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Exclusive – Housing Wire – Ben Carson will accept HUD Secretary role

The speculation is now over as sources close to the appointment confirm to HousingWire that Ben Carson will officially accept the role of United States Secretary of Housing and Urban Development.  Rumors swirled this week over whether Carson, a former GOP presidential candidate and retired neurosurgeon would accept the role. Now, the speculation is over – Carson announced he will accept and those sources say a formal acceptance will come as soon as today or tomorrow.  President-elect Donald Trump announced Tuesday on Twitter that he was “seriously considering” Carson as the next HUD Secretary. Later Tuesday, a report from Reuters stated that Trump did offer the top HUD job to Carson.  While Carson previously stated that he was not interested in serving on Trump’s cabinet, he told Fox News that he was reconsidering the possibility.  In fact, the former GOP presidential candidate even announced on his Facebook Wednesday that “after serious discussions with the Trump transition team,” he believed he could make a difference. He also stated that an announcement would come soon about his role in “helping to make America great again,” according to an article by Damian Paletta and Nick Timiraos for The Wall Street Journal.  The new HUD secretary also took to Twitter to announce his upcoming decision.


Dr. Ben Carson ✔ @RealBenCarson

An announcement is forthcoming about my role in helping to make America great again.

8:43 AM – 23 Nov 2016 3,585 3,585 Retweets   11,839 11,839 likes

Before Carson accepted the position, rumors swirled about the possibility of Pam Patenaude, who currently serves as the president of the J. Ronald Terwilliger Foundation for Housing America’s Families, and Robert Woodson, who runs the Center for Neighborhood Enterprise in Washington, D.C., taking the position of potential HUD secretaries under Trump.

Trump threatens to terminate US-Cuba deal if ‘Cuba is unwilling to make a better deal’

Donald Trump warned in a tweet on Monday that he would terminate the 2014 deal that reopened Cuban-American relations if Havana is unwilling to negotiate a better agreement.  The tweet reaffirms Trump’s hardliner stance on US-Cuba relations, which became evident on Saturday when he released a statement in response to Fidel Castro’s death that condemned him for oppressing his people.  “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the US as a whole, I will terminate deal,” the tweet reads.  Kellyanne Conway, Trump’s former campaign manager and senior advisor, commented this weekend on Trump’s stance, saying “on the issue of diplomatic relations being re-opened with Cuba, what President-elect Trump says is that he’d be open to that himself, but that we got nothing in return.”  “We’re allowing commercial aircraft there. We pretend that we’re actually doing business with the Cuban people now when, really, we’re doing business with the Cuban government and the Cuban military. They still control everything,” she said.  Landmark commercial flights to Cuba from the United States resumed Monday morning after more than a half-century of interruption.  JetBlue’s first commercial flight to Havana, Cuba took off from John F. Kennedy airport just before 9 a.m. Monday. American Airlines is offering its own one-hour flights from Miami to Havana on Monday.  Delta Airlines will soon follow suit when it begins offering regular flights to Cuba from the United States on Dec. 1.  The Cuban government announced that Castro’s ashes will be buried Sunday at the Santa Ifigenia cemetery in Santiago de Cuba.

Black Knight – Home Price Index Report: September 2016

The Data and Analytics division of Black Knight Financial Services, Inc. released its latest Home Price Index (HPI) report, based on September 2016 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.

–  September’s home price movement was relatively flat at the national level, with home prices ticking up just 0.1% from August

–  US home prices are up 5.4% from last year and are now within just 0.6% of hitting a new national peak

–  New York led home price gains among the states for the third consecutive month, with home prices there gaining 0.9% from August

–  Florida and Washington dominated the best-performing metropolitan areas, collectively accounting for nine of the top 10

–  Home prices in St. Louis, Mo., continue to underperform, falling another 0.7% for the month and pulling the metro even further from its 2007 peak; it remains alone among the top 40 metros in seeing negative year-over-year movement

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

United States HPI:   $266K

Change from Last Month:  0.1%

Change from Last Year:     5.4%

Month-over-month change in foreclosure pre-sale inventory rate:    -0.6%

Largest States’ HPI Changes from Last Month (Ranked by Population)

California      -0.3%

Texas 0.1%

Florida            0.6%

New York       0.9%

Illinois -0.5%

Pennsylvania           -0.2%

Ohio   -0.1%

Georgia          0.2%

North Carolina          0.2%

Michigan       0.1%

Largest Metros’ HPI Changes from Last Month (Ranked by Population)

New York, NY           0.6%

Los Angeles, CA      -0.3%

Chicago, IL    -0.4%

Dallas, TX      0.4%

Houston, TX  0.0%

Philadelphia, PA      -0.2%

Washington D.C.     -0.2%

Miami, FL       0.7%

Atlanta, GA    0.2%

Boston, MA   0.1%

Top 10 Movers, State-Level

New York       0.9%

Florida            0.6%

Utah   0.6%

Arizona          0.5%

Idaho  0.5%

Washington  0.5%

Montana        0.4%

Kansas          0.4%

New Mexico  0.4%

South Dakota           0.4%

Top 10 Movers, Metro-Level

Lakeland, FL 1.2%

Palm Bay, FL            1.2%

Homosassa Springs, FL 1.0%

Mount Vernon, WA  0.9%

Daytona Beach, FL 0.8%

Yakima, WA  0.8%

Port St. Lucie, FL 0.8%

Glens Falls, NY        0.8%

Longview, WA          0.8%

Bellingham, WA       0.8%

Will Trump shake up the auto industry?

onald Trump’s agenda on trade and environmental regulations has raised major questions about the road ahead for car companies.  On the campaign trail, Trump frequently criticized Ford and the North American Free Trade Agreement, saying trade deals have cost American jobs, especially in the manufacturing sector. The transition team currently forming the Trump administration has already signaled that reforming US trade deals will be one of the first tasks undertaken by the President-elect next year.’  The incoming administration also has its sights on environmental regulations imposed by President Barack Obama and the Environmental Protection Agency. For car companies, this means fuel-efficiency rules that some in the industry view as overly burdensome could be up for significant changes.  The Alliance of Automobile Manufacturers, a trade group that represents top automakers including General Motors (GM) and Ford (F), sent Trump’s transition team a memo that highlighted its positions on issues like the federal government’s emissions standards. The organization has pushed for reform amid cheaper gasoline prices and weak sales of electric vehicles.  Federal agencies recently began a midterm review of the 2012 Corporate Average Fuel Economy (CAFE) program, which stated that automakers would have to more than double their fleet-wide fuel economy to 54.5 miles per gallon by model-year 2025.

Mitch Bainwol, president and CEO of the Alliance of Automobile Manufacturers, told Congress that federal rules can’t ignore a consumer shift from passenger cars to sport-utility vehicles, while electric cars struggle to gain traction. Plug-in electric cars make up less than 1% of sales.  “Much has changed in four years – most notably, fuel prices and changes in consumer purchasing habits. These changes are important to keep in mind because automakers are ultimately judged not by what they produce but by what consumers buy,” Bainwol said in his congressional testimony.  The CAFE deal allowed for both sides to take a second look at the regulations in 2017, coinciding with Trump’s rise to the White House. Final rules are expected in early 2018.  Other potential changes coming next year and beyond may throw a wrench into the auto industry’s supply chain.  Trump’s attacks on Ford focused on the automaker’s plan to construct a $1.6 billion factory in Mexico, where it will hire 2,800 additional people. Ford expects to begin assembling small cars at the plant in 2018. Eventually, all of Ford’s small-car production will be concentrated in Mexico. Ford CEO Mark Fields has argued that new models in the US would replace car production going south of the border, thus preventing any loss of jobs. He confirmed this week that Ford’s Mexico plans have not changed.  Even before Inauguration Day, Trump is touting progress on the issue. On Thursday evening, Trump posted a message on Twitter (TWTR) saying he spoke to Ford Chairman Bill Ford, who told the President-elect that Lincoln production would remain at the company’s Louisville, Ky., plant.

Under terms of a new labor deal negotiated last year, the United Auto Workers union gave Ford the green light to build the Lincoln MKC compact SUV at a factory in Mexico. The production move would allow Ford to build more Ford Escapes in Louisville. But sales of the Escape have slipped in recent months, and demand since the start of 2016 has been roughly flat compared to last year.  Ford also said it looks forward to working with the Trump administration to “support economic growth and jobs,” according to a statement provided after Trump’s victory over Hillary Clinton.  Trump has argued that NAFTA, a wide-ranging trade agreement with Canada and Mexico, is an unfair deal that hurts American jobs. Cars shipped from Mexico to the US face no taxes, while Mexico imposes a tariff on cars imported into the country. During the campaign, Trump proposed implementing tariffs as high as 35% to encourage automakers to keep production in the US  Shares in Ford and GM slipped in the wake of Trump’s win, but the stocks soon recovered as traders plowed into equities in the hope that the incoming administration will be a sparkplug for the economy.  Efraim Levy, an analyst at CFRA Research, believes Trump will back away from his toughest stance on US trade policies.  “Even with some potential tariff costs to automakers, we believe GM and Ford will have time to flex production and regional sales to mitigate the impact,” Levy wrote in a note to clients.  As for the UAW, which publicly endorsed Clinton, the union suggested it will work with the Trump administration on trade policy. During a press conference following Trump’s victory Opens a New Window. , Williams called Trump’s position on trade “right on.”

WSJ – waterfront towers reel in unusual loan deal

The partners behind a gargantuan apartment complex being built on Manhattan’s far West Side have nailed down $2.3 billion in construction financing at a time when money from traditional lenders is hard to come by. GID and Henley Holding Co., a wholly owned subsidiary of the Abu Dhabi Investment Authority, are putting up three towers along the Hudson River between West 59th and West 61st streets. The expected finish date for the 1,132-unit Waterline Square project is 2019.  The partners are borrowing $1.243 billion and are contributing more than $1 billion in equity. The leading lenders are Wells Fargo, HSBC USA, J.P. Morgan Chase & Co. and the National Bank of Abu Dhabi.  “They are really bucking the trend by getting a construction loan today,” said Ed LaGrassa, president of Chilton Realty International, which helps clients secure equity placements and structure joint ventures. “Because of a lack of construction lending available, a lot of projects aren’t going anywhere at the moment.”  The 5-acre project is one of the few remaining waterfront development sites on the Upper West Side. The land is part of Riverside South, a strip between West 59th and West 72nd streets that had its own city master plan in the 1990s.

When GID began looking at the area in 2013, the company had figured to buy a single lot to build a single tower, said James Linsley, president of GID Development Group. Instead, the company acquired three adjoining sites to create an “authentic New York neighborhood,” he said. “This represented to us quite possibly the last waterfront development opportunity on the Upper West Side of Manhattan, and that was a pretty rare situation,” Mr. Linsley said.  Most of the foundations are completed for the three buildings, which will have rental apartments on the lower floors and condominiums on the upper ones. The partnership tapped Uruguayan architect Rafael Viñoly, who designed the slender ultraluxury condo skyscraper at 432 Park Ave., Richard Meier & Partners Architects LLP and Kohn Pedersen Fox Associates PC to design the glass, stone and metal towers, which range from 34 to 38 stories tall.  “The three buildings are almost like cousins,” Mr. Linsley said. “They communicate with each other architecturally.”GID and Henley’s Waterline Square stands out because of the partners’ ability to secure a large construction loan from traditional lenders such as banks and insurance companies, said real estate financing experts.  Banks won’t lend 75% to 85% of the construction costs like they often did before the financial crisis, said Michael Lefkowitz, a partner at real estate law firm Rosenberg & Estis PC. Today, banks and insurance companies lend only to developers with a proven record and for loans at 50% to 60% of the total costs.

Developers, said Mr. Lefkowitz, are turning to nontraditional lending sources such as other developers or the EB-5 Immigrant Investor Program, which makes foreign nationals eligible for green cards if they invest in a new capital enterprise and create or preserve jobs.  “They want to see substantial equity in the deal before they lend the first dollar,” Mr. Lefkowitz said.  GID and Henley are counting on a strong residential market when Waterline Square is finished in a couple of years. Whatever the state of the market, real-estate experts are expecting the project to be a big draw. The partners, for example, will make 20% of the apartments affordable in exchange for the 421-a tax abatement.  A handful of Manhattan landlords are offering concessions to rental tenants because of a new supply of apartments, but those are expected to be absorbed and rental vacancies are still low. And while the ultraluxury condo market is soft, the Upper West Side remains strong draw for families, Mr. LaGrassa said.  “In essence, all their eggs are not in one basket,” Mr. LaGrassa said of GID and Henley’s Waterline Square. “You are diversifying into different buildings and different product types.”

RealtyTrac – Blue state buyers swing to red state rentals

A new analysis from ATTOM Data Solutions shows that 3.4 million single family investment homes (non-owner occupied) nationwide are owned by an out-of-state investor. That’s 16% of all single family investment homes.  In many cases those lower-priced markets are in politically red states with the out-of-state investors often hailing from politically blue states. Passive real estate investors — think young professionals with well-paying day jobs or baby boomer homeowners flush with home equity wealth — in high-priced housing markets are looking beyond their backyards for real estate investing opportunities in lower-priced markets.  States with the most investment homes owned by out-of-state investors are Florida, North Carolina, Tennessee, Arizona, Georgia and Texas, with Michigan and Pennsylvania also in the top 10. Counties with the most investment homes owned by out-of-state investors are Maricopa County, Arizona (Phoenix); Clark County, Nevada (Las Vegas); Lee County, Florida (Cape Coral); Cape May County, New Jersey (Ocean City); and Wayne County, Michigan (Detroit). California is the state with investors owning the most out-of-state investment homes — with 24% of all investment homes owned by Californians located out of state –followed by Florida, Texas, New York, Illinois and Virginia.

These taxes could go away under President Trump

Based on Trump’s various tax proposals, six taxes could wind up being eliminated, four of which would go away as a result of repealing and replacing the Affordable Care Act. It’s important to emphasize that what Trump proposed during his campaign and what actually gets passed into law could be very different. Nonetheless, taxpayers should be prepared for what could be our first major tax reform in quite some time.

–  Medical device excise tax: The medical device excise tax is a highly controversial 2.3% tax on the revenue of medical device companies. It’s particularly disliked since it taxes top-line sales as opposed to end-result profits, and it indiscriminately taxes devices that range from highly specialized heart valves to everyday products like bandages and gloves sold in bulk to hospital chains. It was only expected to cover between 2% and 3% of the total cost of the ACA over a 10-year period, so if Obamacare, as the ACA is more commonly known, is indeed repealed, the medical device excise tax would be gone as well. The medical device excise tax is currently suspended for two years but would presumably be reinstated in 2018 if Obamacare is left in place.

–  Net investment income tax: The Net Investment Income Tax, or NIIT, is a component of Obamacare that would disappear if the law were repealed. The NIIT is a 3.8% tax on investment income for individuals with modified adjusted gross incomes in excess of $200,000, and joint filers over $250,000. According to the IRS, gains from the sale of stocks, bonds, and mutual funds, gains from the sale of investment real estate, and gains from the sale of interests in partnerships and S corporations are all included in the NIIT.

–  Medicare surtax: A 0.9% Medicare surtax was also added when Obamacare was passed as a tax on wages for upper-income earners. Typically, the Medicare payroll tax is 2.9%, which is split down the middle between you and your employer (unless you happen to be self-employed, in which case you pay it all). This works out to you each paying 1.45%. However, once an individual hits $200,000 in wages, the 0.9% surtax kicks in for a total payroll tax of 2.35%. This tax would go away if the ACA is repealed.

–  Cadillac tax: Lastly, the Cadillac tax would be bid adieu if Obamacare were repealed. The Cadillac tax is the ACA’s high-cost tax plan that implements a 40% excise tax on employer plans exceeding $10,200 in premiums per year for individuals and $27,500 for families. Though this tax isn’t set to take effect until 2020, if Trump has his way it’ll never see the light of day.

Beyond Obamacare, two additional taxes are on the chopping block with Trump as president.

–  Estate tax: The estate tax (also known as the death tax) could also go the way of the dodo. The estate tax is a relatively small contributor to annual federal revenue, since it only applies to estates in excess of $5.45 million per individual or $10.9 million for a couple. Estates below these levels are exempt. Trump has gone on the record multiple times as stating that the 40% estate tax rate is double taxation, and he firmly believes that eliminating it would help preserve family wealth.

–  Alternative Minimum Tax: The Alternative Minimum Tax, or AMT, could also disappear. The AMT is a supplemental income tax imposed by the IRS on well-to-do individuals who’ve used a variety of tax loopholes to lower their effective tax rate to an artificially low level. Trump’s tax plan is all about simplicity, and the AMT simply gets in the way of that simplicity.

Zillow – October home sales forecast: sooner or later, gravity wins

–  Zillow expects existing home sales to be flat in October, holding at 5.47 million units at a seasonally adjusted annual rate (SAAR)

–  New home sales should fall 3.7% to 571,000 units (SAAR), but would still be up 19.4% from October 2015.

Home sales have been surprisingly robust in 2016, despite steadily contracting for-sale inventory. Existing home sales have grown on average by about 1.1% each month in 2016, even as inventory has fallen by about 1.7% each month over the same time. Higher velocity – homes spending less time on the market and buyers spending more – has allowed the market to seemingly defy gravity.  But sooner or later, gravity wins.  Despite early reports of strong sales in September, sales for previous months were revised lower. We expect tight market conditions to continue to pass through to home sales in October. Our forecast suggests existing home sales, (as reported by the National Association of Realtors on Tuesday, Nov. 22), will be flat in October from September at 5.47 million units at a seasonally adjusted annual rate (SAAR) and up 3.4% from last October. Over the past year, existing home sales have grown at an average annual rate of 2.8%, well below the average annual rate of 6.5% reported for the 12 months ending September 2015.  While existing home inventory has weighted on the market, new construction has provided a modest boost. New home sales have shot up after remaining stubbornly low for much of the housing market recovery. But with housing starts falling, our forecast points to a 3.7% monthly decline in new home sales in October, to 571,000 units (SAAR). This would still be up 19.4% from October 2015, but below July and August’s relatively strong numbers. The Census Bureau will report new home sales numbers on Wednesday, Nov. 23.  Looking ahead over the next year, our forecasts point to modest growth in existing home sales and accelerating new home sales. For October 2017, we expect existing home sales to total 5.45 million units (SAAR), up 3.1% from October 2016, but below recent highs of 5.57 million units reported in June 2016. For new home sales, we expect 615,000 sales (SAAR) in October 2017, up 28.6% from October 2016. This would put new home sales at their highest level since January 2008.

Gas prices dip to US average of $2.20 per gallon

The average price of regular grade gasoline has fallen nationally to $2.20 per gallon, a drop of 6 cents over the past two weeks.  Industry analyst Trilby Lundberg updated the figures Sunday, predicting that prices would continue inching down unless a meeting of oil-producing nations later this month culminates in “a credible agreement to freeze or reduce” production.  A seasonal weakness in demand was one reason behind the early-November decline. Lundberg cited another influence: With autumn maintenance projects wrapping up, US refiners are increasing supplies.  Those factors combined to create the drop in average prices, despite a small rise in crude oil prices.  Gas in San Diego was most expensive in the continental US, at $2.73 on average. The low average was in Tulsa, Oklahoma, at $1.78 per gallon.

WSJ – In New Jersey and Long Island, developers eye office-to-warehouse conversions

Not so long ago, replacing an office building with a warehouse wouldn’t have crossed the minds of many developers. Office space, after all, costs more to build and usually generates higher rents. A red-hot warehouse market driven by the rise of e-commerce has changed that. Though the numbers are small, several suburban office properties in or near New Jersey and Long Island industrial neighborhoods have been redeveloped as warehouses.  “It was always the reverse, and we used to convert from industrial to office,” said Thomas DiMicelli, an executive vice president with brokerage firm JLL who works in the Long Island market. “Industrial values have gone up enough, it can make converting office buildings worthwhile.”  Many of the converted properties weren’t top-notch office space but met a number of requirements for a warehouse, including close proximity to New York City, ports and highways but ample distance from residential communities. Adequate land for trailer-trucks to park and move goods is also critical, said Jules Nissim, an executive vice president real estate services firm Cushman & Wakefield.  The sites also were in office markets that have been soft, brokers said. The vacancy rate for Long Island stood at 14.3% in the third quarter; New Jersey’s vacancy rate was 24%, according to JLL.  By comparison, the vacancy rates for Industrial space are 1.8% on Long Island and 4.6% in northern and central New Jersey.

Prices for industrial space are soaring. The average sale price on Long Island is $96.80 a square foot, compared with $62.50 three years ago. In New Jersey, warehouses are going for an average of for $74.84 a square foot, compared with $63.78 in 2013.  One reason is the migration of industrial companies in Brooklyn and Queens to Long Island and New Jersey; the businesses, flush with cash from selling properties in the boroughs for hotel or residential development, are ramping up the competition to buy sites, brokers said.  “They made so much money selling the building, and in many cases it was worth more than their businesses,” said Frank Frizalone, a Cushman & Wakefield executive director who is based on Long Island. “There are more buyers than renters out there.”  Several years ago, industrial developer Sitex Group paid $990,000 for a 60,000-square-foot office building on 7 acres in Carlstadt, N.J., said principal Brian D. Milberg. Sitex repositioned the site as an industrial property and sold it to a towel company for about $13 million.  “We are in Chicago and southern California doing the same thing, looking for abandoned office parks,” Mr. Milberg said.  Forsgate Industrial Partners, a developer, is just finishing the redevelopment of a 65,000-square-foot office building in South Brunswick, N.J., to create about 150,000 square feet of distribution space, said Andrew L. Moss, director of leasing and acquisitions. The company marketed the office building for two years before deciding to rebuild it as a warehouse because the risk was less than trying to modernize it as an office building.  Halfway into construction, Forsgate secured a high-end retail tenant for the entire space.  “From our standpoint, we minimized the risk,” Mr. Moss said.

MBA – mortgage applications down

Mortgage applications decreased 9.2% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 11, 2016.  The Market Composite Index, a measure of mortgage loan application volume, decreased 9.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10% compared with the previous week. The Refinance Index decreased 11% from the previous week to its lowest level since March 2016. The seasonally adjusted Purchase Index decreased 6% from one week earlier to its lowest level since January 2016. The unadjusted Purchase Index decreased 10% compared with the previous week and was 3% higher than the same week one year ago.  “Following the election, mortgage rates saw their biggest week over week increase since the taper tantrum in June 2013, and reached their highest level since January of this year,” said David H. Stevens, CMB, President and CEO of the Mortgage Bankers Association. “Investor expectations of faster growth and higher inflation are driving the jump up in rates, and rates have now increased for five of the past six weeks, spurring a commensurate drop in refinance activity.”  The refinance share of mortgage activity decreased to 61.9% of total applications from 62.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.7% of total applications.  The FHA share of total applications increased to 12.2% from 11.6% the week prior. The VA share of total applications increased to 12.6% from 12.3% the week prior. The USDA share of total applications decreased to 0.6% from 0.7% the week prior.

US manufacturing sector stabilizing; producer prices tame

US manufacturing output increased for a second straight month in October amid gains in the production of motor vehicles and a range of other goods, suggesting that the battered factory sector was slowly recovering.  Other data on Wednesday showed a moderation in producer inflation last month. Still, the disinflationary impulse is ebbing as oil prices rise and the dollar’s rally fades, which could see an increase in price pressures in the coming months.  The Federal Reserve said factory production rose 0.2% last month after a similar gain in September. Output was supported by a 0.9% rise in the production of motor vehicles and parts. There were also increases in the production of primary metals and computers and electronic products.  “With the global economic backdrop more stable and growth set to pick up in the United States, we expect to see activity in the manufacturing sector improve a bit in the coming months,” said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.  The report added to a survey early this month showing a second straight month of expansion in factory activity in October. Manufacturing accounts for 12% of the US economy.  The sector has suffered a prolonged slump in the aftermath of the dollar’s surge between June 2014 and January this year, which has constrained exports. Activity has also been hurt by the collapse in oil drilling after oil prices plunged.

NAHB – Builder Confidence Holds Firm in November

Builder confidence in the market for newly-built single-family homes held steady in November at a level of 63 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).  “With most of our members responding before the November elections, confidence levels remained unchanged as they awaited the results,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.  “Still, builder sentiment has held well above 60 for the past three months, indicating that the single-family housing sector continues to show slow, gradual growth.”  “Ongoing job creation, rising incomes and attractive mortgage rates are supporting demand in the single-family housing sector. This will help keep housing on a steady, upward glide path in the months ahead,” 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.  The HMI components measuring buyer traffic rose one point to 47, and the index gauging current sales conditions held steady at 69. Meanwhile, the component charting sales expectations in the next six months fell two points to 69.  Looking at the three-month moving averages for regional HMI scores, the Northeast, Midwest and West each posted respective two-point gains to 45, 58 and 77. The South remained unchanged at 66.

Lowe’s misses on earnings and revenue; stock sinks

Shares of Lowe’s fell 3% in intraday trade Wednesday after the home improvement retailer reported quarterly earnings and revenue that missed analysts’ expectations.  It also lowered its earnings guidance for the fiscal year.  The company posted fiscal third-quarter earnings of 88 cents a share on revenue of $15.73 billion. Analysts expected earnings of 96 cents a share on revenue of $15.85 billion, according to Thomson Reuters consensus estimates.  “Our third quarter operating results were below our expectations due to slower sales in the first two months of the quarter,” CEO Robert Niblock said in a statement. “While we expected moderation in the second half of the year, traffic slowed more than we anticipated in August and September before improving in October, which put pressure on our profitability in the quarter.”  Lowe’s said sales and comparable-store sales for the quarter increased 9.6% and 2.7%, respectively, from last year.  The company also repurchased $550 million in stock under its share- repurchase program and paid $309 million in dividends in the quarter.  Lowe’s said it expects total sales for the full year to increase 9% to 10% and comparable-store sales to increase 3% to 4%. It also expects to add about 40 home improvement and hardware stores.

CoreLogic – US housing policy outlook: November 2016

Tip O’Neill, the long-time Speaker of the US House of Representatives, famously said that “all politics is local.” He was right. Maybe this is why every month, FEMA notifies members of Congress when constituents in their districts or states will be affected by their flood mapping updates.  FEMA also runs the National Flood Insurance Program. Everyone in a “Special Flood Hazard Area” must have the right insurance coverage in order to obtain a loan from a supervised financial institution.  The headline in this update is that in 2017…in the midst of a new Congress…and a new Administration…the National Flood Insurance Program is up for reauthorization. Reauthorization means that Congress is required to take a look at the program’s effectiveness and evaluate its relevance.  In theory reauthorization should be a slam dunk:

–  Flooding is the #1 natural disaster in the US

–  The long-term tailing effects of Hurricane Katrina and Superstorm Sandy tell the story of how serious the effects of flooding can be

–  The National Association of Realtors reports that Congress’ previous failures to reauthorize the NFIP resulted in the loss of 40,000 home sales per month

This number alone is just too big to ignore. And yet while there’s strong agreement that reauthorization is necessary, there are concerns that divide. Here are just some of them:

–  The NFIP is underwater to the tune of $24 billion dollars. Even by Washington standards, this is a big number. In the eyes of some members of Congress legislative reforms to the program enacted by Congress in 2012 and 2014 are not enough.

–  Realtors believe that premiums charged are often too high, and the program needs greater precision. Risk relative to price must be as exacting as possible. However, those with concerns about the $24 billion in losses are not enthused about lowering premiums.

–  Members of Congress have expressed concerns about NFIP private insurers profiting from the program due to FEMA’s failure to properly oversee them…Insurers don’t agree.

–  Members of Congress have also expressed concern that lenders are not complying with the requirement to make sure that flood insurance is in place where a home is located within a Special Flood Hazard Area. Lenders don’t agree.

–  There’s an emerging discussion regarding expansion of the program to individuals whose homes fall just outside of the zone of risk. Small-government members of Congress are vehement that NFIP should not be expanded. In fact, a minority of members of Congress might go so far as to eliminate the program.

Notably, some members of Congress didn’t want to wait for NFIP reauthorization to act. In April of this year the House of Representatives passed the Flood Insurance Market Parity and Modernization Act. This bill shifts risk to private insurers outside of NFIP and is intended to also foster greater price competition. But other members of Congress worry that the bill simply reduces NFIP premiums and doesn’t address the 24 billion in NFIP losses.  So what starts out looking like an easy “yes” turns out to be a complex “maybe.” Maybe yes. Maybe a temporary extension. Maybe even a temporary failure to reauthorize.  We’ll be back to you with an NFIP update in 2017 once the 115th Congress is in session.

Three Trump buildings in NYC to be renamed in nod to residents

A national apartment building company said it would take President-elect Donald Trump’s name off three New York City high-rises after tenants complained they were embarrassed living in buildings associated with someone who is so unpopular on Manhattan’s West Side.  Equity Residential, which owns tens of thousands of apartments across the US, told residents in an email that it would give the towers the more “neutral” names 140, 160 and 180 Riverside Blvd. Now, the buildings are all named Trump Place.  The new names “will appeal to all current and future residents,” the email said.  In the weeks leading up to the Nov. 8 election, hundreds of residents in the buildings signed a “Dump the Trump Name” petition. The buildings had his name emblazoned on the outside like many of the properties the billionaire has developed. The name is also on the carpet and on employees’ uniforms.  Many New Yorkers were disappointed by Mr. Trump’s surprise victory, and Manhattan has been the scene of many Trump protests.

The decision by Equity Residential to rename the buildings is “a little triumph after last week,” said Kevin Dumont, a resident in one of the buildings.  In a statement, the Trump Organization said: “This recent change is simply the enforcement of a pre-existing agreement which has been in place for years. It was mutually agreed upon.”  The statement doesn’t elaborate on when that agreement took place.  Marty McKenna, a first vice president of Equity Residential, said: “We have been speaking to the Trump Organization for some time regarding the use of the name. We agreed to wait until after the election to avoid being involved in the political situation.”  Mr. McKenna declined to say when those discussions started. Equity Residential’s chairman is real estate mogul Sam Zell.  A venture of Mr. Trump and a group of Hong Kong investors developed the buildings along the Hudson River in the 1990s. They were sold to Equity Residential in 2005.  For decades, Mr. Trump’s strategy has been to brand a range of products with his name to convey an image of wealth and success. That strategy began to backfire during the campaign when a wide range of companies began to distance themselves from his name because of his controversial remarks about immigrants, women and others.   Earlier this year, Mr. Trump’s hotel company decided to brand a new line of hotels without the Trump name. That brand, which is targeting a younger tech-savvy crowd, is called Scion.

WSJ – the mortgage market is changing fast

The remaking of US politics also is likely to upend the nation’s mortgage market. There are two reasons why: interest rates and regulation.  Changes in these areas could affect the course of the housing recovery, the availability of credit to borrowers and the extent to which lenders are willing to take on new risk. It may also affect the current structure of the mortgage market, in which banks mostly have focused on plain-vanilla and jumbo loans while nonbank lenders have targeted riskier borrowers, sometimes with more exotic mortgage products.  Interest rates are the most immediate concern. Donald Trump’s victory has led to a surge in bond yields and, in turn, mortgage rates. In the two days following the election, the average rate on 30-year fixed-rate conforming mortgages spiked a quarter of a percentage point to 3.87%, according to  Mortgage rates are still incredibly low by historical standards; the average over the past 45 years is 8.26%, according to data from Freddie Mac. But the quick rise in the 10-year Treasury yield has lenders worried mortgages could become more expensive far sooner than they had anticipated.  Depending on how far that runs, higher rates could arrest further gains in home prices. While prices have shot up in many US housing markets over the past couple of years, superlow mortgage rates have kept higher prices within reach of many borrowers.  “The ultimate problem is the impact of rising rates on home values,” said Stu Feldstein, president at SMR Research Corp., a mortgage-research firm. “We’re back into a bubble condition in part because of low rates that have enabled people to buy houses much more expensive than their incomes could afford.”  He said his firm expects that by the end of 2017 rising rates will have contributed to home values declining in about one-third of the US

The speed and size of any increase in rates will depend in part on Mr. Trump’s fiscal policies and whether markets believe that could lead inflation higher. “We have a new narrative,” said Chris Whalen, senior managing director at Kroll Bond Rating Agency Inc., noting that markets, not just central-bank actions, will play a role in the direction of mortgage rates. “We’re back to a situation where what investors think matters again and that’s very important for mortgages.”  The second point lenders are considering is whether a more bank-friendly regulatory environment is on the way. In part, that will depend on how the administration approaches any rollback of the Dodd-Frank regulatory overhaul law.  In an interview with The Wall Street Journal on Friday, Mr. Trump said of Dodd-Frank: “We have to get rid of it or make it smaller.”  The law resulted in a number of safeguards for mortgages, including requirements for lenders to make sure borrowers can afford mortgages they sign up for. Risky mortgages including those with balloon payments and with little verification of applicants’ income or assets largely became much harder to find. A looser lending environment would result in conflicting developments: More borrowers would get approved, while raising the risk of more foreclosures to come. Analysts say most lenders would be unlikely to return to practices and products that burned them during the housing crash.  Bryan Sullivan, chief financial officer at nonbank lender LoanDepot Inc., said the “hangover” from the crisis persists, making lenders wary.

But the new regulations also made lenders more risk averse. Banks have increasingly targeted only the most creditworthy borrowers or those taking out jumbo loans—mortgages that exceed $417,000 in most parts of the country.  Along with regulatory risk, banks have faced greater legal peril over mortgages in recent years. The biggest banks, in particular, have paid tens of billions of dollars in settlements and fines related to soured mortgages.  So the appointment of a new attorney general, and the approach of the Justice Department toward lending transgressions, will have a big impact on how lenders assess legal risk. Big banks, for example, have largely abandoned making loans that are insured by the Federal Housing Administration for fear of being penalized when risky mortgages go bad.  “A more reasonable attorney general…would be a great outcome,” said David Stevens, president and chief executive of the Mortgage Bankers Association.

Dow hits fresh record as financial stocks rise

The Dow Jones Industrial average opened at a record high on Monday, driven by financial stocks, after the index capped off its best week since 2011 following Donald Trump’s unexpected victory in the US presidential election.  Since Trump’s triumph last Tuesday, investors have been betting on his campaign promises to simplify regulation in the health and financial sectors and boost spending on infrastructure.  The financial index rose 2.18% to its highest level since 2008. Goldman Sachs and JPMorgan provided the biggest boost to both the S&P 500 and the Dow.  The Nasdaq Composite was little changed, weighed down by tech giants Apple, Facebook and Microsoft.  Stock markets around the world were affected by a continued selloff in the global bond market as investors looked for more clarity regarding Trump’s policies.  The risk of faster domestic inflation and wider budget deficits if Trump goes on a spending binge sent yields on US Treasury and other benchmark global bonds higher. The dollar index surged to an 11-month high.  Yields on the US 10-year Treasury notes climbed to their highest since January on Monday at 2.30%, while 30-year paper shot above 3%.

NAHB – housing affordability edges lower in third quarter

Ongoing home price appreciation offset a small decline in mortgage interest rates to move housing affordability slightly lower in the third quarter of 2016, according to the National Association of Home  Builders/Wells Fargo Housing Opportunity Index (HOI).  “Historically low interest rates and firming job growth are positive indicators that housing markets across the nation will continue to gradually improve,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “Home prices, however, continue to be affected by the rising costs of construction, both in terms of land and labor.”  “Regulatory restraints along with shortages of buildable lots and skilled workers are adding to the cost of new homes, which is putting upward pressure on home prices,” said NAHB Chief Economist Robert Dietz. “Though these factors have negatively affected the marketplace, affordability still remains positive. Moreover, attractive mortgage rates, rising incomes and growing household formations make this an excellent time to buy.”  In all, 61.4% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the US median income of $65,700. This is down from the 62% of homes sold that were affordable to median-income earners in the second quarter.  The national median home price increased from $240,000 in the second quarter to $247,000 in the third quarter. Meanwhile, average mortgage rates edged lower from 3.88% to 3.76% in the same period.

Elgin, Ill., was rated the nation’s most affordable major housing market, where 94.3% of all new and existing homes sold in this year’s third quarter were affordable to families earning the area’s median income of $82,500. Meanwhile, Fairbanks, Alaska, was rated the nation’s most affordable smaller market, with 97.7% of homes sold in the third quarter being affordable to families earning the median income of $93.800.  Rounding out the top five affordable major housing markets in respective order were Youngstown-Warren-Boardman, Ohio-Pa.; Scranton-Wilkes-Barre-Hazleton, Pa.; Indianapolis-Carmel-Anderson, Ind.; and Syracuse, N.Y.  Smaller markets joining Fairbanks at the top of the list included Monroe, Mich.; Binghamton, N.Y.; Wheeling, W.Va.-Ohio; and Davenport-Moline-Rock Island, Iowa-Ill.  For the 16th consecutive quarter, San Francisco-Redwood City-South San Francisco, Calif., was the nation’s least affordable major housing market. There, just 9.7% of homes sold in the third quarter were affordable to families earning the area’s median income of $104,700.  Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and Santa Rosa.  Four of the five least affordable small housing markets were also in California. At the very bottom of the affordability chart was Salinas, where 17.6% of all new and existing homes sold were affordable to families earning the area’s median income of $63,500.  In descending order, other small markets at the lowest end of the affordability scale included Santa Cruz-Watsonville; Napa; San Luis Obispo-Paso Robles-Arroyo Grande; and Kahului-Wailuku-Lahaina, Hawaii.

Trump: no ‘big’ vacations, no salary as president

Donald Trump is pledging no long vacations and no presidential salary during his time in the White House.  “There’s just so much to be done,” Trump told CBS’ 60 Minutes in an interview broadcast Sunday. “So I don’t think we’ll be very big on vacations, no.”  As for the president’s $400,000-a-year pay, the New York businessman said: “No, I’m not going to take the salary. I’m not taking it.”

Republicans have regularly criticized President Obama for his fondness for playing golf and his family vacations in Hawaii.

Pending home sales edge up in September

Pending home sales shifted higher in September following August’s notable dip and are now at their fifth highest level over the past year, according to the National Association of Realtors (NAR). Increases in the South and West outgained declines in the Northeast and Midwest.  The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew 1.5% to 110.0 in September from a slight downward revision of 108.4 in August. With last month’s gain, the index is now 2.4% higher than last September (107.4) and has now risen year-over-year for 22 of the last 25 months.  In addition to sales matching their third highest pace (5.47 million) since February 2007 (5.79 million), distressed sales — foreclosures and short sales — fell to their lowest share since NAR began tracking them in October 2008 (4%). Furthermore, sales to first-time buyers reached 34%, which matched the highest share since July 2012 and was up convincingly from September 2015 (29%).  The PHSI in the Northeast fell 1.6% to 96.5 in September, but is still 7.7% above a year ago. In the Midwest the index declined modestly (0.2%) to 104.6 in September, and is now 1.0% lower than September 2015.  Pending home sales in the South rose 1.9% to an index of 122.1 in September and are now 1.7% higher than last September. The index in the West jumped 4.7% in September to 107.3, and is now 4.0% above a year ago.

Consumer sentiment hits 87.2 in October vs. 88.2 estimate

The Index of Consumer Sentiment hit 87.2 in October, according to the University of Michigan on Friday, the lowest level since October 2014.  Economist expected the consumer sentiment index to hit 88.2 in October, down from 91.2 in September final reading, according to Thomson Reuters consensus estimates.  The decline was due to “less favorable prospects” for the national economy, with half of all consumers expecting an economic downturn within the next five years, according to the survey.  The report said if interest rates rise in December, it will have a “minimal impact” on spending. It said consumers also expect a small slowdown in job creation that is likely to prevent any more declines in the unemployment rate.  The monthly survey of 500 consumers measures attitudes toward topics like personal finances, inflation, unemployment, government policies and interest rates.  “The October decline was due to less favorable prospects for the national economy, with half of all consumers anticipating an economic downturn sometime in the next five years for the first time since October 2014,” said Richard Curtin, the survey’s chief economist.

WSJ – US Economy Roars Back, Grew 2.9% in Third Quarter

US economic growth accelerated last quarter, easing fears of a near-term slowdown but doing little to change the trajectory of a long but weak expansion.  Gross domestic product, a broad measure of goods and services produced across the economy, expanded at an inflation- and seasonally adjusted 2.9% annual rate in the third quarter, the Commerce Department said Friday. That was stronger growth than the second quarter’s pace of 1.4%. Economists surveyed by The Wall Street Journal expected growth at a 2.5% pace for the July-to-September period.  Last quarter’s growth rate was the fastest recorded in two years.  The third-quarter acceleration largely reflected increased exports and a buildup of inventories, while consumer spending increased at a slower rate.  Friday’s data also gave voters their last comprehensive look at the economy’s health before the November election.  The improvement could give Democratic presidential nominee Hillary Clinton more latitude to position herself as the candidate to continue Obama administration policies that have led to a long expansion. Still, the most recent gain comes in the weakest expansion in recent memory, a point Republican candidate Donald Trump makes frequently.

Since the recession ended in mid-2009 the economy has grown at roughly a 2% annual rate, making the current expansion the weakest on records back to 1949.  The third-quarter GDP report showed consumer-spending gains slowed after a strong advance this spring. Personal-consumption expenditures rose at a 2.1% pace in the third quarter compared with a 4.3% gain during the prior period. Spending on long-lasting durable goods such as cars and appliances rose at a better-than-9% rate for the second straight quarter.  Consumer spending accounts for about two-thirds of total output.  Exports, which add to GDP, increased at a 10% rate in the third quarter, the best gain in nearly three years. Separate data suggested that shipments of agricultural products, especially soybeans, supported the gain. Imports, which subtract from domestic output, increased at a 2.3% rate. In total, trade contributed 0.83 percentage point to overall growth.  The change in private inventories, a drag on output the five previous quarters, contributed 0.61 percentage point to the overall growth rate in the third quarter. An increase in stockpiles could indicate businesses are more confident in future demand.

A measure of economic growth that excludes inventory effects, real final sales of domestic product, rose at a 2.3% pace in the third quarter, a slight slowdown compared to a 2.6% increase in the second quarter.  A measure of business spending, nonresidential fixed investment, rose at a 1.2% rate versus the prior quarter’s 1% advance. Firms increased spending on building structures, but reduced outlays on equipment for the fourth straight quarter. Spending on intellectual property, including research and development and software, advanced at a slower pace than in the prior quarter.  Spending on home building and improvements fell for the second straight quarter. Residential fixed investment declined at a 6.2% pace in the third quarter. Until this spring, residential investment had been a driver of economic growth since mid-2014.  Government spending advanced at a 0.5% rate last quarter, with stronger federal spending offsetting a decline at the state and local level.

The latest data suggests the economy this year isn’t likely to top 2015’s 2.6% growth rate, the best annual reading of the expansion. The economy has failed to grow better than a 3% in any year since 2005, and many economists expect such growth will remain a rarity. The nonpartisan Congressional Budget Office projects GDP to grow at around 2% annually through 2026. Federal Reserve policy makers have pegged longer-run output gains at a 1.8% annual rate.  And while output advanced at a quicker rate last quarter, hiring was also stronger than in the second quarter. That could restrain improvement in worker productivity. Worker productivity has decreased for three straight quarters, through the midpoint of this year, and has been weak for much of the expansion. Productivity is a key ingredient in determining future growth in wages, prices and overall economic output.  Friday’s report showed inflation pressures eased during the summer.  The price index for personal-consumption expenditures rose at a 1.4% seasonally adjusted annual rate in the third quarter from the second. Consumer prices rose at a 2% rate during the second quarter. When excluding volatile food and energy costs, the price index increased at a 1.7% rate in the third quarter.

Zillow – rapid reaction: Q3 2016 homeownership rate

–  The Q3 2016 homeownership rate ticked up to 63.5% from 62.9% in Q2 on the back of strong owner household formation, but remains down slightly from Q3 2015, according to the US Census Bureau.

–  The number of US homeowner households grew by 922,000 in Q3 from Q2, the highest quarterly change in owner households since Q3 2001.

–  The number of US renter households fell by 606,000 in Q3 from Q2, the largest decline in at least 15 years.

Despite the challenges of low inventory, rising home prices and some difficulties getting financing, Americans are finding ways to transition away from renting and make homeownership happen. The modest uptick in the homeownership rate in Q3 from Q2 was driven by almost 1 million new homeowner households created in the quarter, and a drop in renter households of more than 600,000 over the same time — the largest quarterly gain and drop, respectively, since 2001. Household formation overall was strong, rising 1% from a year ago. In September alone, the US added more than 730,000 new households, and has added more than a million since last September. There has been a lot of hand wringing lately about the declining homeownership rate and slowing household formation rate, but this quarter’s data prove that homeownership is stabilizing and buying a home remains an important goal for millions of Americans.

CoreLogic – 1.8 million homes in 13 western US states at severe risk of wildfire

According to new data released today by CoreLogic, 1.8 million single-family homes across 13 states in the western US are currently designated as Extreme or High risk of wildfire damage, representing a combined total reconstruction cost value (RCV) of almost $500 billion. An additional 27 million properties, with an estimated RCV of $6.7 trillion, fall into the Moderate or Low risk category.  The CoreLogic Wildfire Risk analysis designates risk levels as Extreme, High, Moderate and Low based on a numeric risk score ranging from 1 to 100 assigned to individual properties. This score indicates the level of susceptibility to wildfire, as well as the risk associated with the property being located in close proximity to adjacent high-risk properties or areas. This proximity designation is important since wildfire can easily expand to surrounding properties and cause significant damage even if the original property was not considered high risk.

Black Knight Financial Services’ First Look at September 2016     Mortgage Data  


The Data and Analytics division of Black Knight Financial Services reports the following “first look” at September 2016 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.

–  Despite declining from August, September saw the third highest prepayment rate in three years

–  September’s less-than-one-percent seasonal increase in the delinquency rate was relatively mild by historical standards

–  At one%, the rate of all mortgages that are in active foreclosure fell to its lowest point in nine years

–  Non-current mortgage rates continue to struggle in oil states, with Alaska and Wyoming seeing the largest increases over the past six months


US stocks open lower as Apple, oil slump

US stocks opened lower Wednesday, with Dow industries losing 85 points at the open, as a steep drop in Apple Inc. shares following disappointing results weighed on main indexes. A further drop by oil futures to below $50 a barrel also put pressure on energy shares. The S&P 500 fell 9 points, or 0.4%, to 2,134. The Dow Jones Industrial Average dropped 82 points, or 0.4%, to 18,086. The Nasdaq Composite began the session down 28 points, or 0.5%, at 5,254.


MBA – mortgage applications down

Mortgage applications decreased 4.1% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 21, 2016. The prior week’s results included an adjustment for the Columbus Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.1% on a seasonally adjusted basis from one week earlier. On an nonadjustable basis, the Index increased 7% compared with the previous week.

The Refinance Index decreased 2% from the previous week to its lowest level since June 2016. The seasonally adjusted Purchase Index decreased 7% from one week earlier to its lowest level since January 2016. The nonadjustable Purchase Index increased 3% compared with the previous week and was 9% higher than the same week one year ago.

The refinance share of mortgage activity increased to 62.7% of total applications from 61.5% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.2% of total applications.  The FHA share of total applications decreased to 11.1% from 11.3% the week prior. The VA share of total applications decreased to 12.2% from 12.8% the week prior. The USDA share of total applications remained unchanged at 0.7% from the week prior.


US international trade deficit at $56.1 billion in Sept

The international trade gap shrank in September, while wholesale inventories rose.  The international trade deficit totaled $56.1 billion in September, down $3.1 billion from $59.1 billion a month earlier, the Commerce Department reported.

Exports for September were $125.6 billion, $1.1 billion more than August exports. Imports fell to $181.7 billion, $2 billion less than August imports.  Wholesale inventories for the month reached $590.7 billion, up 0.2% from August.


WSJ – US new home sales up in September after august dip

Sales of newly built homes rose in September after an August tumble, a sign modest momentum continues in the housing market.  Purchases of new single-family homes increased 3.1% in September from the prior month to a seasonally adjusted annual rate of 593,000, the Commerce Department said Wednesday.

Economists surveyed by The Wall Street Journal had expected a sales pace of 600,000 last month.  Sales for August were revised down sharply, to a 575,000 pace from an earlier estimate of 609,000. New data shows sales declined 8.6% in August from July. The sales pace in July was the best month for home sales since 2007.

New-home sales account for a fairly small slice of US home buying activity, and sales data can be extremely volatile from month to month. September’s increase in sales from the prior month came with a margin of error of 16.2 percentage points.

Through the first nine months of the year, sales are up 13% compared with the same period in 2015. That measure is more consistent with other gauges of the housing market showing improvement through most of this year.  “Demand for new homes remains strong in response to employment growth, wage gains, positive demographics and mortgage rates near all-time lows,” said David Berson, chief economist at Nationwide Mutual Insurance Co.  Still, the recent pace of new-home sales is about half the peak rate reached in 2005.


Sales of existing homes, which account for the bulk of purchases, rose 3.2% in September from the prior month, the National Association of Realtors said last week. Existing-home sales touched a postrecession peak in June, and then sales softened a bit during the summer months.

Home builders are sending somewhat mixed signals on their expectations of demand for new properties.  The National Association of Home Builders survey showed a measure of builders’ optimism fell slightly in October, but remained well in the range of positive market conditions.

Builders started fewer homes in September than in August, but sought more permits, according to separate Commerce data released last week.  Similar to the trend in new-home sales, single-family permits and starts advanced this year compared with 2015.

But the pace of building multifamily properties, such as apartments and condominiums, has slowed this year.  Wednesday’s report showed there was a 4.8-month supply of newly built homes available at the end of September, given the current sales pace. The median price of new homes sold in September was $313,500, up from $307,600 a year earlier.


RealtyTrac – 19 best single family rental markets for high rental yields and wage growth

The five most populous counties making the list were Macomb County, Michigan, in the Detroit metro area; Polk County, Florida, in the Lakeland-Winter Haven metro area; Ocean County, New Jersey, and Orange County, New York, both in the greater New York metro area; and Bell County, Texas, in the Killeen-Temple metro area.

Counties with the highest annual gross rental yields on the list were Clayton County, Georgia in the Atlanta metro area (24.3%); Saint Lawrence County, New York in the Ogdensburg-Massena metro area (16.9%); Jackson County, Michigan in the Jackson metro area (13.9%); along with Carroll County, Georgia (13.3%) and Newton County, Georgia (13.1%), both in the Atlanta metro.  Counties with the strongest annual weekly wage growth on this list were once again led by Clayton County, Georgia (17.4%), followed by Woodbury County, Iowa in the Sioux City metro area (12.2%); Carroll County, Georgia in the Atlanta metro area (6.0%); Whitfield County, Georgia in the Dalton metro area (4.8%); and Peoria County, Illinois in the Peoria metro area (4.8%).


CoreLogic – effects of student loan debt on millennial renters’ creditworthiness

As college costs have skyrocketed, students and their families have taken on debt to make up the difference. Many studies have pointed out that the increasing student debt has created a financial burden on millennials and postponed their home buying decisions. Few addressed the effect of student loan debt on millennials’ creditworthiness.

CoreLogic has studied the effects of student loan debt on millennial renters (specifically those 20-34 years old) by using the CoreLogic Rental Property Solutions’ tenant screening score from ScorePLUS. ScorePLUS measures the likelihood of lease default in next 12-18 months at the time of rental application.

It uses the applicant’s credit history from credit bureaus as well as specific rental application characteristics. The score is scaled in the range of 200-800 with a higher score indicating better credit quality. CoreLogic first compared the average ScorePLUS score for millennial applicants with student debt and without student loan debt.

As is evident, from 2009 to 2015, the millennial applicants with student loan debt actually have higher ScorePLUS scores than those without student loan debt. Applicants with student loan debt generally held college degrees so it is no surprise that these applicants had higher scores, on average, than those who did not have a college degree. It is noteworthy that the score gap of the two groups becomes smaller in recent years.


CoreLogic also compared renters’ ScorePLUS scores with different amount of student loan debt. We can see in both 2010 and 2015 that millennial applicants who had higher student loan debt earned higher average ScorePLUS scores than those who had a lower amount of student loan debt. A similar trend was found in renters’ FICO scores which shows that applicants who carried higher student loan debt had higher FICO scores, on average.

Therefore, student loan debt did not prevent millennials from access to credit even though it may delay their homebuying decisions.  As this CoreLogic analysis shows, renters with student loan debt have higher average credit scores than those without; and those with higher debt amounts have higher average credit scores than those with lower student loan debt amounts.

Despite the fact that student loan debt has grown into the nation’s second largest consumer debt, following mortgage, and has created a significant financial burden for millennials, it does not appear to prevent millennials from accessing credit.

MBA – mortgage applications up


Mortgage applications increased 0.6% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 14, 2016. This week’s results included an adjustment for the Columbus Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9% compared with the previous week.

The Refinance Index decreased 1% from the previous week. The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase Index decreased 7% compared with the previous week and was 13% higher than the same week one year ago.

The refinance share of mortgage activity decreased to 61.5% of total applications from 62.4% the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.1% of total applications.  The FHA share of total applications increased to 11.3% from 10.9% the week prior. The VA share of total applications increased to 12.8% from 12.0% the week prior. The USDA share of total applications remained unchanged at 0.7% from the week prior.


Oil Up 2% after surprise draw in US inventories

Oil prices rose about 2% on Wednesday after the US government reported a surprising drop in domestic crude stockpiles, versus analysts expectations for a build.  Brent crude was up $1.12, or 2%, at $52.80 per barrel by 10:33 a.m. EDT (1533 GMT).  US West Texas Intermediate (WTI) crude rose $1.16, or 2.3%, to $51.45.  The Energy Information Administration (EIA) said US crude stocks fell by 5.2 million barrels in the week ended Oct. 14. Analysts polled by Reuters had forecast a 2.7 million-barrel build.


WSJ – US housing starts fell 9% in September

Housing starts fell for the second straight month in September, but builders received more permits, a sign residential construction should pick up in the coming months amid steady demand.  September’s drop in starts was due to an unusually large decline in the volatile multifamily category, but an uptick in permits for multifamily housing indicated the steep fall was likely an aberration.

The more stable category of single-family homes posted monthly gains in both permits and starts.  Building permits issued for privately owned housing units rose 6.3% in September from the prior month to a seasonally adjusted annual rate of 1.225 million, the Commerce Department said Wednesday. Permits for single-family homes, about 60% of all permits, rose to a rate of 739,000, up 0.4% last month.

Housing starts fell 9.0% in September to an annual rate of 1.047 million, as starts on multifamily buildings dropped sharply. But single-family starts continued to climb, rising 8.1% in September to a rate of 783,000.  “Single-family construction is maintaining a steady climb, with permits for single-family structures pointing to continued growth ahead,” said Brittany Baumann, macro strategist at TD Securities USA, Inc. She predicted “upward path in single-family home construction” to continue through the end of the year.


Sales of existing homes, about 90% of the housing market, have grown fairly strongly this year, reaching a post-recession peak in June, according to the National Association of Realtors. Steady job growth, wage gains and low interest rates on mortgages have supported home buying.

But low inventory of new and existing homes is driving up prices, putting a purchase out of reach of some would-be buyers. Realtors are looking to home builders to provide much-needed supply.  Despite strong demand for housing in many parts of the country, fixed residential investment dropped in the second quarter, dragging on overall US growth.

Home builders’ sentiment is still running high, coming in at 63 in October, the second-highest level of the year, the National Association of Home Builders reported earlier this week, but many builders continue to report shortages of lots and labor.

That suggests that “supply constraints will remain an inhibiting factor” to a full bounce back in residential construction, according to Stephen Stanley, chief economist at Amherst Pierpont Securities.  “It is a mystery that in an environment that sounds like it would be very positive for housing, activity fell in real terms at a nearly 8% annual clip in the second quarter and may have declined at close to a 6% pace in the third quarter,” Mr. Stanley said.


Much of the construction growth this year has been in single-family homes. Through the first nine months of the year, permits were up 0.6% compared with the same period in 2015, while single-family permits were up 8.1%, year to date. Starts were up 3.7% through September, and single-family starts were up an even higher 8.6% through the nine months.

Relatively stronger momentum for single-family home construction suggests that builders are responding to rising prices and steady demand for that segment, while construction of larger multifamily projects is slowing.  Both permits and starts fell sharply in the years leading up to the recession, as the housing crisis took hold, and remained near all-time low levels for two years after the recession ended.

The construction gauges have rebounded since 2011, but the pace of gains slowed over the past year.  Monthly housing figures are often choppy and can be subject to large revisions. August permits were revised up to a 1.152 million rate from 1.139 million. August starts were revised to 1.150 million from 1.142 million.

September’s rise in permits, based on a survey of local governments, had a margin of error of 1.9 percentage points. Last month’s decline in starts, based on a survey of builders and homeowners, came with a margin of error of 9.2 percentage points.  Economists surveyed by The Wall Street Journal had expected overall September permits to rise to a 1.17 million annual rate and starts to rebound to a 1.18 million pace. Construction typically begins a month or two after a permit is issued.


Halliburton revenue falls short of estimates

Oil services company Halliburton Co. said Wednesday it had net income of $6 million, or 1 cent a share, in the third quarter, after a loss of $54 million, or 6 cents a share, in the year-earlier period. Revenue fell to $3.833 billion from $5.582 billion.

The FactSet consensus was for a loss per share of 6 cents and revenue of $3.906 billion. “In the near term, we remain cautious around fourth quarter customer activity due to holiday and seasonal weather-related down times,” Chief Executive Dave Lesar said n a statement. “However, it does not change our view that things are getting better for us and our customers.”

He said the company is pleased to have returned to profit “given the devastation our industry has faced over the last two years.” Shares were down 0.9% pre-market, but are up 38% in the year so far, while the S&P 500 has gained 4.5%.


CoreLogic – cash and distressed sales update: July 2016

–  The cash sales share fell 1.9 percentage points from July 2015

–  Of total sales in July 2016, distressed sales accounted for 7.2% and real estate-owned (REO) sales accounted for 4.3%

–  The REO sales share in July was the lowest for any month since July 2007


Cash sales accounted for 29.7% of total home sales in July 2016, down 1.9 percentage points year over year from July 2015. The cash sales share peaked in January 2011 when cash transactions accounted for 46.6% of total home sales nationally. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25%.

If the cash sales share continues to fall at the same rate it did in July 2016, the share should hit 25% by mid-2018.  REO sales had the largest cash sales share in July 2016 at 57.6%. Resales had the next highest cash sales share at 29.4%, followed by short sales at 28.1% and newly constructed homes at 15%. While the percentage of REO sales within the all-cash category remained high, REO transactions have declined since peaking in January 2011.

Figure 2 shows the distressed sales share of total home sales, of which REO sales made up 4.3% and short sales made up 2.9% in July 2016. The distressed sales share of 7.2% in July 2016 was the lowest distressed sales share since September 2007. At its peak in January 2009, distressed sales totaled 32.4% of all sales with REO sales representing 27.9% of that share.

The pre-crisis share of distressed sales was traditionally about 2%. If the current year-over-year decrease in the distressed sales share continues, it will reach that “normal” 2-percent mark in mid-2018.  All but eight states recorded lower distressed sales shares in July 2016 compared with a year earlier. Maryland had the largest share of distressed sales of any state at 19.4% in July 2016, followed by Connecticut (18.6%), Michigan (17.8%), New Jersey (15.6%) and Illinois (15.5%).

North Dakota had the smallest distressed sales share at 2.5%. While some states stand out as having high distressed sales shares, only North Dakota and the District of Columbia are close to their pre-crisis levels (each within one percentage point).  New York had the largest cash sales share of any state at 44.6%, followed by Alabama (43.6%), Florida (39.6%), New Jersey (37.3%) and Indiana (37%).


NAHB – builder confidence remains solid in October

Builder confidence in the market for newly constructed single-family homes remained on firm ground in October, down two points to a level of 63 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).  “Even with this month’s drop, builder confidence stands at its second-highest level in 2016, a sign that the housing recovery continues to make solid progress,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.

“However, builders in many markets continue to express concerns about shortages of lots and labor.”  “The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.”


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.  Two of the three HMI components posted losses in October. The component gauging current sales conditions dropped two points to 69 and the index charting buyer traffic fell one point to 46.

Meanwhile, the index measuring sales expectations in the next six months rose one point to 72.  Looking at the three-month moving averages for regional HMI scores, the West increased two points to 75 while the Northeast, Midwest and South each posted one-point gains to 43, 56 and 65, respectively.


Realtytrac – the foreclosure gender gap

–  Foreclosure Rates Higher For Male Homeowners Than Female Homeowners;

–  Exception is Single/Unmarried Owners: Female Foreclosure Rates Are Higher;

–  Foreclosure Rate Gender Gap Largest For Widowed Homeowners

ATTOM Data Solutions, the nation’s leading source for comprehensive housing data and the new parent company of RealtyTrac, today released an analysis showing homes owned by men had a higher foreclosure rate on average than homes owned by women as of the end of Q3 2016.

ATTOM analyzed tax assessor records and publicly recorded foreclosure filings for more than 5 million single family homes and condos nationwide where the primary homeowner was identified as an individual man or an individual woman. The analysis did not include homes owned by married couples when both were listed as homeowners or other joint home ownership situations.

The analysis found that 73 out of every 10,000 homes with individual male homeowners were in foreclosure as of the end of Q3 2016 while 72 out of every 10,000 homes owned by individual female homeowners were in foreclosure.

The foreclosure rate gap was even bigger between married men and married women homeowners — 83 out of every 10,000 homes with an individual married man listed as the primary homeowner were in foreclosure while 66 out of every 10,000 homes with an individual married woman listed as the primary homeowner were in foreclosure.

The biggest foreclosure rate gender gap was among widowed homeowners. The foreclosure rate for widowers was 112 out of every 10,000 homes while the foreclosure rate for widows was 94 out of every 10,000 homes.  The exception to the rule was among single and unmarried homeowners where homes owned by women had higher foreclosure rates on average (73 out of every 10,000 homes) than those owned by men (70 out of every 10,000 homes).



Ohio dumps Wells Fargo too


In case anyone thought that Wells Fargo’s now-former CEO John Stumpf falling on the sword and “retiring” would stem the tide of bad news for the bank, a former presidential candidate is now calling on his state to suspend business ties to the bank for at least a year.

One-time Republican presidential candidate and current governor of Ohio, John Kasich, announced Friday that he is using his power as governor to bar Wells Fargo from participating in future state debt offerings and financial services contracts initiated by state agencies for one year.

Additionally, Kasich said that he will seek to exclude Wells Fargo from participating in debt offerings initiated by the Ohio Public Facilities Commission.  Kasich’s office notes that Kasich is one of six votes on the OPFC. The remaining members are Ohio’s attorney general, auditor of state, secretary of state, treasurer of state and the director of the office of budget and management.

“It’s clear that Wells Fargo’s culture was compromised by greed and by a desire to make money that was stronger than a commitment to following proper ethical standards,” Kasich said.  “While Wells Fargo only does limited retail banking in Ohio, it does regularly seek state bond business so I have instructed my Administration to seek services from other banks instead, and I’ll cast my votes against Wells Fargo on the Public Facilities Commission,” Kasich continued.  “This company has lost the right to do business with the State of Ohio because its actions have cost it the public’s confidence,” Kasich added.


According to Kasich’s office, he may “revisit the decision” during the next year if Wells Fargo “makes progress in restoring a culture of integrity.”  Ohio’s move by a series of states and municipalities that have taken action to distance themselves from Wells Fargo in the wake of the fake account scandal surrounding the bank, which stems from more than 5,000 of the bank’s former employees opening more than 2 million fake accounts to get sales bonuses.

Previously, the city of Chicago, the state of California, and the state of Oregon suspended ties with Wells Fargo.  “Policymakers’ first instinct in these situations is often to just write another law, but we’ve seen that that doesn’t always make a difference,” Kasich concluded. “We need to send a message to this company—and every other company—that the public must be respected, that ethical standards must be respected and when they’re not it comes with a cost.”


Bank of America 3Q profit rises 6.6%

Bank of America, the second-largest US bank by assets, reported its first rise in profit in three quarters on Monday, boosted by strong results from bond trading.  Net income attributable to shareholders rose 6.6% to $4.45 billion in the third quarter ended Sept. 30, from $4.18 billion a year earlier. Earnings per share rose to 41 cents from 38 cents in the same period of 2015.

Analysts on average had expected earnings of 34 cents per share, according to Thomson Reuters I/B/E/S, although it was not immediately clear if the figures were directly comparable.  Revenue from trading fixed-income securities, currencies and commodities jumped 32% from a year earlier, boosted by Brexit-inspired volatility and changing expectations for monetary policy in the United States, Europe and Japan.  Non-interest expenses fell 3.3% to $13.48 billion.

BofA, like its peers, has been slashing costs to help make up for weak income from lending after years of low interest rates. Chief Executive Brian Moynihan said in July the bank would cut annual costs by another $5 billion by 2018, which would take the total to about $53 billion from about $58 billion in 2015.  The Federal Reserve, which last raised interest rates by 0.25 percentage points in December, has kept rates unchanged since then but has indicated a possible hike in December.


The three other big US banks that have reported third-quarter results all beat profit and revenue forecasts.  However, their net earnings declined – JPMorgan Chase’s by 7.6%, Citigroup’s by 10.5% and Wells Fargo’s by 3.7%.  BofA, whose shares were up 1.6% at $16.25 in premarket trading, said total revenue net of interest expenses rose 3% to $21.64 billion.

Net interest income rose 3% to $10.20 billion, the first increase in three quarters.  BofA said last month it would alter the way it accounts for changes in long-term interest rates from the third quarter as a way to reduce volatility in reported net interest income.  Like JPMorgan and Wells Fargo, BofA set aside more money to cover potential bad loans.

The bank’s provisions rose 5.5% $850 million in the quarter.  Income from investment banking rose 13.3% to $1.46 billion, driven by higher debt and equity issuance activity.  JPMorgan and Citigroup also benefited from a pickup in investment banking activity after a slow first-half of the year.  Adjusted revenue from Bank of America’s wealth and investment management unit, which includes Merrill Lynch, fell 1.7% to $4.38 billion.

The wealth business has played a significant role in the bank’s strategy to grow revenue from more stable businesses that require relatively little capital.  Up to Friday’s close, BofA’s shares had fallen 4.9% this year, compared with a 2.5% decline in the KBW banking index.


Warren calls for Obama to oust SEC chair

In the eyes of Sen. Elizabeth Warren, D-Mass, the chair of the Securities and Exchange Commission has not done nearly enough to prevent the “flood” of money flowing from corporations into the election process and has repeatedly “undermined” the SEC’s mission to protect investors, and therefore needs to replaced immediately.

Warren sent a letter Friday to President Obama, calling on him to replace Mary Jo White as the chair of the SEC due to her “refusal” to develop a political spending disclosure rule and her efforts to permit publicly traded companies to disclose less to investors and the public.  “Corporations are flooding our elections with millions of dollars in secret political contributions, drowning out the voices of working families.

Yet two weeks ago, Republican leaders successfully forced a rider into must-pass legislation to fund our government that prohibited the Securities and Exchange Commission from issuing a final rule requiring public companies to disclose these political contributions,” Warren writes.  “Democrats will continue to fight to remove the rider when Congress considers the next government funding bill in December, and I urge you to make clear in advance that you will veto any bill that includes it,” Warren continues.  “But the rider is not the biggest barrier to making progress on this critical issue.

For years, the Chair of the SEC, Mary Jo White, has refused to develop a political spending disclosure rule despite her clear authority to do so, and despite unprecedented and overwhelming investor and public support for such a rule,” Warren writes.


According to Warren, this “brazen conduct” is the most recent and prominent example of White “undermining” the Obama administration and “ignoring the SEC’s core mission” of investor protection.  Warren says that White has made it clear during her tenure that she feels that companies disclose too much publicly and wants to allow them to disclose less than they do now.

“She has failed to complete disclosure mandates Congress enacted in the wake of the 2008 financial meltdown, while simultaneously devoting the SEC’s limited discretionary resources to a far-reaching, anti-disclosure initiative cooked up by big business lobbyists seeking to reduce the amount of information public companies must make available to their investors,” Warren writes of White.

“Enough is enough,” Warren continues. “To address your concerns on political spending disclosure, and to advance other priorities of your administration and investors, I respectfully urge you to exercise your unilateral authority…to immediately designate another SEC commissioner as Chair of the agency.”  Warren tells Obama that she understands that replacing White would be an “uncommon act,” but feel that it is necessary to make such a move now.

“For the last three years, [Chair White’s anti-disclosure] views have undermined the SEC, your Administration’s priorities, Congressional mandates, and the best interests of investors,” Warren write. “Under a new Chair, the agency can re-direct its limited discretionary resources away from actively undermining the interests of investors and back toward its core purposes.”


Warren tells Obama that White’s “unapologetic anti-disclosure posture” has allowed efforts to “weaken” federal disclosure requirements to move forward.  “I do not make this request lightly. I have tried both publicly and privately to persuade Chair White to direct the agency’s resources toward pressing matters of compelling interest to investors and the public, and toward completing those rules that Congress has required it to implement,” Warren writes.  “But after years of fruitless efforts, it is clear that Chair White is set on her course,” Warren concludes. “The only way to return the SEC to its intended purpose is to change its leadership.”


Manufacturing in New York state slides again in October

Manufacturing in New York state contracted for the third straight month in October.  The Federal Reserve Bank of New York says its Empire State index slid to a reading of minus 6.8 this month, lowest since May and down from a minus 2 reading in September. Anything below zero signals contraction.

Economists had expected the survey to show growth this month.  New orders, shipments and employment all fell this month, but at a slower pace than they did in September.  Prices paid and received by manufacturers grew modestly.  Manufacturers have been struggling with a strong dollar, which makes their goods pricier abroad, and weak investment in machinery by businesses cautious about global economic outlook. But the New York Fed found that manufacturers’ outlook for the next six months is sunnier.


Industrial production flat

US industrial production barely rose in September as a rebound in manufacturing output was offset by a decline in utilities production, suggesting a moderate acceleration in economic growth in the third quarter.  The Federal Reserve said on Monday industrial output edged up 0.1% last month after a downward revised 0.5% decline in August.

Economists polled by Reuters had forecast industrial production gaining 0.1% last month after a previously reported 0.4% fall in August. Industrial production rose at an annual rate of 1.8% in the third quarter, the first quarterly increase since the third quarter of 2015.

The industrial sector continues to be hobbled by the lingering effects of the dollar’s surge and oil price plunge between June 2014 and December 2015. The sector has also been hurt by business efforts to reduce an inventory overhang, which has resulted in fewer orders being placed with factories.

But with the dollar’s rally fading and oil prices stabilizing, the worst of the industrial downturn is probably over. A survey early this month showed an acceleration in factory activity in September, while new orders for manufactured capital goods have increased since June.


Manufacturing output rose 0.2% in September after falling 0.5% in the prior month. Motor vehicle and parts production edged up 0.1%. Manufacturing production rose at a 0.9% rate in the third quarter.  Mining production increased 0.4% as gains in oil and gas well drilling offset a drop in crude oil extraction.

That left mining output rising at a 3.7% rate in the third quarter following six consecutive quarterly declines.  Utilities production dropped 1.0% last month after slipping 0.3% in August.  With output barely rising last month, industrial capacity use edged up 0.1 percentage point to 75.4%. Officials at the Fed tend to look at capacity use as a signal of how much “slack” remains in the economy and how much room there is for growth to accelerate before it becomes inflationary.

CoreLogic – 37,000 completed foreclosures in August 2016


CoreLogic released its August 2016 National Foreclosure Report which shows the foreclosure inventory declined by 29.6% and completed foreclosures declined by 42.4% compared with August 2015. The number of completed foreclosures nationwide decreased year over year from 64,000 in August 2015 to 37,000 in August 2016, representing a decrease of 69% from the peak of 118,221 in September 2010.

The foreclosure inventory represents the number of homes at some stage of the foreclosure process and completed foreclosures reflect the total number of homes lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 6.4 million completed foreclosures nationally, and since home ownership rates peaked in the second quarter of 2004, there have been approximately 8.5 million homes lost to foreclosure.

As of August 2016, the national foreclosure inventory included approximately 351,000, or 0.9%, of all homes with a mortgage compared with 499,000 homes, or 1.3%, in August 2015. The August 2016 foreclosure inventory rate is the lowest it’s been since July 2007.


CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due including loans in foreclosure or REO) declined by 20.6% from August 2015 to August 2016, with 1.1 million mortgages, or 2.8%, the lowest level since September 2007. The decline was geographically broad with decreases in serious delinquency in 48 states and the District of Columbia.

“Foreclosure inventory fell by 30% from the previous year, the largest year-over-year decline since January 2015,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The large decline in the distressed inventory has been one of the drivers of steady home price growth which helps Americans increase their home equity to support increased spending or cushion future economic risk.”

“Foreclosure rates and serious delinquency continued to trend down in August as real estate markets across many parts of the US exhibit strong demand growth and rising prices,” said Anand Nallathambi, president and CEO of CoreLogic. “With the foreclosure inventory now under 1% nationally, the need to boost single-family housing stocks through new construction will become more acute in the coming months and years.”


Additional August 2016 highlights:

–  On a month-over-month basis, completed foreclosures increased by 7.7% to 37,000 in August 2016 from the 34,000 reported for July 2016. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

–  On a month-over-month basis, the August 2016 foreclosure inventory was down 3.2% compared with July 2016.

–  The five states with the highest number of completed foreclosures in the 12 months ending in August 2016 were Florida (55,000), Texas (27,000), Ohio (23,000), California (22,000) and Georgia (21,000).These five states account for about 35% of completed foreclosures nationally.

–  Four states and the District of Columbia had the lowest number of completed foreclosures in the 12 months ending in August 2016: the District of Columbia (212), North Dakota (341), West Virginia (469), Alaska (624) and Montana (717).

–  Four states and the District of Columbia had the highest foreclosure inventory rate in August 2016: New Jersey (3.2%), New York (2.9%), Maine (1.8%), Hawaii (1.8%) and the District of Columbia (1.8%).

–  The five states with the lowest foreclosure inventory rate in August 2016 were Colorado (0.3%), Minnesota (0.3%), Arizona (0.3%), Utah (0.3%) and Michigan (0.3%).


Venture capitalist explains why Silicon Valley will be disappointed by a Clinton presidency

Silicon Valley shouldn’t get too excited about the prospect of Hillary Clinton in the White House, said one well-known venture capitalist.  If she prevails over Donald Trump next month, her cabinet and office appointments are likely to be less concerned with helping tech than pleasing specific democratic constituencies, whose interests often conflict with Silicon Valley, said investor Bradley Tusk, CEO of Tusk Holdings.

Some of the big issues Silicon Valley wants addressed include immigration reform, new regulations for autonomous vehicles, and worker reclassification to jumpstart the so-called gig economy, said Tusk, a former aide to New York City Mayor Michael Bloomberg who now specializes in helping startups navigate regulatory environments.


The first issue — visa reform to allow more high-skilled workers into the US — is unlikely to come quickly, because Democrats in Congress will push for comprehensive immigration reform, Tusk said, a much bigger legislative endeavor that failed when it was last introduced in Congress in 2007.  Companies like Apple, Alphabet, Amazon, Facebook and Microsoft need a lot of engineering talent, and would like to see the government issue more H-1B visas to let more workers into the US and allow them to stay.  “I think they’re going to have trouble on that issue,” said Tusk.

Opposition from trucking industry unions, insurance companies and some auto manufacturers means Clinton will not prioritize new regulations to promote autonomous driving, he said. The last thing many tech companies want is a long drawn-out process to establish new regulations in this area, Tusk said. (Tusk, incidentally, is an investor in Uber, one of the companies working on autonomous cars.)  Union opposition to worker reclassification makes Clinton unlikely to implement changes that would benefit companies that operate in the gig economy, Tusk said.

Both of these areas may yet see regulatory progress on the state level, but tech companies would prefer federal guidance.  Though he expects Clinton to appoint an insider from the technology world to her cabinet, it is unlikely to be to a position with any regulatory authority — like Secretary of Commerce — and thus will result in little meaningful changes for the tech sector, he said.


Some people that are rumored in Silicon Valley to be in the running for a cabinet appointment include Facebook COO Sheryl Sandberg, HP CEO Meg Whitman, and Kleiner Perkins Caufield & Byers partner Mary Meeker, Tusk said. (Sanberg, howeversaid at a conference on Tuesday that she has no plans to work in government.)

Even more, some cabinet appointments could wind up being hostile to tech, Tusk said.  Clinton will almost certainly appoint a left wing Secretary of Labor — to appease Bernie Sanders and Elizabeth Warren supporters — making federal progress on a new worker classification almost impossible, he said. Uber and others would be forced then to negotiate with individual states, which they find much more burdensome, he said.

The Secretary of Transportation will likely become the most important figure in Washington for tech, given both the Federal Aviation Administration’s jurisdiction over drones and autonomous vehicle regulations, said Tusk. That appointment is also likely to be a political one rather than someone from the tech industry, making desired reforms less likely, he said.

Clinton’s support on the campaign trail for some things the tech world cares deeply about — like strong encryption — was likely cultivated to lure tech donors and voters, rather than to reflect strong beliefs, said Tusk. Ultimately, when faced with a crisis in which security and privacy seem to be at odds, she is likely to side with the government over tech companies, he said.  For example, when faced with a similar situation such as the Apple versus FBI case, Clinton is likely to side with the FBI once she is in office, he said.


MBA – mortgage applications down

Mortgage applications decreased 6.0% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 7, 2016.  The Market Composite Index, a measure of mortgage loan application volume, decreased 6.0% on a seasonally adjusted basis from one week earlier.

On an unadjusted basis, the Index decreased 6% compared with the previous week. The Refinance Index decreased 8% from the previous week, to its lowest level since June 2016. The seasonally adjusted Purchase Index decreased 3% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 27% higher than the same week one year ago.

The refinance share of mortgage activity decreased to 62.4% of total applications from 63.8% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.1% of total applications.  The FHA share of total applications increased to 10.9% from 10.0% the week prior. The VA share of total applications increased to 12.0% from 11.4% the week prior. The USDA share of total applications remained unchanged at 0.7% from the week prior.


Number of job openings fall in August to 5.4 million

Monthly job openings decreased in August to 5.4 million, the Bureau of Labor Statistics said on Wednesday.  That’s a rate of 3.6%, according to the Job Openings and Labor Turnover Summary (JOLTS). Economist expected monthly job openings in August to be 5.72 million, according to estimates by Reuters, down from 5.87 million last month.

The professional and business services industry led the largest decrease at 223,000. Hires and separations changed little at 5.2 million and 5 million, respectively, the department said.  The report from the Labor Department — often closely watched by Fed chair Janet Yellen — is a key barometer of economic conditions, measuring job postings in different sectors, and the number of hires and layoffs.  The quits rate was 2.1% and the layoffs and discharges rate was 1.1%.


PHH wins landmark victory: CFPB ruled unconstitutional

What was once unthinkable actually happened, as the United States Court of Appeals for the District of Columbia Circuit handed an earth-shattering victory to PHH, declaring the Consumer Financial Protection Bureau’s leadership structure unconstitutional and vacating a $103 million fine against PHH.  PHH, a mortgage lender, made national headlines when it challenged CFPB Director Richard Cordray’s $103 million increase to a $6 million fine initially levied against PHH for allegedly illegally referring consumers to mortgage insurers in exchange for kickbacks.

The case was one of the first occasions that a company fought back against the CFPB, the governmental agency that formed after the financial crisis and was a celebrated achievement of the Dodd-Frank Act, at least by those on the left.  In this case, the issue began in June 2015, when Cordray exercised his authority to layer an additional $103 million fine on top of the original $6.4 million penalty from Administrative Law Judge Cameron Elliot.

The fine centered around Cordray saying that PHH violated the Real Estate Settlement Procedures Act every time it accepted a kickback payment on or before July 21, 2008 – going far beyond Elliot’s ruling, which had limited PHH’s violations to kickbacks that were connected with loans that closed on or after July 21, 2008.  Cordray issued a final order that required PHH to disgorge $109 million – all the reinsurance premiums it received on or after July 21, 2008.  PHH challenged Cordray’s authority to levy the additional fine and the constitutionality of the CFPB, and after much deliberation, the court agreed with PHH on all counts.


In a unanimous decision of the three justices of the United States Court of Appeals for the District of Columbia Circuit, the court ruled that the CFPB’s current structure allows the director to wield far too much power, more than any other agency in the government.  “Because the Director alone heads the agency without Presidential supervision, and in light of the CFPB’s broad authority over the US economy, the Director enjoys significantly more unilateral power than any single member of any other independent agency,” the court writes.

And it gets worse for the CFPB from there.  From the court’s decision:  “By “unilateral power,” we mean power that is not checked by the President or by other colleagues. Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power. That is not an overstatement.

What about the Speaker of the House, you might ask? The Speaker can pass legislation only if 218 Members agree. The Senate Majority Leader? The Leader needs 60 Senators to invoke cloture, and needs a majority of Senators (usually 51 Senators or 50 plus the Vice President) to approve a law or nomination. The Chief Justice? The Chief Justice must obtain four other Justices’ votes for his or her position to prevail.

The Chair of the Federal Reserve? The Chair needs the approval of a majority of the Federal Reserve Board. The Secretary of Defense? The Secretary is supervised and directed by the President. On any decision, the Secretary must do as the President says. So too with the Secretary of State, and the Secretary of the Treasury, and the Attorney General.”

In short, the court writes, the director of the CFPB is the “single most powerful official in the entire US Government, other than the President,” in terms of unilateral power.  “It is the Director’s view of consumer protection law that prevails over all others,” the court writes. “In essence, the Director is the President of Consumer Finance. The concentration of massive, unchecked power in a single Director marks a departure from settled historical practice and makes the CFPB unique among traditional independent agencies.”


At issue is the CFPB’s status as an independent agency, which, as the court points out, have typically operated with a different leadership structure than the CFPB.  The court points out that other governmental departments, such as the Department of Justice or the Department of the Treasury, are led by a single director, but notes a significant difference.

The difference, as the court notes, is that those agencies are “executive agencies,” operating within the Executive Branch chain of command under the supervision and direction of the President, and those agency heads are removable at will by the President.  “The President is a check on those agencies,” the court notes. “Those agencies are accountable to the President.

The President in turn is accountable to the people of the United States for the exercise of executive power in the executive agencies.”  That makes the power structure of those agencies constitutional, whereas the CFPB’s leadership structure, with power concentrated with the agency’s director, is unconstitutional because it is an independent agency, rather than an executive agency.

“As an independent agency with just a single Director, the CFPB represents a sharp break from historical practice, lacks the critical internal check on arbitrary decisionmaking, and poses a far greater threat to individual liberty than does a multi-member independent agency,” the court writes. “All of that raises grave constitutional doubts about the CFPB’s single-Director structure.”


But that’s not the case any more.  As a result of the decision, the CFPB now will operate as an executive agency. The President of the United States now has the power to supervise and direct the Director of the CFPB, and may remove the Director at will at any time.  PHH also asked for both the CFPB and the Dodd-Frank Act to be abolished, and while the CFPB will undoubtedly change, the agency is not being shut down.

“With the for-cause provision severed, the President now will have the power to remove the Director at will, and to supervise and direct the Director,” the court writes.  “The CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury,” the court continues.

“Those executive agencies have traditionally been headed by a single person precisely because the agency head operates within the Executive Branch chain of command under the supervision and direction of the President,” the court continues. “The President is a check on and accountable for the actions of those executive agencies, and the President now will be a check on and accountable for the actions of the CFPB as well.”  Putting aside the foundation-shattering change to the CFPB’s leadership structure, the court was also asked to rule on the fine handed down against PHH.  At issue there was Cordray retroactively applying the law to previous violations, an act that the court did not approve of.


The court explains that decision this way:  “Put aside all the legalese for a moment. Imagine that a police officer tells a pedestrian that the pedestrian can lawfully cross the street at a certain place. The pedestrian carefully and precisely follows the officer’s direction. After the pedestrian arrives at the other side of the street, however, the officer hands the pedestrian a $1,000 jaywalking ticket. No one would seriously contend that the officer had acted fairly or in a manner consistent with basic due process in that situation.

Yet that’s precisely this case. Here, the CFPB is arguing that it has the authority to order PHH to pay $109 million even though PHH acted in reliance upon numerous government pronouncements authorizing precisely the conduct in which PHH engaged.”  “PHH argues that the CFPB violated bedrock due process principles by retroactively applying its new interpretation of the statute against PHH,” the court writes.  “We agree with PHH,” the court continues. “We grant PHH’s petition for review, vacate the CFPB’s order, and remand for further proceedings consistent with this opinion.”


In a statement, a CFPB spokesperson says that the agency “respectfully disagrees” with court’s ruling.  “The Bureau believes that Congress’s decision to make the Director removable only for cause is consistent with Supreme Court precedent and the Bureau is considering options for seeking further review of the Court’s decision,” the CFPB spokesperson said.  “In the meantime, as the court expressly recognized, the Bureau will continue its important work,” the spokesperson continued. “Congress has charged the Bureau with ensuring that the markets for consumer financial products and services are fair, transparent, and competitive and with protecting consumers in these markets from unlawful practices. Today’s decision will not dampen our efforts or affect our focus on the mission of the agency.”

PHH, on the other hand, is “extremely gratified” with the court’s decision.  “We are hopeful that the Court’s opinion will provide greater certainty to the entire mortgage industry regarding the industry’s reliance on long-standing regulation as to how to conduct business consistent with RESPA,” PHH said in a statement.  “Regarding the Court’s decision to remand the case to the CFPB to determine whether any mortgage insurers paid more than reasonable market value to the PHH-affiliated reinsurer, we will continue to present the facts and evidence to demonstrate that we complied with RESPA and other laws applicable to our former mortgage reinsurance activities in all respects,” PHH concluded.

CoreLogic – home price index highlights: August 2016


–  Home prices forecast to rise 5.3% over the next year.

–  The highest appreciation was in the West, with Oregon and Washington growing by double digits in August.

–  The low-price tier showed the fastest appreciation of any price tier.


National home prices increased 6.2% year over year in August 2016, according to the latest CoreLogic Home Price Index (HPI®) Report. While the HPI has increased on a year-over-year basis every month since February 2012, prices are still 5.6% below the April 2006 peak. Home prices have risen 42% since bottoming out in March 2011.

Home prices are expected to increase by 5.3% from August 2016 to August 2017, and are projected to return to the April 2006 peak in mid-2017. Adjusting for inflation, US home prices increased 6.3% year over year in August 2016, and are 19.2% below their peak.

Oregon showed the largest HPI gain of all states in August 2016 with a 10.3% year-over-year increase, followed closely by Washington (+10.2%) and Colorado (+9.1%). Nevada home prices were the farthest below their all-time HPI high, still 31.4% below the March 2006 peak.

In addition to the overall indices, CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home price.  The low-price tier has shown the most price growth in recent months, increasing 9% year over year in August 2016. This price tier also recovered 59.9% from its lowest point in March 2011 and is the only price tier to pass its pre-housing-crisis peak.

Although the low-to-middle tier has recovered 50.4% from its lowest point in March 2011, and has grown by 7.5% year over year, it is still the farthest from its peak of all the price tiers, down 7.1%. The middle- to moderate-price tier increased 6.6% year over year in August 2016, but remains 6.7% below its peak. The high-price tier, which fell the least during the housing crisis, increased by 5% year over year in August 2016, the slowest increase of all the price tiers. The high-price tier remains 5% below its peak.


US service sector hits highest level in nearly a year

A gauge of US service-sector activity rose to the highest level in nearly a year in September, a sign of steady growth for a key segment of the economy.  The Institute for Supply Management on Wednesday said its nonmanufacturing index jumped to 57.1 in September from 51.4 in August.

That was the highest level since October 2015.  Economists surveyed by The Wall Street Journal had expected a September reading of 53.0. A reading above 50 signals expansion while a reading below 50 indicates contraction.  The service sector — ranging from restaurants to real estate — covers the bulk of economic activity in the US Consumer spending on services makes up about two-thirds of all personal expenditures.


MBA – mortgage applications increase

Mortgage applications increased 2.9% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 30, 2016.  The Market Composite Index, a measure of mortgage loan application volume, increased 2.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3% compared with the previous week.

The Refinance Index increased 5% from the previous week. The seasonally adjusted Purchase Index decreased 0.1% from one week earlier. The unadjusted Purchase Index decreased 0.2% compared with the previous week and was 14% lower than the same week one year ago.  The refinance share of mortgage activity increased to 63.8% of total applications from 62.7% the previous week.

The adjustable-rate mortgage (ARM) share of activity increased to 4.5% of total applications.  The FHA share of total applications decreased to 10.0% from 10.2% the week prior. The VA share of total applications decreased to 11.4% from 11.9% the week prior. The USDA share of total applications increased to 0.7% from 0.6% the week prior.


Private sector added 154,000 jobs in September

US private employers added 154,000 jobs in September, below economists’ expectations, a report by a payrolls processor showed on Wednesday.  Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 166,000 jobs, with estimates for the gain ranging from 140,000 to 181,000.  Private payroll gains in the month earlier were revised down to 175,000 from an originally reported 177,000 increase.  The report is jointly developed with Moody’s Analytics.

The ADP figures come ahead of the US Labor Department’s more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.  Economists polled by Reuters are looking for US private payroll employment to have grown by 170,000 jobs in September, up from a gain of 126,000 the month before. Total non-farm employment is expected to have risen by 175,000.  The unemployment rate is forecast to stay steady at the 4.9% recorded a month earlier.


PHH takes another hit as Bank of America Merrill Lynch pulls mortgage servicing portfolio

It only took a little more than six months for Bank of America Merrill Lynch to decide to pull the rest of its mortgage servicing business from PHH Mortgage Corporation, marking another devastating blow for the company.  PHH Mortgage, a wholly-owned subsidiary of PHH Corp., announced in an 8-K filing with the Securities and Exchange Commission that it received written notice from Bank of America that it is terminating its agreement with PHH, meaning the company will no longer provide private label origination services on behalf of Merrill Lynch, effective March 31, 2017.

Less than a year ago, PHH and Bank of America announced a new agreement for PHH to continue providing mortgage origination services to Merrill Lynch clients.  The agreement renewed a deal that was set to expire on Dec. 31, 2015, and announced a new deal that would begin on Jan. 1, 2016.  However, at the time, the terms of the deal were not disclosed. And according to the latest 8-K filing, Bank of America was allowed to terminate without cause.


The first sign of trouble came just three months after Bank of America and PHH renewed their agreement. PHH disclosed to its investors that BofA decided to pull the origination of new applications for certain mortgages in April 2016.  At the time, the change represented about 20% of Merrill Lynch’s closing dollar volume, and about 5% of PHH’s closing dollar volume. Merrill Lynch’s closing volume accounted for about 26% of PHH’s total volume for 2015.

The news in April came with the potential threat of Merrill Lynch pulling the rest of its serving since PHH received no assurances regarding the remainder of the Merrill Lynch origination activity, which could also be subject to change at any time during 2016 or beyond.  In the most recent 8-K filing, PHH reiterated that earlier this year Bank of America disclosed its intent to insource an estimated 60% of Merrill Lynch’s volume based on closing dollar volume for the year ended Dec. 31, 2015, and BofA expressed its belief this in-sourcing trend from Merrill Lynch would continue.

PHH president and CEO Glen Messina said at the time in a note to investors disclosing the news, “While we are disappointed with these changes, we intend to take appropriate measures to adjust our operations and incorporate these developments in our review of strategic options.”  “We believe these decisions reflect the broader dynamics in our industry, including higher compliance and other costs associated with a more onerous regulatory environment,” he added.


Due to the first time Merrill Lynch pulled its business, PHH became unsure of its earnings, and retracted its previously disclosed earnings guidance for 2016. PHH said it had no intentions of providing new earnings guidance until its comprehensive review of strategic options.  But before PHH could even get to this point, it had to go through a few more hurdles, announcing in August 2016 that it was about to lose another large portion of its mortgage-subservicing portfolio.

PHH disclosed that it received notice from HSBC Bank that it plans to sell the mortgage servicing rights on approximately 139,000 mortgage loans currently subserviced by PHH Mortgage Corporation on behalf of HSBC.  PHH said that HSBC informed the company that the purchaser of the mortgage servicing rights does not plan to continue using PHH as a subservicer.  It wasn’t too long after the HSBC news that PHH said it would cut one-third of its local workforce in Amherst, New York, where it employed 294 people.

Due to this latest termination, PHH said it estimates Merrill Lynch originations will contribute approximately $45 million of pre-tax earnings for fiscal year 2016 based on PHH’s estimate of Merrill Lynch loan closing volume for 2016.  As a result, PHH said in the 8-K filing that it is “taking actions to reduce its facilities footprint and intends to take actions to realign operating costs in response to the loss of Merrill Lynch production volume, including by re-allocating excess originations capacity to portfolio retention efforts and to clients other than Merrill Lynch.”


Trade deficit widened to $40.73 billion in August

The US trade deficit rose more than expected in August as a rise in imports offset higher exports.  The Commerce Department said on Wednesday the trade gap widened 3% to $40.73 billion. Imports hit their highest level since September 2015 while exports were the highest since July of last year. The July trade deficit was revised to $39.55 billion from a previous $39.47 billion.

Economists polled by Reuters had forecast the trade gap decreasing to $39.3 billion in August. When adjusted for inflation, the deficit fell to $57.48 billion from a revised $58.23 billion in July.  Exports have begun to slowly shake off the lingering effects of the dollar’s strength for much of the past two years against the currencies of the United States’ major trading partners.  Exports of goods and services edged up 0.8% to $187.85 billion in August.

Exports to China rose 2.6% and were up 1.2% to the European Union. Exports to the United Kingdom rose 2.4%.  Imports of goods and services increased 1.2% to $228.58 billion in August. Oil prices averaged $39.38 per barrel in August, down 20.2% from a year ago. Imports from China increased 9.5% while the politically sensitive US-China trade deficit widened 11.6% to $33.85 billion in August.



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