increasingly looking nationally and don’t necessarily want to have to travel to see the properties they buy. That means statistics are key, and potential investors are hungrier than ever for data. “They know real estate is a good investment, and they want to invest, but to do all the due diligence takes a lot of work, and most of our investors are already busy with other jobs,” said Hovland. So, will every house in each of those Top 20 markets yield top dollar? Not necessarily. There will always be renters who fail to pay and extenuating circumstances that can suddenly cause a local market to turn. As with the other multitude of lists and rankings, this is just a guide.

Black Knight – May Mortgage Monitor: underwater borrower population below two million for first time since 2006 

– ​​​​​​ The number of underwater borrowers declined by 16% in the first three months of 2017

–  350,000 borrowers regained equity in Q1 2017, bringing the total underwater population down to 1.8 million

–  The underwater population has fallen by nearly one million borrowers since last year, a 35% annual decline

–  Nearly half of remaining underwater borrowers live in the bottom 20% of homes by price in their markets

–  Tappable equity has risen by $695 billion from last year, bringing total lendable equity to just under $5 trillion

–  Over 40 million Americans have tappable equity available in their homes today; the largest population on record

The Data and Analytics division of Black Knight Financial Services, Inc. released its latest Mortgage Monitor Report, based on data as of the end of May 2017. This month, Black Knight finds that rising home prices have both decreased the number of borrowers underwater on their mortgages while increasing the amount of tappable – or lendable – equity available to homeowners. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, continued growth in the equity landscape has also improved the net worth of many – but not all – homeowners with mortgages.  “The steady upward trajectory of home prices continues to improve the equity positions of many homeowners,” said Graboske. “This is plainly visible in the number of borrowers who are underwater on their mortgages, owing more than their homes are worth. Over the past year, we’ve seen a 35% decline in the total underwater population, with a 16% decline in that population over the first three months of 2017 alone. Home prices rose 2.3% in the first quarter, as compared to 1.8% over the same period last year, helping an additional 350,000 borrowers regain equity in their homes. As of today, there are 1.8 million underwater borrowers remaining, the first time this population has fallen below two million since 2006. “What stands out is the disparity we see in this improvement. As has been the case for some time now, negative equity has become more and more a localized phenomenon. But it’s also becoming concentrated among a particular class of homeowner. Nearly half of all borrowers who remain underwater own homes in the lowest 20% of prices in their respective markets. While the nation as a whole now has a negative equity rate of just 3.6%, among owners in that lowest price tier, it’s over eight%. In fact, these lowest-price-tier properties are more than twice as likely to be underwater as those in the next price tier up, and 6.5 times more likely to be underwater than those living in the top 20% of the market. This is the highest differential we’ve seen between high and low price tiers since we began keeping track in 2005. In some areas, the disparity between the lowest price tier and the highest is staggering. In Detroit, for example, borrowers whose homes are in the lowest 20% of prices are 50 times more likely to be underwater than those in the top 20%.”

Rising home prices are also increasing the amount of equity available for homeowners to borrow against. Looking solely at borrowers with at least 20% equity in their homes, Black Knight found that total tappable (or lendable) equity increased by $695 billion dollars over the last year. “Over 40 million Americans with a mortgage now have tappable equity available in their homes,” Graboske continued. “This is the largest this population has ever been. Growth over the last year brought the total lendable equity market to just under $5 trillion as of the end of Q1 2017. If home prices continue to rise at or near their current rate of appreciation, tappable equity will likely hit record highs by this summer. Though nearly half of the country’s 100 largest metropolitan areas have already reached record levels of tappable equity, as a whole these areas remain geographically concentrated. The majority are found in more coastal areas, specifically in large city centers. In fact, more than half of the nation’s tappable equity lies in the 10 largest metro areas. California alone contains nearly 40% of available equity. While the growth in tappable equity is obviously good news for both homeowners and lenders alike, it does represent some risk as well. Investors in mortgages and mortgage servicing rights – as well as others with a stake in the broader mortgage market – need to be prepared to account for a higher share of equity-driven prepayment risk, as well as an increased chance of borrowers adding on second liens that primary loan servicers and investors may not be aware of.” As was reported in Black Knight’s most recent First Look release, other key results include:

​-  Total US loan delinquency rate: 3.79%​

​-  Month-over-month change in delinquency rate: -7.13%

​-  Total US foreclosure pre-sale inventory rate: 0.83%

​-  Month-over-month change in foreclosure pre​-sale inventory rate: -2.97%

​-  States with highest percentage of non-current loans: ​MS, LA, AL, WV, ME

​-  States with the lowest percentage of non-current* loans: OR, ID, MN, ND, CO

​-  States with highest percentage of seriously delinquent loans:MS, LA, AL, AR, TN

Amazon is quietly rolling out its own Geek Squad to set up gadgets in your home

For 15 years, Best Buy’s Geek Squad installation and repair service has served as one key advantage over Amazon that the e-commerce giant seemed unlikely to match.But over the last few months, Amazon has quietly been hiring an army of in-house gadget experts to offer free Alexa consultations as well as product installations for a fee inside customer homes, multiple sources told Recode, and job postings confirm. The new offering, which has already rolled out in seven markets without much fanfare, is aimed at helping customers set up a “smart home” — the industry term used to describe household systems like heating and lighting that can be controlled via apps, and increasingly by voice. While Amazon has a marketplace for third parties to offer home services like TV mounting and plumbing, these new smart-home-related services seem important enough to Amazon that it is hiring its own in-house experts. And perhaps for good reason. Smart-home gadgets make up one of the fastest-growing segments of the consumer electronics industry, but they can be difficult to set up and integrate with each other. That hurdle has led to higher-than-normal return rates, experts say, so Amazon is likely looking at the in-home services as one way to lower that number. Perhaps more importantly, controlling the smart home by voice is one of the most promising use cases for Alexa, the virtual assistant built into the Echo line of gadgets, which Amazon is betting heavily on. So it’s not totally surprising that Amazon would make the effort to close the education gap for these products by sending its own hires into customer homes. An Amazon spokesman declined to comment. Amazon is charging $99 for installation services like setting up an Ecobee4 Alexa-enabled smart thermostat, though some services are discounted by 20% this week. Multi-device set-ups that take more than an hour may cost more. In eligible cities, shoppers can book the installations during the checkout process.

New York City’s ‘Billionaire’s Row’ is dead — and a record-breaking foreclosure could be the ‘nail in the coffin’

A full-floor penthouse in the landmark One57 condo building is headed to the auction block after it was seized under foreclosure, Bloomberg reported. This is most likely the largest foreclosure in the history of high-end real estate in New York City, experts say. “I don’t know of a foreclosure that’s larger than that,” Donna Olshan, president of Olshan Realty, told Bloomberg. The apartment, which was the eighth-priciest sold in the building, will go to auction on July 19. It was purchased for $50.9 million in 2014, with a $35.3 million mortgage loan from Banque Havilland. It was due to be paid in full a year after purchase, but no such payment was made by the shell company the unit was registered under. Havilland is now forcing the auction to recoup the funds it’s missing, plus interest, according to court filings. One57 is emblematic of New York City’s Billionaire’s Row, a stretch of 57th Street near Central Park, which in recent years has become a magnet for new condos courting high-priced investment. One57 is considered the most expensive of the new buildings, with record-breaking sales that included a $100.5 million top-floor penthouse. This is the second apartment in the building to face foreclosure in the last two months. A unit on the 56th floor, which sold for $21.4 million in July 2015, hit the auction block on June 14. It’s unclear if the property has changed hands yet.

Oil pares losses, but rising supply a worry

Oil dipped on Monday, paring some earlier losses triggered by rising drilling activity in the United States and no let-up in supply growth from both OPEC and non-OPEC exporters, but the outlook remained gloomy. Brent crude futures were last down 11 cents on the day at $46.60 a barrel by 1430 GMT, while US crude futures were last down 13 cents at $44.10 a barrel. “The market is in trouble and looks very vulnerable to lower numbers,” PVM brokerage said in a note. The Organization of the Petroleum Exporting Countries has agreed with some non-OPEC members to curtail production until March 2018 but the move has failed to eliminate a global glut of crude. Several key OPEC ministers will meet non-OPEC Russia on July 24 in St Petersburg, Russia, to discuss the situation in oil markets. Kuwait said on Sunday that Nigeria and Libya had been invited to the meeting and their production could be capped earlier than November, when OPEC is scheduled to hold formal talks, according to Bloomberg. Libya said on Monday it was ready for dialog but added that its political, economic and humanitarian situation should be taken into account in talks on caps. Brent prices are 17% below their 2017 opening despite strong compliance by OPEC with the production-cutting accord.


CoreLogic – US home price report shows prices up 6.6% in May 2017

–  Price Appreciation Outstripping Income Growth in Many Markets

–  Many Markets Still Lack Adequate Inventory

–  Tight Inventory Impacting Rental Markets

CoreLogic released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ for May 2017 which shows home prices are up strongly both year over year and month over month. Home prices nationally increased year over year by 6.6% from May 2016 to May 2017, and on a month-over-month basis, home prices increased by 1.2% in May 2017 compared with April 2017,* according to the CoreLogic HPI. Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 5.3% on a year-over-year basis from May 2017 to May 2018, and on a month-over-month basis home prices are expected to increase by 0.9% from May 2017 to June 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. “The market remained robust with home sales and prices continuing to increase steadily in May,” said Dr. Frank Nothaft, chief economist for CoreLogic. “While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1% on a year-over-year basis in May of this year compared with May of last year. Rents in the affordable single-family rental segment (defined as properties with rents less than 75% of the regional median rent) increased 4.7% over the same time, well above the pace of overall inflation.” “For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending,” said Frank Martell, president and CEO of CoreLogic. “For renters and potential first-time homebuyers, it is not such a pretty picture. With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.”

US factory orders fall; core capital goods orders revised up

New orders for US-made goods fell more than expected in May, but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.8%, the Commerce Department said on Wednesday after a revised 0.3% decline in April. It was the second straight monthly decrease in orders. Economists had forecast factory orders falling 0.5% in May after a previously reported 0.2% drop in April. Factory orders were up 4.8% from a year ago. Manufacturing, which accounts for about 12% of the US economy, is losing momentum after gaining steam since mid-2016 amid a recovery in the energy sector that led to demand for oil and gas drilling equipment. Activity is slowing against the backdrop of a moderation in oil prices and declining motor vehicle sales. Motor vehicle manufacturers reported on Monday that auto sales fell in June for a fourth straight month, leading to a further increase in inventories, which could weigh on vehicle production. The dollar held steady against a basket of currencies as investors awaited the release of minutes of the Federal Reserve’s June 13-14 policy meeting later in the day.US stocks were trading slightly lower while prices for US Treasuries rose.

Wednesday’s report from the Commerce Department also showed orders for non-defense capital goods excluding aircraft – seen as a measure of business spending plans – rising 0.2% instead of slipping 0.2% as reported last month. Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, nudged up 0.1% instead of the previously reported 0.2% decrease. Moderate capital expenditure comes despite relatively strong business confidence. A survey this week showed a measure of factory activity rising to a near three-year high in June. In May, orders for machinery jumped 1.1%. Mining, oilfield and gas field machinery orders surged 8.5%. Orders for electrical equipment, appliances and components increased 1.0% and orders for primary metals advanced 0.6%. Orders for transportation equipment fell 3.0%. That was the biggest drop since last November and reflected an 11.6% tumble in nondefense aircraft orders. Motor vehicle orders gained 0.1% after rising 0.9% in April. Unfilled orders at factories fell 0.2% after two straight monthly increases. Manufacturing inventories slipped 0.1% after rising for six consecutive months, while shipments gained 0.1%. The inventories-to-shipments ratio was unchanged at 1.38

Olick – Two major lending changes mean it’s suddenly easier to get a mortgage

–  The nation’s three major credit rating agencies, Equifax, TransUnion and Experian, will drop tax liens and civil judgments from some consumers’ profiles if the information isn’t complete.

–  Mortgage giants Fannie Mae and Freddie Mac are allowing borrowers to have higher levels of debt and still qualify for a home loan.

–  These changes come at a time when lenders are competing for a shrinking market of borrowers.

Two major changes in the mortgage market go into effect this month, and both could help millions more borrowers qualify for a home loan. The changes will also add more risk to the mortgage market. First, the nation’s three major credit rating agencies, Equifax, TransUnion and Experian, will drop tax liens and civil judgments from some consumers’ profiles if the information isn’t complete. Specifically, the data must include the person’s name, address, and either date of birth or Social Security number. A sizeable number of liens and judgments do not include this information and have subsequently caused some misrepresentations and mistakes.Of about 220 million Americans with a credit profile, approximately 7% have liens or civil judgments against them. With these hits to their credit removed, their scores could go up by as much as 20 points, according to a study by credit rating firm Fair Isaac Corp. (FICO). “It’s a significant impact for still a very large number of people,” said Thomas Brown, senior vice president of financial services at LexisNexis, who is concerned that the move will add significant risk to the mortgage system. “If you look at someone that has a tax lien or a civil judgment, they can be anywhere from two to more than five times more risky just because of the presence of that information,” he said. “That’s very, very significant.” Credit reports, however, can have mistakes on them that end up sidelining consumers from qualifying for loans. Twenty% of consumers have at least one mistake on one of their three credit reports, according to a Federal Trade Commission study. The concern is that those who do have legitimate liens and judgments against them will get credit that is undeserved. “It doesn’t really do a consumer well to be extended credit that they can’t afford, they can’t reasonably service,” said Brown.

In addition to the FICO changes, mortgage giants Fannie Mae and Freddie Mac are allowing borrowers to have higher levels of debt and still qualify for a home loan. The two are raising their debt-to-income ratio limit to 50% of pretax income from 45%. That is designed to help those with high levels of student debt. That means consumers could be saddled with even more debt, heightening the risk of default, but the argument for it appears to be that risk in the market now is unnecessarily low. “In this case, we’re changing the underwriting criteria, and we think the additional increment of risk for making that change is very small,” said Doug Duncan, Fannie Mae’s chief economist. “Given how pristine credit has been post-crisis, we don’t feel that is an unreasonable risk to take.” During the last housing boom, anyone with a pulse could get a mortgage, but after the financial crisis, underwriting rules tightened significantly. As a result, current default rates on loans made in the last eight years are lower than historical norms. At the same time, younger borrowers with high levels of student loan debt are being left out of the housing recovery, unable to qualify for a home loan. Duncan said a consumer’s debt level is just one of many factors considered by lenders when underwriting a mortgage. “We look at all the other criteria that are information rich, in terms of assessing that individual’s risk profile, and they have to look good in all those other areas,” he added. The level of risk to the mortgage marketplace, banks and nonbank lenders alike, will rise. Fannie Mae and Freddie Mac are still under government conservatorship, which means losses would be incurred by taxpayers. “Is Fannie taking on more risk than they should by going up to a 50% DTI limit? Those are legitimate questions that the [Consumer Financial Protection Bureau] or Congress should be answering,” said Guy Cecala, CEO of real estate trade publication Inside Mortgage Finance.

And all these changes come at a time when lenders are competing for a shrinking market of borrowers. Higher interest rates have meant far fewer mortgage refinances, and high home prices have resulted in fewer homebuyers. In response, lenders expect to ease other credit standards further. In fact, those expectations reached a record in the second quarter of this year on a Fannie Mae lender survey. The study noted that easing credit standards might be due in part to increased pressure to compete for declining mortgage volume. “For the third consecutive quarter, the share of lenders expecting a decrease in profit margin over the next three months exceeded the share with a positive profit margin outlook. For the former, the percentage citing competition from other lenders as a reason for their negative outlook reached a survey high,” Duncan wrote in the report. Fannie Mae also noted in its announcement of the DTI changes that its appetite for risk remains the same. That may mean a shift in other parts of a borrower’s risk profile. “There is the belief that there is this windfall for consumers, that consumers will just be able to get more credit,” said Brown of LexisNexis. “Well, the reality is the risk in the marketplace has not changed. The information that’s used to assess risk is what’s changing, and so for banks and others extending credit, if they want to maintain the same loss rates, they have to tighten credit somewhere else. It’s just pure math.” to create 1,500 full-time jobs at its first Utah fulfillment center

Amazon announced it will be creating 1,500 full-time jobs at its Salt Lake City, Utah fulfillment center on Wednesday.”We are excited to continue growing our team with the first fulfillment center in Utah,” said Akash Chauhan, Amazon’s Vice President of North American operations. The hourly associates will receive a competitive salary and a comprehensive benefits package, according to a press release from the company. “We consider this a perfect pairing, as Amazon and Salt Lake City are both known for our customer service and ease of doing business. We are very excited for the 1,500 new full-time jobs Amazon will create in our community, and look forward to a long future of working together,” said Salt Lake City Mayor Jackie Biskupski. The company’s expansion in the beehive state comes after a patent revealed that Amazon wants to create beehive drone delivery centers.

NAR – pending home sales tumble in May for third straight month

The ongoing supply shortages that are propping up home prices in many metro areas caused pending home sales in May to slump for the third consecutive month, according to the National Association of Realtors (NAR). None of the major regions saw an increase in contract activity last month. The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 0.8% to 108.5 in May from a downwardly revised 109.4 in April. The index is now 1.7% below a year ago, which marks the second straight annual decline and the most recent since November and December of last year. Lawrence Yun, NAR chief economist, says it’s clear the critically low inventory levels in much of the country somewhat sidetracked the housing market this spring. “Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales,” he said. “Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.” The persistent housing shortages seen in several markets are most severe, according to Yun, in the lower price ranges. That’s very apparent when looking at the% change in closings in May compared to a year ago. Sales of homes under $100,000 last month were down 7.2% from last year and up only 2.0% for those between $100,000 and $250,000. In higher price brackets, sales expanded incrementally all the way up to massive increases of 26.0% for homes priced between $750,000 and $1 million and even more for those $1 million and up (29.1%).

Weaker financial and economic confidence could also be playing a role in the slowdown in contract activity. NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey, released earlier this week, found that fewer renters think it’s a good time to buy a home, and respondents overall are less confident about the economy and their financial situation than earlier this year. “The lack of listings in the affordable price range are creating lopsided conditions in many areas where investors and repeat buyers with larger down payments are making up a bulk of the sales activity,” said Yun. “Meanwhile, many prospective first-time buyers can’t catch a break. Prices are going up and there’s intense competition for the homes they’re financially able to purchase.” Existing-home sales are forecast to be around 5.63 million this year, an increase of 3.2% from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 5%. In 2016, existing sales increased 3.8% and prices rose 5.1%.”A much higher share of homeowners compared to a year ago think now is a good time to sell1, but until they do, sales will likely stay flat and low inventory will keep price growth moving swiftly,” said Yun.The PHSI in the Northeast decreased 0.8% to 96.4 in May, but remains 3.1% above a year ago. In the Midwest the index was 104.5 in May (unchanged from April), and is 2.8% lower than May 2016. Pending home sales in the South declined 1.2% to an index of 123.4 in May and are now 1.4% below last May. The index in the West subsided 1.3% in May to 98.6, and is now 4.5% below a year ago.

ABC News settles ‘pink slime’ food-libel lawsuit

ABC News has settled a defamation lawsuit filed by the maker of a processed-meat product that critics dubbed “pink slime,” bringing to a close a high-profile legal test of so-called food-libel laws intended to shield the food-production industry from bogus food-safety scares. Terms of the settlement weren’t announced. Beef Products Inc. sued ABC News, anchor Diane Sawyer and reporter Jim Avila in 2012 for $1.9 billion, over a series of stories about its lean, finely textured beef product—what critics dubbed “pink slime”—claiming it was the victim of journalistic hit job that harmed its business. A judge dismissed the claims against Ms. Sawyer before the start of the jury trial, which began earlier this month in South Dakota. Due to a South Dakota food-libel law that triples damages against those found to have knowingly lied about the safety of a food product, ABC News was facing, potentially, $6 billion in damages. Beef Products, a family-owned South Dakota meat processor, said in a Wednesday statement the settlement validated that lean, finely textured beef, made from defatted beef trimmings in a process involving ammonium hydroxide, was safe. “While this has not been an easy road to travel, it was necessary to begin rectifying the harm we suffered as a result of what we believed to be biased and baseless reporting in 2012,” Beef Products said. “Through this process, we have again established what we all know to be true about Lean Finely Textured Beef:  it is beef, and is safe, wholesome, and nutritious.”

MBA – mortgage applications decrease in latest MBA weekly survey

Mortgage applications decreased 6.2% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 23, 2017. The Market Composite Index, a measure of mortgage loan application volume, decreased 6.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7% compared with the previous week. The Refinance Index decreased 9% from the previous week. The seasonally adjusted Purchase Index decreased 4% from one week earlier. The unadjusted Purchase Index decreased 5% compared with the previous week and was 8% higher than the same week one year ago. The refinance share of mortgage activity decreased to 45.6% of total applications from 46.6% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.0% of total applications. The FHA share of total applications increased to 10.3% from 10.1% the week prior. The VA share of total applications decreased to 10.3% from 10.4% the week prior. The USDA share of total applications remained unchanged at 0.7% from the week prior.

Dow surges more than 100 points as bank shares jump

US equities traded higher on Wednesday as bank stocks led the charge. The Dow Jones industrial average jumped 137 points with Goldman Sachs and Disney contributing the most gains.The S&P 500 advanced 0.7% with financials rising 1.3% to lead advancers. The SPDR S&P Bank exchange-traded fund (KBE), which tracks large banks, spiked 1.7% higher as investors braced for the release of the Federal Reserve’s stress test results. Analysts expect several big banks to come out of the test with substantial increases in return to shareholders — potentially using cash reserves to pay out more than 100% of their profits. As a result, higher figures would also reflect banks’ confidence in their own financial health. Shares of JPMorgan Chase and Goldman Sachs both climbed about 1%. Stocks also jumped after the European Central Bank tried to walk back remarks made by ECB President Mario Draghi a day earlier. A source familiar with Draghi’s knowledge told Reuters that Draghi intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening.Draghi said Tuesday “the threat of deflation is gone and reflationary forces are at play,” sending the euro to a one-year high against the dollar. The currency pulled back from those levels on Wednesday following Reuters’ report.

WSJ – labor shortage squeezes real-estate developers

About two-thirds of the contractors who are struggling with the labor shortages gripping the construction industry say it has become a challenge to finish jobs on time, according to a new survey. More than one-third of contractors said they are being forced to turn work down and 58% said they are putting in higher bids, said the survey sponsored by USG Corp. USG 2.80% and the US Chamber of Commerce. Three-quarters of those who said they are having difficulty finding skilled labor said they are simply asking their employees to work harder. “Basically they’re just making people work harder as a way to cope,” said Steve Jones, senior director of Dodge Data & Analytics, which was the research partner of USG and the Chamber on the project. The survey was conducted as part of the development of a new economic indicator launched earlier this month named the USG + US Chamber of Commerce Commercial Construction Index. It was designed to gauge such trends as backlogs, revenue projections, access to financing and labor issues. Two-thirds of the contractors surveyed predicted there would be more workers in the next six months. But 61% of the respondents reported problems finding skilled laborers in such trades as concrete, interior finishes, masonry, electrical and plumbing. “There is reason for concern in the lack of qualified talent,” said Tom Donohue, chief executive of the Chamber in a written statement.

Industry officials are warning that labor shortages will become more acute if the Trump administration moves ahead with its plan to spend $1 trillion on infrastructure. “We couldn’t absorb $1 trillion worth of brand new work,” said Mr. Jones. “We’re already strapped just dealing with the work we already have.”Labor shortages are partly due to the increasing number of construction projects moving forward. During the first four months of this year, construction spending amounted to $359.5 billion, 5.8% more than the same period in 2016, according to the US Census Bureau. Also, tens of thousands of workers left the building trades during the economic downturn. Even before it hit, the construction workforce was aging, Mr. Jones said. “You had an aging workforce in an industry that doesn’t lend itself to long careers because it’s hard, physical work and then you lose a whole bunch of people,” he said. The USG and Chamber survey asked four questions on coping strategies to the 61% of respondents who said they’re having difficulty finding skilled labor.

Black Knight – Home Price Index report: April 2017

US Home Prices Continue to Hit New Highs in April, Rising 1.2% from March, Up 6.0% Year-Over-Year

The Data and Analytics division of Black Knight​ Financial Services, Inc. released its latest Home Price Index (HPI) report, based on April 2017 residential real estate transactions. The Black Knight HPI utilizes repeat sales data from the nation’s largest public records data set, as well as its market-leading, loan-level mortgage performance data, to produce one of the most complete and accurate measures of home prices available for both disclosure and non-disclosure states. Non-disclosure states do not include property sales price information as part of their publicly available county recorder data. Black Knight is able to obtain the sales price information for these states by combining and matching records across its unique data assets.​​

–  At $275K, the national-level HPI is the highest it has ever been, marking a 3.6% gain in home prices since the start of 2017

–  Washington continues to outperform the nation, leading all states in monthly appreciation for the third consecutive month and with the Seattle metro area seeing an 8.4% gain in home prices since the start of the year​

–  Seattle and Bellingham, Wash. – along with Carson City, Nev. – led all metropolitan areas with 2.3% monthly appreciation; Washington state accounted for five of the nation’s top 10 best-performing metros

–  All of the nation’s 20 largest states and 40 largest metros saw home prices increase in April, while each of the top 10 best-performing metros saw home prices increase by 2.0% or more

–  Tuscaloosa, Ala., was the only metro area to see a decline, with prices falling another 5.1% in its fifth consecutive month as the country’s worst-performing metropolitan area

–  Home prices in nine of the nation’s 20 largest states and 18 of the 40 largest metros hit new peaks in April

US coal mining surges in 2017 following last year’s record decline

The United States, China and India, the world’s largest coal users, have increased coal mining this year by 6% following 2016’s record global decline. Among the three counties, production through May is up by at least 121 million tons compared to the same period last year, according to data reviewed by The Associated Press. The change is most dramatic in the United States where production is up 19% within just the first five months of 2017, according to the US Department of Energy. The new data is a reversal from last year’s trend, where tonnage mined worldwide fell 6.5%, the largest drop on record, according to data from BP. China and the US accounted for almost all of the decline. The reasons for this year’s turnaround include policy shifts in China, changes in US energy markets and India’s continued push to provide electricity to more of its poor, industry experts said. President Donald Trump’s role as coal’s booster-in-chief in the US has played at most a minor role, they said. Earlier this month President Trump announced the United States would withdraw from the Paris Climate Agreement intended to curb global emissions. The president said the agreement impacted his ability to fulfill his “America First” campaign promise to revive jobs and the economy in the United States. Trump’s advocacy for reviving the coal-mining industry stands as an exception among the three top coal producing nations’ leaders. Yet the US also is where coal’s rebound could be briefest. Cheap natural gas, a growing appetite for renewable energy and stricter pollution rules spurred utilities to shut down or announce retirements for several hundred US coal plants. Many companies made investments based on the shift toward cleaner energy and many experts believe market forces will continue to push the trend in that direction.

NAR – 71% of homeowners believe it’s a good time to sell; economic and financial confidence

Existing housing inventory has declined year over year each month for two straight years, but new consumer findings from the National Association of Realtors® offer hope that the growing number of homeowners who think now is a good time to sell will eventually lead to more listings. That’s according to NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey, which also found that fewer renters think it’s a good time to buy a home, and respondents are less confident about the economy and their financial situation than earlier this year despite continuous job gains. One trend gaining steam in the HOME survey is an increased share of homeowners who believe now is a good time to sell their home. This quarter, 71% of homeowners think now is a good time to sell, which is up from last quarter (69%) and considerably more than a year ago (61%). Respondents in the Midwest (76%) surpassed the West (72%) for the first time this quarter to be the most likely to think now is a good time to sell. Confidence among renters that now is a good time to buy a home continues to retreat. Fifty-two% of renters think now is a good time to buy, which is down both from last quarter (56%) and a year ago (62%). Conversely, 80% of homeowners (unchanged from last quarter and a year ago) think now is a good time to make a home purchase. Younger households, and those living in urban areas and in the costlier West region are the least optimistic.

The surge in economic optimism seen in the first quarter of the year appears to be short lived. The share of households believing the economy is improving fell to 54% in the second quarter after soaring to a survey high of 62% last quarter. Homeowners, and those living in the Midwest and in rural and suburban areas are the most optimistic about the economy. Only 42% of urban respondents believe the economy is improving, which is a drastic decrease from the 58% a year ago. Dimming confidence about the economy’s direction is also leading households to not have as strong feelings about their financial situation. The HOME survey’s monthly Personal Financial Outlook Index showing respondents’ confidence that their financial situation will be better in six months fell to 57.2 in June after jumping in March to its highest reading in the survey. A year ago, the index was 57.7. In this quarter’s survey, respondents were also asked about the affordability of homes in their communities. Overall, only 42% of respondents believe they are affordable for almost all buyers, with those living in the Midwest being the most likely to believe homes are affordable (55%) — and not surprisingly — West respondents (29%) being least likely to think homes are affordable. Additionally, 20% of respondents would consider moving to another more affordable community. Those earning under $50,000 annually (27%) and those age 34 and under (29%) were the most likely to indicate they would consider moving.

Trump urges India PM Modi to ease barriers for US exports, lauds strong ties

US President Donald Trump urged Indian Prime Minister Narendra Modi to do more to relax Indian trade barriers on Monday during talks in which both leaders took great pains to stress the importance of a strong US-Indian relationship. At a closely watched first meeting between the two, Trump and Modi appeared to get along well. Modi pulled in Trump for a bear hug on the stage as the cameras rolled in the Rose Garden. “I deeply appreciate your strong commitment to the enhancement of our bilateral relations,” Modi told him. “I am sure that under your leadership a mutually beneficial strategic partnership will gain new strength, new positivity, and will reach new heights.” Trump was also warm but made clear he sees a need for more balance in the US-India trade relationship in keeping with his campaign promise to expand American exports and create more jobs at home. Last year the US trade deficit with India neared $31 billion. Trump said he would like a trading relationship that is “fair and reciprocal.” “It is important that barriers be removed to the export of US goods into your markets and that we reduce our trade deficit with your country,” he said. Trump said he was pleased about an Indian airline’s recent order of 100 new American planes and that the United States looked forward to exporting more energy, including major long-term contracts to purchase American natural gas. These energy contracts “are being negotiated and we will sign – trying to get the price up a little bit,” Trump said. Modi came to Washington looking to revitalize a relationship that thrived under former President Barack Obama but has appeared to flag as Trump courted India’s rival China in an effort to persuade Beijing to do more to rein in North Korea. Modi effusively praised Trump, hailing his “vast and successful experience in the business world” and “great leadership” for US-India ties, which he said should “lend an aggressive and forward looking agenda to our relations.”

NAHB – Statement from NAHB Chairman Granger MacDonald on proposed canadian lumber tariffs

Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas, today issued the following statement regarding the US Commerce Department’s preliminary decision to impose up to 7.7% anti-dumping duties on Canadian lumber imports: “This latest action by the Commerce Department to impose anti-dumping duties of up to more than 7% on Canadian lumber shipments into the US is basically another tax on American home builders and home buyers that will jeopardize affordable housing in America. Adding this new tariff to the proposed 20% countervailing lumber duty that the Trump administration slapped on imports of lumber this spring means that total tariffs would be a whopping 27%. Given that lumber is a major component in new home construction, the combined duties will harm housing affordability and price countless American households out of the housing market. A robust housing market is essential to stimulate job and economic growth. With the US housing sector regaining its footing, imposing arbitrary protectionist restrictions to subsidize domestic lumber producers will blunt this forward momentum and make homeownership more expensive for hard-working families. Clearly, this is not the way to resolve the US-Canada lumber trade dispute or to boost the American economy. The US relies on Canada for approximately one-third of its lumber needs because of the limited domestic timber supply available for harvesting. Policymakers need to take steps to significantly reduce red tape that prevents the US Forest Service from better managing its timber lands and increase the delivery of domestic timber products into the mark.

Black Knight Financial Services – First Look at May 2017     Mortgage Data

The Data and Analytics division of Black Knight Financial ​Services (NYSE: BKFS) reports the following “first look” at May 2017 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.

– Easing Interest Rates Spur Increase in Prepayment Activity; Delinquencies Pull Back After April’s Increase

– Prepayments (historically a good indicator of refinance activity) jumped 23% month-over-month, reaching their highest point so far in 2017

– Delinquencies reversed course after calendar-driven increase in April, seeing a 7% month-over-month decline

– Inventory of loans either seriously delinquent (90 or more days past due) or in active foreclosure continues to improve, with both hitting 10-year lows in May​

– Just 2.12% of Colorado borrowers are past due on mortgage payments, the lowest of any state; Mississippi has the highest non-current rate of any state at 10.16%

US Treasurys edge lower as bond investors look to data, Fed speeches

US government debt prices were lower on Friday, as investors geared up for a slew of data releases and speeches by US Federal Reserve members. The yield on the benchmark 10-year Treasury note sat higher at around 2.15% at 8:28 a.m. ET, while the yield on the 30-year Treasury bond was up at 2.73%. Bond yields move inversely to prices. On the final day of trading for the week, economic data is expected to keep investors busy with manufacturing PMI data and services PMI data due out at 9:45 a.m. ET, followed by the latest new home sales data, out at 10 a.m. ET. On the central bank front, a whole host of speeches are set to take place by Fed officials on Friday. In Nashville, St. Louis Fed President James Bullard is expected to appear at the Illinois Bankers Association’s annual conference, where he is expected to comment upon the US economy and monetary policy. Cleveland Fed President Loretta Mester will be at the 2017 Policy Summit on Housing, Human Capital, and Inequality in Cleveland, where she’s likely to talk about community development.In the meantime, Fed Governor Jerome Powell will be speaking at The Federal Reserve Bank of Chicago Symposium on Central Clearing.  When it comes to commodities, oil continues to be a hot topic for investors, as oil prices showed signs of recovery on Friday, with US crude and Brent trading slightly higher in early trade. No auctions are set to take place on Friday.

WSJ – US new-home sales rise in May, prices hit record

– Purchases of new, single-family homes rose 2.9% to a seasonally adjusted annual rate of 610,000 in May

New-home sales rose in May and prices hit a record level, more evidence of strong demand and tight inventories in the housing market. Purchases of new, single-family homes—a narrow slice of all US home sales—rose 2.9% to a seasonally adjusted annual rate of 610,000 in May, the Commerce Department said Friday. Economists surveyed by The Wall Street Journal had expected a sales pace of 590,000. New-home sales have seesawed so far in 2017, reaching a rate of 644,000 in March and then falling in April to 593,000. Over a broader period, the market for new homes appears to be picking up. From a year earlier, new-home sales rose 8.9% in May and so far this year have climbed 12.2%. At the current sales pace, there was a 5.3 months’ supply of new homes on the market in May. The median sale price for a new home sold in May was $345,800, the highest recorded for data dating back to 1963. The average sale price also came in the highest at $406,400. Earlier this week, the National Association of Realtors reported sales of existing homes, which compose the bulk of the market, rose 1.1% in May to a seasonally adjusted annual rate of 5.62 million.

SpaceX aims for rarefied air with upcoming launches

–  SpaceX will launch two different Falcon 9 rockets, on Friday and Sunday.

– Elon Musk’s company would be the first to both launch and land two rockets in 48 hours.

– United Launch Alliance successfully launched two rockets in two days in March 2008.

With its pair of launches on Friday and Sunday, SpaceX hopes to demonstrate its rocket services can be a cost-effective, rapid-turnaround means of reaching the final frontier. No private company has successfully launched two rockets in a 48-hour time frame since United Launch Alliance did so in March 2008 — and SpaceX aims to both land its rockets and reuse them later. A joint venture of Lockheed Martin and Boeing and a major competitor to SpaceX, United Launch Alliance’s CEO Tony Bruno wished SpaceX well, writing on Twitter, “Good Luck & congrats upon success. Having routinely achieved high launch rates, I know that tempo is anything but routine.” The first launch by Elon Musk’s company will occur at Kennedy Space Center in Florida during a two hour window beginning at 2:10 p.m. ET. The BulgariaSat-1 Mission will deliver a commercial communications satellite to orbit aboard SpaceX’s Falcon 9 rocket. The first stage of this specific rocket was used previously this year, in a launch from Vandenberg Air Force Base in January. After separating with its payload, the Falcon 9’s first stage will attempt to land upright on a mobile droneship stationed in the Atlantic Ocean. Two days later, SpaceX will launch a separate Falcon 9 rocket from California’s Vandenberg Air Force Base, this time with a payload of 10 Iridium NEXT satellites. Scheduled for 4:25 p.m. ET Sunday, this mission will continue to fulfill SpaceX’s contract to deliver 75 Iridium satellites into low-Earth orbit by mid-2018. The Falcon 9’s first stage is then intended to land on another SpaceX autonomous droneship, this time located in the Pacific Ocean. In 2008, on March 13 and March 15, United Launch Alliance succeeded in blasting off one of each of its Atlas V and Delta II rockets. However, both launch vehicles were expendable systems, and were not reused.

MBA forecasts commercial/multifamily mortgage originations to decline in 2017

The Mortgage Bankers Association (MBA) projects commercial and multifamily mortgage originations will be down slightly in 2017, ending the year at $478 billion, a decrease of 3% from the 2016 volumes. Mortgage banker originations of just multifamily mortgages are forecast at $206 billion in 2017, with total multifamily lending at $245 billion. “Commercial and multifamily market activity has downshifted at the start of 2017,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Markets continue to move forward, but the rapid increases in property values, transaction volumes and other fundamentals that characterized the post-recession period have given way to more regular changes tied to the economy as well as changes in supply and demand. For many parts of the market, the downshift is a positive development.” Commercial/multifamily mortgage debt outstanding is expected to continue to grow in 2017, ending the year roughly two% higher than at the end of 2016.

NAR – existing-home sales rise 1.1% in May; median sales price ascends to new high

Existing-home sales rebounded in May following a notable decline in April, and low inventory levels helped propel the median sales price to a new high while pushing down the median days a home is on the market to a new low, according to the National Association of Realtors (NAR). All major regions except for the Midwest saw an increase in sales last month.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1% to a seasonally adjusted annual rate of 5.62 million in May from a downwardly revised 5.56 million in April. Last month’s sales pace is 2.7% above a year ago and is the third highest over the past year.  The median existing-home price for all housing types in May was $252,800. This surpasses last June ($247,600) as the new peak median sales price, is up 5.8% from May 2016 ($238,900) and marks the 63rd straight month of year-over-year gains. Total housing inventory at the end of May rose 2.1% to 1.96 million existing homes available for sale, but is still 8.4% lower than a year ago (2.14 million) and has fallen year-over-year for 24 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.7 months a year ago. Properties typically stayed on the market for 27 days in May, which is down from 29 days in April and 32 days a year ago; this is the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 94 days in May, while foreclosures sold in 48 days and non-distressed homes took 27 days. Fifty-five% of homes sold in May were on the market for less than a month (a new high). Inventory data from® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in May were Seattle-Tacoma-Bellevue, Wash., 20 days; San Francisco-Oakland-Hayward, Calif., 24 days; San Jose-Sunnyvale-Santa Clara, Calif., 25 days; and Salt Lake City, Utah and Ogden-Clearfield, Utah, both at 26 days.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased for the second consecutive month, dipping to 4.01% in May from 4.05% in April. The average commitment rate for all of 2016 was 3.65%. First-time buyers were 33% of sales in May, which is down from 34% in April but up from 30% a year ago. NAR’s 2016 Profile of Home Buyers and Sellers — released in late 20164 — revealed that the annual share of first-time buyers was 35%. Earlier this month, NAR hosted the Sustainable Homeownership Conference at University of California’s Memorial Stadium in Berkeley. A white paper titled, “Hurdles to Homeownership: Understanding the Barriers,” (link is external) was released, which honed in on the five main reasons why first-time buyers are failing to make up a greater share of the market. “Of the barriers analyzed in the white paper, single-family housing shortages will be the biggest challenge for prospective first-time buyers this year,” said President William E. Brown. “Those hoping to buy an entry-level, single-family home continue to see minimal choices. The best advice for these home shoppers is to know what you can afford, lean on the guidance of a Realtor® and act fast once an ideal property within the budget is listed.” All-cash sales were 22% of transactions in May, up from 21% in April and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 16% of homes in May, up from 15% in April and 13% a year ago. Sixty-four% of investors paid in cash in May.

Distressed sales — foreclosures and short sales — were 5% of sales in May, unchanged from April and down from 6% a year ago. Four% of May sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 20% below market value in May (18% in April), while short sales were discounted 16% (12% in April). Single-family home sales increased 1.0% to a seasonally adjusted annual rate of 4.98 million in May from 4.93 million in April, and are now 2.7% above the 4.85 million pace a year ago. The median existing single-family home price was $254,600 in May, up 6.0% from May 2016. Existing condominium and co-op sales climbed 1.6% to a seasonally adjusted annual rate of 640,000 units in May, and are 3.2% higher than a year ago. The median existing condo price was $238,700 in May, which is 4.8% above a year ago. May existing-home sales in the Northeast jumped 6.8% to an annual rate of 780,000, and are now 2.6% above a year ago. The median price in the Northeast was $281,300, which is 4.7% above May 2016. In the Midwest, existing-home sales fell 5.9% to an annual rate of 1.28 million in May, and are 0.8% below a year ago. The median price in the Midwest was $203,900, up 7.3% from a year ago. Existing-home sales in the South rose 2.2% to an annual rate of 2.34 million, and are now 4.5% above May 2016. The median price in the South was $221,900, up 5.3% from a year ago. Existing-home sales in the West increased 3.4% to an annual rate of 1.22 million in May, and are now 3.4% above a year ago. The median price in the West was $368,800, up 6.9% from May 2016.

Retailers’ efforts to lure shoppers to stores with experiences still missing the mark

– Eighty-six% of shoppers like “experience stores,” where they can test products in stores but buy on mobile or online, GPShopper finds in a survey of 1,200 adults.

– With a few exceptions, most American retailers today are “incredibly bad” at offering a good in-store experience, GlobalData Retail’s Neil Saunders tells CNBC.

– Warby Parker, Apple and Bonobos are a few examples of winners in the space, Saunders says.

Retailers are still coming up short on winning shoppers over with in-store experiences. More than one-third of shoppers said they “feel nothing” when asked about their initial reaction after shopping in stores, GPShopper found in its latest report, “Reality of Retail: Consumer Connection.” GPShopper’s study, which was conducted with research firm YouGov, asked roughly 1,200 US adults what innovations — both digital and physical — they want retailers to incorporate in stores. The survey found:

– 86% of shoppers like “experience stores,” where they can test products in stores but buy on mobile or online, similar to the Samsung store concept.

– 85% like the idea of product recommendations based on ratings, similar to what Amazon is doing with Amazon Books.

– 80% like buying items online and picking purchases up in stores, as Wal-Mart and Target have been promoting.

– 78% like stores that were first online and then developed physical storefronts, similar to Warby Parker.

“We believe in retail but also think [stores] need to evolve to meet the modern consumer,” said Maya Mikhailov, CMO and co-founder of GPShopper.”The modern consumer is connecting to retail digitally. … The most important device for them is the mobile phone.” Mikhailov added that traditionally brick-and-mortar retailers are now “stumped” about what to do with excess square footage amid the age of digital. And as evidenced by GPShopper’s latest survey, many retail companies have yet to hit a high note with consumers’ emotions. Following “feeling nothing,” many shoppers appear to be “anxious.”

CoreLogic – Housing Credit Index: first quarter 2017

– CoreLogic’s Housing Credit Index (HCI) found mortgage loans originated during Q1 2017 exhibit slightly higher credit risk compared with the previous year but remained similar to early 2000s.

– The average credit score for homebuyers increased 7 points between Q1 2016 and Q1 2017, rising from 734 to 741.

– The average loan-to-value ratio (LTV) for homebuyers in Q1 2017 slightly fell from Q1 2016, from 87.6% to 85.9%. However, the average debt-to-income ratio (DTI) for homebuyers in Q1 2017 was similar to Q1 2016, holding steady at 36%.

Loans originated in Q1 2017 have slightly higher credit risk than loans originated last year. However, the credit risk is about the same compared to early 2000s, according to the latest CoreLogic Housing Credit Index (HCI). Compared with loans made during 2001-2003, loans in Q1 2017 have a similar risk quality based on six important credit-risk attributes, including borrower credit score, LTV ratio, DTI ratio, documentation level, investor-owned status and condo/co-op share. Some of the credit-risk attributes of loans in Q1 2017, such as LTV and DTI, look more risky than the loans in 2001-2003. However, other credit-risk attributes such as documentation level and credit score look less risky. The slight increase in the overall HCI from the first quarter of 2016 to the first quarter of 2017 has been primarily caused by increased riskiness of home-purchase loan attributes and the larger share of home-purchase loans in the first quarter of 2017. Shift to a higher percentage of home-purchase loans increased overall credit-risk metrics, as home-purchase loans have higher risk attributes than refinance loans. Investor activity and condo/co-op lending had increased in Q1 2017 from Q1 2016, making the loans look more risky in Q1 2017, despite the lower-risk signals from the credit score, DTI and LTV attributes. In Q1 2017, the HCI for both home-purchase and refinance loans remained in the same range as early 2000s. The share of borrowers with a credit score of less than 640 and the low- and no-doc share were down significantly compared to the 2001-2003 benchmark period. In contrast, the share of new loans with an LTV of 95% or higher was slightly above the benchmark period, and the share of loans with a DTI at-or-above 43% was about 31% higher than the benchmark period. Similarly, the investor-owned share was 27% higher than the benchmark period, and the condo/co-op share was 34% higher the benchmark level.

Wal-Mart to vendors: get off Amazon’s cloud

The battle between the King Kong and Godzilla of retail has moved into the cloud. Wal-Mart Stores Inc. is telling some technology companies that if they want its business, they can’t run applications for the retailer on Inc.’s leading cloud-computing service, Amazon Web Services, several tech companies say. Amazon’s rise as the dominant player in renting on-demand, web-based computing power and storage has put some competitors, such as Netflix Inc., in the unlikely position of relying on a corporate rival as they move to the cloud. Wal-Mart, loathe to give any business to Amazon, said it keeps most of its data on its own servers and uses services from emerging AWS competitors, such as Microsoft Corp.’s Azure. Wal-Mart uses some tech vendors’ cloud apps that run on AWS, said Wal-Mart spokesman Dan Toporek. He declined to say which apps or how many, but acknowledged instances when Wal-Mart pushed for AWS alternatives. “It shouldn’t be a big surprise that there are cases in which we’d prefer our most sensitive data isn’t sitting on a competitor’s platform, ” he said, adding that it’s a “small number.” Snowflake Computing Inc., a data-warehousing service, was approached by a Wal-Mart client about handling its business from the retailer, Chief Executive Bob Muglia said. The catch: Snowflake had to run those services on Azure.”They influence their vendors, which has influence on us,” Mr. Muglia said of Wal-Mart.  The San Mateo, Calif., company had been developing an Azure offering, and “Wal-Mart has expedited our work,” said Mr. Muglia, a former senior Microsoft executive. Snowflake won the business from Wal-Mart’s client. Other large retailers also have requested, as Wal-Mart did, that service providers move away from AWS, according to technology vendors that work with retailers.

Olick – mortgage applications hold steady as rates remain low

– Total mortgage application volume rose 0.6% on a seasonally adjusted basis from the previous week.

– Volume was nearly 14% lower compared with the same week a year ago, according to the Mortgage Bankers Association.

– Refinance volume for the week was 2% higher than the previous week.

After surging to the highest level since the presidential election, demand for home loans remained steadily elevated last week. Total mortgage application volume rose 0.6% on a seasonally adjusted basis from the previous week. Volume was nearly 14% lower compared with the same week one year ago, according to the Mortgage Bankers Association, when lower interest rates sparked a refinance boom. Low rates are giving refinances another slight boost. Refinance volume for the week was 2% higher than the previous week but still about 30% lower than a year ago. “Both the 10-year Treasury yield and the 30-year conventional mortgage fixed rate held steady last week keeping rates well below the recent highs,” said Lynn Fisher, MBA’s vice president of research and economics. “The recent pause in the upward movement of interest rates continues to encourage late-to-the-game borrowers to refinance and to assist those ready to purchase.” The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less remained unchanged at 4.13%, with points decreasing to 0.34 from 0.35, including the origination fee, for 80% loan-to-value ratio loans. Mortgage applications to purchase a home, which are less sensitive to weekly rate moves, fell 1% for the week, seasonally adjusted, but are 9% higher than the same week one year ago. Lower mortgage rates usually help with affordability, but the tight supply of homes for sale has pushed prices far higher than expected this year. Buyers are turning more to adjustable-rate mortgages, which carry lower interest rates, but some would-be buyers are still being sidelined by the lack of affordable homes for sale. If a home is priced affordably today, it will fly off the shelf in record time with multiple offers.

CoreLogic – loan performance insights report highlights: March 2017

– Early-stage delinquencies fell to the lowest level recorded back to January 2000

– The current-to 30-day transition rate decreased in March 2017 from a year earlier

– North Dakota had the lowest delinquency rate of any state

In March 2017, 4.4% of home mortgages were in some stage of delinquency, down from 5.2% a year earlier and the lowest since March 2007, according to the latest CoreLogic Loan Performance Insights Report. The measure includes all home loans 30 days or more past due, including those in foreclosure. The share of mortgages that were 30 to 59 days past due – considered “early-stage” delinquencies – was 1.7% in March 2017, down from 1.9% in March 2016. This is the lowest share of mortgages in early-stage delinquency back to January 2000. The share of mortgages 60 to 89 days past due was 0.6% in March 2017, the same as in March 2016. In addition to delinquency rates, CoreLogic tracks the rate at which mortgages transition from one stage of delinquency to the next, such as going from being current to 30 days past due. The March 2017 current- to 30-day rate was 0.6%, down slightly from 0.7% in March 2016. The 30- to 60-day transition rate was 11.6% in March 2017, down from 13.2% in March 2016, while the 60- to 90-day transition rate was 20.8% this March, down from 23.1% a year earlier. In March 2017 that rate was highest in Mississippi – 7.8% — and North Dakota had the lowest rate at 1.9%. Figure 3 shows the 30-days-or-more past-due rate for the 10 largest metro areas. That rate was highest – 6.9% – in the New York metro area and lowest – 1.7% – in San Francisco.

Harley-Davidson betting on Trump to break trade barriers

Harley-Davidson (HOG) has been committed to creating jobs in America, specifically in Wisconsin, where the legendary motorcycle brand was founded in 1903, but CEO Matt Levatich said he sees the biggest opportunity to grow overseas. “Trade is very important,” he told the FOX Business Network’s Maria Bartiromo. “We are paying a lot of attention to the trade policies and the trade opportunities that we have, particularly in Asia.” The company recently announced they would build a new plant in Thailand to keep up with growing demand in Asia, which is the world’s largest motorcycle market according to Levatich. But stifling taxes from India and China have hurt the motorcycle brand’s bottom line. “Tariffs in the entire tax structure add a significant amount of burden to the product before it gets to retail and that limits our ability to access and reach those customers,” he said. President Trump has used Harley-Davidson as an example of an American company that has faced 100% tariffs abroad, but in January, Trump pulled out of the Trans Pacific Partnership, which could have helped, in Levatich’s opinion. “The whole trade environment can’t be taken in isolated cases and so it’s a very complex issue… TPP was in negotiation for almost a decade before it was unfortunately turned down. That would have helped us a lot,” he said. Despite this, Levatich is optimistic on the administration’s efforts to work on American businesses’ behalf.

MBA – May new home purchase mortgage applications up 15% year over year

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for May 2017 shows mortgage applications for new home purchases increased 15% compared to May 2016. Compared to April 2017, applications increased by 4% relative to the previous month. This change does not include any adjustment for typical seasonal patterns. “Following a decline in April, applications for new homes slightly rebounded month-over-month in May, setting up a 15% year over year increase relative to May of 2016,” said Lynn Fisher, MBA’s Vice President of Research and Economics. “While March has signaled the peak in applications for new homes for the last two years, we may see more sustained activity throughout the balance of this year as demand for new homes continues to increase and strong house price growth continues to motivate homebuilding.” By product type, conventional loans composed 69.2% of loan applications, FHA loans composed 17.5%, RHS/USDA loans composed 1.1% and VA loans composed 12.2%. The average loan size of new homes decreased from a revised $329,244 in April to $324,844 in May. The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 605,000 units in May 2017, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. The seasonally adjusted estimate for May is an increase of 8.6% from the revised April pace of 557,000 units. On an unadjusted basis, the MBA estimates that there were 57,000 new home sales in May 2017, an increase of 5.6% from the revised pace of 54,000 new home sales in April.

Oil prices bounce but stuck near 2017 lows on supply overhang

Oil prices edged up from 2017 lows on Friday but remained on track for a fourth consecutive week of losses because of excess supplies, despite OPEC-led production cuts. Brent crude futures were up 57 cents at $47.49 per barrel by 1224 GMT. US West Texas Intermediate (WTI) crude futures were at $44.85 per barrel, up 39 cents. “The market took a breather yesterday and is trying to recover somewhat this morning. It is by no means bullish,” said Tamas Varga, analyst at brokerage PVM Oil Associates. Oil prices are more than 12% below where they were in late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended for nine months a pledge to cut output by 1.8 million barrels per day (bpd). The cuts had been due to end this month and will now run till March. Rising US oil output has undermined the impact of OPEC-led cuts. Data from the US Energy Information Administration (EIA) this week showing growing gasoline stocks and shaky demand, despite the peak summer driving season, sent prices tumbling. “It’s going to be difficult to have a rally unless there’s a disruption or some news from OPEC,” said Olivier Jakob, managing director with PetroMatrix. Recovering production from Libya and Nigeria, both of which were exempt from OPEC cuts, and high exports and production from Russia were also contributing to the glut. An excess is already building on ships in Asia.

NAHB – multifamily decline brings overall housing starts down 5.5% in May

Led by a decline in multifamily production, nationwide housing starts fell 5.5% in May to a seasonally adjusted annual rate of 1.09 million units, according to newly released data from the US Department of Housing and Urban Development and the Commerce Department. Multifamily starts fell 9.7% to a seasonally adjusted annual rate of 289,000 units while single-family production edged down 3.9% to 794,000. “Today’s report is consistent with builder sentiment in the housing market, indicating some weakness after a strong start to the year,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “Ongoing job growth, rising demand and low mortgage rates should keep the single-family sector moving forward this year, even as builders deal with ongoing shortages of lots and labor.” “After a strong start for single-family building this year, recent months have recorded softer readings,” said NAHB Chief Economist Robert Dietz. “However, on a year-to-date basis, single-family starts are up 7.2% as builders add inventory to the market.”Regionally in May, combined single- and multifamily housing production rose 1.3% in the West and remained unchanged in the Northeast. Starts fell by 9.2% in the Midwest and 8.8% in the South. Overall permit issuance in May was down 4.9% to a seasonally adjusted annual rate of 1.17 million units. Single-family permits inched down 1.9% to 779,000 units while multifamily permits fell 10.4% to 389,000. Regionally, overall permits rose 3.3% in the Northeast. Permits fell 9.4% in the Midwest, 0.3% in the South and 13.1% in the West.

NAHB – builder confidence remains solid in June

Builder confidence in the market for newly-built single-family homes weakened slightly in June, down two points to a level of 67 from a downwardly revised May reading of 69 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). “Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “As the housing market strengthens and more buyers enter the market, builders continue to express their frustration over an ongoing shortage of skilled labor and buildable lots that is impeding stronger growth in the single-family sector,” said NAHB Chief Economist Robert Dietz. Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. All three HMI components posted losses in June but remain at healthy levels. The components gauging current sales conditions fell two points to 73 while the index charting sales expectations in the next six months dropped two points to 76. Meanwhile, the component measuring buyer traffic also moved down two points to 49. Looking at the three-month moving averages for regional HMI scores, the Midwest and South each edged one point lower to 67 and 70, respectively. The Northeast and West both dropped two points to 46 and 76, respectively.

Fannie Mae general counsel appointed to Treasury

The Treasury Department got some much needed good news over the weekend, with Axios reporting that President Donald Trump will appoint Fannie Mae General Counsel Brian Brooks as deputy secretary. Brooks worked with Treasury Secretary Steven Mnuchin at OneWest before joining Fannie Mae in 2014 as executive vice president, general counsel and corporate secretary. His history with OneWest is sure to come up in his confirmation hearings, as it did for Mnuchin. From Axios: “Deputy Secretary is a pivotal role in the Treasury Department, and Wall Street has been keeping a close eye on the vacancy. Brooks will be expected to play a driving role in tax reform and the other major agenda items. Two sources say that Mnuchin wanted a loyalist in this key position.” Mnuchin has had a hard time staffing Treasury, with his first pick for deputy secretary, Jim Donovan of Goldman Sachs, pulling himself out of consideration in May. An article in Bloomberg explained that Treasury is already late delivering a study on how to undo some regulations put in place after the financial crisis. From the article: “Department officials have spent months on the review, holding dozens of meetings with financial companies and ­investors, yet it’s already behind schedule. Rather than issuing one omnibus document, Treasury says its findings will be put out piecemeal in a series of reports.” The reports are part of the Treasury’s effort to deliver on President Donald Trump’s executive order to reduce regulation. If Brooks survives the nomination hearing, he could provide much-needed support.

Investor confidence pushes up oil prices

Oil rose on Monday to break a three-day losing streak, after futures traders increased their bets on a renewed price upswing even though physical markets remain bloated, especially from a relentless rise in US drilling. Brent crude futures had risen 23 cents to $48.38 per barrel by 0900 GMT, while US West Texas Intermediate (WTI) crude futures gained 17 cents to $46.00 per barrel. Traders said the price rises came as data showed speculative traders had increased their investment in crude futures by taking on large volumes of long positions. Brent and WTI futures have lost around 10% in value since May 25, when the Organization of the Petroleum Exporting Countries and 11 of its partners extended a restriction on supply into the first quarter of 2018. “Oil bulls have reset for a technical bounce,” said Stephen Schork, author of the Schork Report. While financial traders have confidence in rising prices, the physical market remains under pressure, especially due to a rise in US drilling for new oil production.

RealtyTrac – the home flipping pyramid

While some may think home flipping is the domain of high-powered, highly capitalized institutional investors, the data suggests otherwise. More than two-thirds (69%) of all single family homes and condos flipped in the first quarter of 2017 were by investors of the mom-and-pop variety who just completed one flip during the quarter, according to an analysis of data from the ATTOM Data Solutions Q1 2017 US Home Flipping Report. Stacked on that broad base of the pyramid are mid-tier investors who completed two to nine flips during the quarter and accounted for 20% of all home flips during the quarter. At the top of the pyramid are those mythical top-tier investors who completed more than 10 flips during the quarter (and only 3% of all flips were by investors who completed more than 100 flips during the quarter). But the pyramid turns upside down when looking at the average purchase price of homes flipped and average time to complete a flip, indicating the mom-and-pop flippers are getting the worst “deals” and taking longer to flip. This probably makes sense intuitively given that professional volume flippers are more experienced at both negotiating discounts upfront and at having a defined process in place to complete rehab and market the home for sale.

Tech selloff spreads to Europe and Asia, politics lifts euro

Technology stocks fell across Europe and Asia on Monday after the worst day for Apple shares in more than a year, while the euro and its bonds rallied after a bumper weekend for pro-EU and pro-business politics in France and Italy. It was a groggy start to the week for shares as the hangover of Apple’s near 4-percent dunking on Friday hit Asian rivals including Samsung and Europe’s big chipmakers STMicro and Dialog. Europe’s tech index fell 2.8% to put it on track for its biggest one-day loss since October. The index had reached a 15-year high earlier this month and has soared around 40% over the last year. The pan-European STOXX 600 was down a more manageable 0.6%, mildly supported by modest gains in oil prices which lifted shares in energy stocks and by the first round of parliamentary election results in France which look set to give President Emmanuel Macron a huge majority to push through his pro-business reforms. Italy also offered some comfort after the eurosceptic 5-Star Movement suffered a severe setback in local elections after failing to make the run-off vote in almost all the main cities up for grabs. It spurred on debt markets. Italian government bond yields, which move inverse to price, fell to their lowest since January, Portugal’s tumbled to nine-month lows while France’s bonds closed the gap on benchmark German Bunds. “Macron doing well in the first round of the French parliamentary elections bodes well for him getting a majority,” said Lyn Graham-Taylor, fixed income strategist at Rabobank. “The fact that 5-Star did poorly in local elections in Italy also suggests a setback for populism in Europe.” The euro rose back to $1.1220 in the currency markets where anticipation is also building ahead of Wednesday’s conclusion of a two-day meeting of the US Federal Reserve.

Former employees accuse Colorado mortgage company of widespread mortgage fraud

Four former employees of a Colorado mortgage originator claim in a lawsuit that their former employer fired them for trying to blow the whistle on widespread mortgage fraud taking place at the company. The Denver Post has the details on American Financing Corp., an originator based in Aurora. Here’s from the Denver Post: “The mortgage originator allegedly misled at least a half-dozen banks and finance companies with faked documents and consumer loan applications, according to the whistle-blower lawsuit. The action in Arapahoe County district court claims managers at the company knew of the alleged mortgage fraud the employees discovered and, in some cases, worked hard to try to cover it up.”The four employees claim that they were concerned by the company’s alleged actions and brought those concerns to their superiors, only to be suspended and ultimately fired. Again from the Denver Post: “Some of the alleged fraud was brazen, including assertions that potential borrowers’ income tax returns were intentionally withheld to hide potentially adverse information, relying instead on their W-2 forms. The banks allegedly defrauded include JP Morgan Chase, Wells Fargo, US Bank, Flagstar Bank and PennyMac, according to the lawsuit, and other institutions include the Colorado Housing and Finance Authority.” According to the report, the company claims that the allegations are false and plans to “vigorously” defend itself.

Asian shares mostly lower after technology shares fall in US

Asian shares were mostly lower Monday, following the drop of technology shares last week on Wall Street. Japan’s benchmark Nikkei 225 slipped 0.4% in morning trading to 19,941.80. South Korea’s Kospi slipped 0.9% to 2,359.98. Hong Kong’s Hang Seng lost 1.1% to 25,756.52, while the Shanghai Composite index dipped 0.5% to 3,144.30. Trading was closed in Australia for a national holiday. Market players are watching central banks’ meetings in Great Britain and the US later this week. Analysts say the Fed is likely to raise interest rates, while the Bank of England is expected to keep them unchanged. The Bank of Japan is also meeting on monetary policy later this week, but little is expected to impact markets, they say.

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