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

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

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

ABC News settles ‘pink slime’ food-libel lawsuit

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

MBA – mortgage applications decrease in latest MBA weekly survey

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

Dow surges more than 100 points as bank shares jump

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

WSJ – labor shortage squeezes real-estate developers

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

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

Black Knight – Home Price Index report: April 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SpaceX aims for rarefied air with upcoming launches

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

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

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

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

MBA forecasts commercial/multifamily mortgage originations to decline in 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CoreLogic – Housing Credit Index: first quarter 2017

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

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

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

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

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

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

Olick – mortgage applications hold steady as rates remain low

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

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

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

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

CoreLogic – loan performance insights report highlights: March 2017

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

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

– North Dakota had the lowest delinquency rate of any state

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

Harley-Davidson betting on Trump to break trade barriers

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

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

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

Oil prices bounce but stuck near 2017 lows on supply overhang

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

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

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

NAHB – builder confidence remains solid in June

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

Fannie Mae general counsel appointed to Treasury

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

Investor confidence pushes up oil prices

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

RealtyTrac – the home flipping pyramid

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

Tech selloff spreads to Europe and Asia, politics lifts euro

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

Former employees accuse Colorado mortgage company of widespread mortgage fraud

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

Asian shares mostly lower after technology shares fall in US

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

CoreLogic – nearly 9 million borrowers have regained equity since the height of the crisis in 2011

–  Nearly 91,000 Homeowners Regained Equity in Q1 2017

–  3.1 Million Residential Properties with a Mortgage Still in Negative Equity

–  Average Homeowner Equity Increased from Q1 2016 to Q1 2017

CoreLogic released its Q1 2017 home equity analysis which shows US homeowners with mortgages (roughly 63% of all homeowners) have seen their equity increase by a total of $766.4 billion since Q1 2016, an increase of 11.2%. Additionally, the average homeowner gained about $13,400 in equity between Q1 2016 and Q1 2017. In Q1 2017, the total number of mortgaged residential properties with negative equity decreased  3% from Q4 2016* to 3.1 million homes, or 6.1% of all mortgaged properties. Compared to Q1 2016, negative equity decreased 24% from 4.1 million homes, or 8.1% of all mortgaged properties. “One million borrowers achieved positive equity over the last year, which means mortgage risk continues to steadily decline as a result of increasing home prices,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Pockets of concern remain with markets such as Miami, Las Vegas and Chicago, which are the top three for negative equity among large metros, with each recording a negative equity share at least twice or more the national average.” Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or both. Negative equity peaked at 26% of mortgaged residential properties in Q4 2009 based on CoreLogic equity data analysis, which began in Q3 2009. The national aggregate value of negative equity was approximately $283 billion at the end of Q1 2017, down quarter over quarter by approximately $2.6 billion, or 0.9%, from $285.5 billion in Q4 2016 and down year over year by approximately $21.5 billion, or 7.1%, from $304.5 billion in Q1 2016. “Homeowner equity increased by over $750 billion during the last year, the largest increase since mid-2014,” said Frank Martell, president and CEO of CoreLogic. “The rising cushion of home equity is one of the main drivers of improved mortgage performance. It also supports consumer balance sheets, spending and the broader economy.”

Highlights as of Q1 2017:

–  Texas had the highest percentage of homes with positive equity at 98.4%, followed by Utah (98.2%), Washington (98.2%), Hawaii (98.1%) and Colorado (98%).

–  On average, homeowner equity increased about $13,400 from Q1 2016 to Q1 2017 (for mortgaged properties). Washington had the highest year-over-year average increase at $37,900, while Alaska experienced a small decline.

–  Nevada had the highest percentage of homes with negative equity at 12.4%, followed by Florida (11.1%), Illinois (10.5%), New Jersey (10.2%) and Connecticut (9.9%). These top five states combined account for 32.6% of outstanding mortgages in the US

–  Of the 10 largest metropolitan areas by population, San Francisco-Redwood City-South San Francisco, CA had the highest percentage of mortgaged properties in a positive equity position at 99.4%, followed by Denver-Aurora-Lakewood, CO (98.6%), Houston-The Woodlands-Sugar Land, TX (98.5%), Los Angeles-Long Beach-Glendale, CA (97.3%) and Boston, MA (95.6%).

–  Of the same 10 largest metropolitan areas, Miami-Miami Beach-Kendall, FL had the highest percentage of mortgaged properties in negative equity at 15.7%, followed by Las Vegas-Henderson-Paradise, NV (14.2%), Chicago-Naperville-Arlington Heights, IL (12%), Washington-Arlington-Alexandria, DC-VA-MD-WV (8%) and New York-Jersey City-White Plains, NY-NJ (5.3%).

Wholesale inventories slide 0.5% in April, falling short of estimates

US wholesale inventories dropped 0.5% in April, falling short of economists’ expectations, the Commerce Department announced on Friday. Economists were expecting a gain of 0.2% in April, according to a poll by Thomson Reuters. Last month, the Commerce Department announced wholesale inventories climbed 0.2% for March. Sales by merchant wholesalers for April, excluding manufacturers’ sales branches and offices, and after adjustment for seasonal variations, were $462.3 billion, down 0.4% for the latest period, the group added on Friday. Total inventories by merchant wholesalers were $591 billion at the end of the month. The April inventories/sales ratio came in at 1.28, compared to 1.35 a year ago. For the first quarter overall, inventory investment was on the weaker side, taking away from growth. Wholesale inventories data for May will be released on July 11, the Commerce Department announced.

NAR – 5 root causes for US’s depressed homeownership rate

Despite steadily improving local job markets and historically low mortgage rates, the US homeownership rate is stuck near a 50-year low because of a perverse mix of affordability challenges, student loan debt, tight credit conditions and housing supply shortages. That’s according to findings of a new white paper titled, “Hurdles to Homeownership: Understanding the Barriers” (link is external) released today in recognition of National Homeownership Month at the National Association of Realtors® Sustainable Homeownership Conference at University of California, Berkeley. Led by a group of prominent experts, including NAR 2017 President William E. Brown, NAR Chief Economist Lawrence Yun and Berkeley Hass Real Estate Group Chair Ken Rosen, today’s conference addresses the dip and idleness in the homeownership rate, its drag on the economy and what can be done to ensure more creditworthy households have the opportunity to buy a home.  “The decline and stagnation in the homeownership rate is a trend that’s pointing in the wrong direction, and must be reversed given the many benefits of homeownership to individuals, communities and the nation’s economy,” said Brown, a Realtor® from Alamo, California. “Those who are financially capable and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.” One of Brown’s main objectives as president of NAR is identifying ways to boost the homeownership rate in a safe and responsible way. The research, which was commissioned by NAR, prepared by Rosen Consulting Group, or RCG, and jointly released by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley Haas School of Business, identifies five main barriers that have prevented a significant number of households from purchasing a home.

They are:

–  Post-foreclosure stress disorder: There are long-lasting psychological changes in financial decision-making, including housing tenure choice, for the 9 million homeowners who experienced foreclosure, the 8.7 million people who lost their jobs, and some young adults who witnessed the hardships of their family and friends. While most Americans still have positive feelings about homeownership, targeted programs and workshops about financial literacy and mortgage debt could help return-buyers and those who may have negative biases about owning.

–  Mortgage availability: Credit standards have not normalized following the Great Recession. Borrowers with good-to-excellent credit scores are not getting approved at the rate they were in 2003, prior to the period of excessively lax lending standards. Safely restoring lending requirements to accessible standards is key to helping creditworthy households purchase homes.

–  The growing burden of student loan debt: Young households are repaying an increasing level of student loan debt that makes it extremely difficult to save for a down payment, qualify for a mortgage and afford a mortgage payment, especially in areas with high rents and home prices. As NAR found in a survey released last year, student loan debt is delaying purchases from millennials and over half expect to be delayed by at least five years. Policy changes need to be enacted that address soaring tuition costs and make repayment less burdensome.

–  Single-family housing affordability: Lack of inventory, higher rents and home prices, difficulty saving for a down payment and investors weighing on supply levels by scooping up single-family homes have all lead to many markets experiencing decaying affordability conditions. Unless these challenges subside, RCG forecasts that affordability will fall by an average of nearly 9 percentage points across all 75 major markets between 2016 and 2019, with approximately 5 million fewer households able to afford the local median-priced home by 2019. Declining affordability needs to be addressed with policies enacted that ensure creditworthy young households and minority groups have the opportunity to own a home.

–  Single-family housing supply shortages: “Single-family home construction plummeted after the recession and is still failing to keep up with demand as cities see increased migration and population as the result of faster job growth,” said Rosen. “The insufficient level of homebuilding has created a cumulative deficit of nearly 3.7 million new homes over the last eight years.” Fewer property lots at higher prices, difficulty finding skilled labor and higher construction costs are among the reasons cited by RCG for why housing starts are not ramping up to meet the growing demand for new supply. A concentrated effort to combat these obstacles is needed to increase building, alleviate supply shortages and preserve affordability for prospective buyers.

Trump announces push to speed up ‘desperately-needed infrastructure’

President Donald Trump on Friday pledged new efforts to speed approvals for highways and other projects as part of his proposal for a $1 trillion boost to fix aging US infrastructure. At the US Transportation Department, Trump said his goal was to solve “one of the biggest obstacles to creating this new and desperately-needed infrastructure – and that is the painfully slow, costly and time-consuming process for getting permits and approvals to build.” Trump said the White House is moving ahead with “massive permit reform” and setting up a new council to help project managers navigate bureaucratic hurdles. “This Council will also improve transparency by creating a new online dashboard allowing everyone to easily track major projects through every stage of the approval process,” Trump said.  He said the council will make sure that any federal agency that “consistently delays projects by missing deadlines will face tough, new penalties. We will hold the bureaucracy accountable.”

NAHB – homeownership remains key part of american dream; obstacles persist for many

As the National Association of Home Builders (NAHB) celebrates National Homeownership Month in June, more than two-thirds of Americans believe that owning a home is an essential part of the American Dream. “Americans continue to place a high priority on homeownership and work hard to achieve this goal for their families,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.  “Our members are committed to providing high-quality homes that meet the diverse needs of Americans across the country.”A key component in the ability of families of all income levels to become home owners is the mortgage interest deduction, which has been a cornerstone of American housing policy since the inception of the tax code more than 100 years ago. The deduction primarily benefits middle-class taxpayers, according to data from the Congressional Joint Committee on Taxation. NAHB supports this tax incentive, as well as provisions that encourage development of affordable housing. Yet, with the national homeownership rate stalled near 64%, NAHB must continue working to address the obstacles for many potential home buyers. “We have long fought for sensible reforms to burdensome regulations that needlessly increase the cost of homes for low- and middle-income families,” said MacDonald, noting NAHB research that shows government regulations add about 24% to the cost of housing. During National Homeownership Month and throughout the year, NAHB and its 700 state and local affiliates work hard to make affordable housing a reality and that it continues to be a priority to our nation’s leadership. NAHB commissioned a nationwide survey by the polling firm Morning Consult of more than 11,300 registered voters earlier this year that found more than 70% of these respondents place a high value on homeownership. “We must support the dream of homeownership and not create barriers through unnecessary federal regulations or tax code changes,” MacDonald said.

Trump renews $1T pledge as White House kicks off ‘Infrastructure Week’

President Donald Trump’s administration will hold infrastructure-themed events around the country this week as part of a growing push to promote a $1 trillion plan to revamp the nation’s crumbling network. “It doesn’t matter who you are, whether you are farmer in the Midwest, or a mother driving your kids to and from school, or a worker or a college kid flying back and forth to school, you’re affected by infrastructure,” White House economic adviser Gary Cohn said during a conference call. The promotional tour begins Monday at the White House, where the president will lay out a plan to revamp the country’s air traffic control system, the Associated Press reported. Trump will reportedly recommend that air traffic control operators at airports operate autonomously from the Federal Aviation Administration. Trump will travel to Ohio on Wednesday to discuss planned updates to critical dams and levees, and then return to the White House on Thursday to meet with governors and mayors about how best to locally implement taxpayer dollars on infrastructure projects. Finally, Trump will chat with the Transportation Department about potential regulatory reform related to permits for railway and road construction.

An overhaul of America’s public infrastructure was a key element of Trump’s platform in the building to the 2016 election. He was highly critical of the state of the country’s major airports, highways and bridges. Trump’s proposed plan calls for an influx of $1 trillion in infrastructure projects through a combination of public and private funding. Reforms to streamline the permit process and renovate existing structures are considered crucial to Trump’s vision, though the president has yet to provide many specific details about how the plan will ultimately unfold. “There’s a great of interest in Congress in doing this,” Vice President Pence said during a March meeting with key executives and administration aides, according to the Wall Street Journal. “But there’s also just as much interest in listening to leaders in the private sector to identify the capital and identify the needs to be able to finance this in a way that really captures the energy of the American economy.” Through early June, the infrastructure plan had taken a backseat to other key Trump projects, including an attempted overhaul of the healthcare system and tax structure. Democrats have widely opposed the notion of private involvement in infrastructure projects, which are traditionally funded by taxpayers.

Regulations impact credit unions

Putting an end to remarks from the Consumer Financial Protection Bureau that its regulations are, in fact, helping credit unions, the Credit Union National Association published a detailed report that outlines exactly how the new rules have suffocated growth. CUNA is a national association that advocates on behalf of all of America’s credit unions, which are owned by more than 100 million consumer members. CFPB Director Richard Cordray has commonly gone on record to denounce doomsayers who say that new regulations are killing the banks, especially when it comes to credit unions and community lenders. In response, CUNA submitted a letter to the CFPB detailing each of the ways the agency’s rulemakings have affected America’s roughly 6,000 credit unions. The letter also includes recommendations on how the bureau can improve its regulations to provide relief to credit unions and their members. “We urge the bureau to take immediate action and implement our suggestions for the protection of credit union members, who have fewer choices and are incurring increased costs due to CFPB rules,” said Jim Nussle, CUNA president/CEO. “CUNA, our state league partners, and credit unions—the original consumer protectors—stand willing to provide the CFPB any further details or analysis necessary to achieve regulatory relief, the ultimate goal of our Campaign for Common-Sense Regulation.

The CFPB continues to cite the very minimal accommodations it has made in some rules for credit unions,” Nussle explained. “However, in practicality, credit unions’ ability to provide top-quality and consumer-friendly financial products and services has been significantly impeded by a one-size-fits-all regulatory scheme that favors large banks and less regulated nonbank lenders—institutions that have more resources for overly complex compliance requirements,” he said. While CUNA is are pleased to hear that the CFPB recognizes the very important role credit unions play in serving consumers, there are still plenty of areas to improve on, which is outlined in the letter and recommendations. According to CUNA’s Regulatory Burden Study, it found that in 2014, regulatory burden on credit unions caused $6.1 billion in regulatory costs, and an additional $1.1 billion in lost revenue. And this data doesn’t even include the CFPB’s recent regulatory additions to the Home Mortgage Disclosure Act (HMDA) and Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) requirements. “The CFPB regularly cites modest thresholds and accommodations it has provided in some mortgage rules and the remittances rule as proof that it is considering the impact its rules have on credit unions and their members,” the letter stated. “Regrettably however, credit unions continue to tell us that the accommodations the CFPB continues to cite are not sufficient exemptions and they do not fully take into consideration the size, complexity, structure, or mission of all credit unions.”

The letter breaks down the following four categories:

  1. Ability to Repay/Qualified Mortgage (ATR/QM)

According to a recent survey of CUNA members, 43% cited the QM rule as most negatively impacting the ability to serve members with mortgage products. So even though the bureau commonly cites the expanded qualified mortgage (QM) safe harbor for small creditors as proof that it has helped credit unions continue to serve members, CUNA explains that it did not provide full relief for many credit unions.

  1. Mortgage servicing

The CFPB claims that it has tailored its servicing rules by making certain exemptions for small servicers that service 5,000 or fewer mortgage loans, but the latest survey results from CUNA members say otherwise. In the recent survey, more than four in 10 credit unions (44%) that have offered mortgages sometime during the past five years indicate they have either eliminated certain mortgage products and services (33%) or stopped offering them (11%), primarily due to burden from CFPB regulations.

  1. Home Mortgage Disclosure Act (HMDA)

CUNA cites that it is hard to say HMDA is tailored to minimize the impact on small entities given that prior to the rule credit unions were not required to report HMDA data on HELOCs. CUNA’s recent survey of its members showed that nearly one in four credit unions (23%) that currently offer HELOCs plan to either curtail their offerings or stop offering them completely in response to the new HMDA rules. And CUNA says it believes this is a conservative estimate.

  1. Remittances

Although the CFPB regularly cites the exemption to entities that provide fewer than 100 remittances annually as an example of providing relief to small entities, CUNA states that this is probably the clearest example that the CFPB is simply not listening. Instead, the letter states, “This rule has made it more expensive for members to remit payment and has drawn consumers away from using credit unions and into the arms of the abusers for which the rule was designed.”

MBA – first quarter commercial/multifamily delinquencies remain low

Delinquency rates for commercial and multifamily mortgage loans were flat or decreased in the first quarter of 2017, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. “Delinquency rates for commercial and multifamily mortgages remained at or near record lows for most capital sources during the first quarter,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Growth in property incomes and property values, coupled with low interest rates, have facilitated financing. As we near the end of the second quarter, the industry has largely worked through the so-called ‘wave of maturities’.” The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae, and Freddie Mac. Together these groups hold more than 80% of commercial/multifamily mortgage debt outstanding. Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the first quarter were as follows:

– Banks and thrifts (90 or more days delinquent or in non-accrual): 0.56%, a decrease of 0.04 percentage points from the fourth quarter of 2016;

– Life company portfolios (60 or more days delinquent): 0.02%, a decrease of 0.02 percentage points from the fourth quarter of 2016;

– Fannie Mae (60 or more days delinquent): 0.05%, unchanged from the fourth quarter of 2016.

– Freddie Mac (60 or more days delinquent): 0.03%, unchanged from third quarter of 2016;

– CMBS (30 or more days delinquent or in REO): 4.45%, a decrease of 0.08 percentage points from the fourth quarter of 2016;

– The analysis incorporates the measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.

US adds 138K jobs in May as jobless rate falls

US job growth slowed in May as a slide in the labor force participation rate helped pressure the nation’s unemployment rate, suggesting the labor market is edging closer to full employment as doubts linger about the economy’s growth trajectory in the second quarter. US employers added 138,000 net new jobs to the rolls last month, below forecasts for 185,000 jobs, data from the Bureau of Labor Statistics showed Friday. The labor force participation rate ticked down to 62.7% from 62.9% the month prior, helping pressure the jobless rate, which also declined to 4.3% from 4.4%, hitting the lowest level since 2001. Despite the headline miss in May, job creation last month was above the three-month average of 121,000 jobs. Roughly 180,000 new jobs each month are needed to keep up with demand in the labor force. Therefore, the data add fuel to the idea America’s labor market is near full employment – an important factor for the Federal Reserve as it continues on its path to normalizing monetary policy.“Today’s jobs report reflects that the labor market is tightening, and there’s not as much room for slack as the economy reaches full employment….it’s tough to continue to add 200,000 jobs each month with our unemployment rate below 5%,” said Steve Rick, chief economist at CUNA Mutual Group.

Job creation was boosted by the health care sector (which added 24,000 positions last month), professional and business services (which added 38,000), food and drinking places (added 30,000), and mining (which gained 7,000 jobs). Retail trade, which has been pressured by changing consumer habits, shed more than 6,000 jobs during the month – its fourth-straight month of declines, while job gains in other sectors including construction, financial services and government were little changed. Average hourly earnings, a closely-watched metric, rose 0.2% during the month, as expected, putting year-over-year wage gains at 2.5%. The figures help reinforce the idea consumer spending, and therefore overall economic growth, will see a bounce back in the current quarter after growth slowed substantially in the first three months of the year from the fourth quarter of 2016, said RSM Chief Economist Joe Brusuelas. Job gains in March were revised down to 50,000 from 79,000 while April’s figures were also lowered to 174,000 from 211,000. Taken as a whole, the jobs report could give the Fed more confidence to raise rates by a quarter percentage point at its meeting later this month. Chair Janet Yellen has repeatedly stated she and the policy-setting Federal Open Market Committee will carefully monitor incoming economic data before moving rates higher in the coming months, noting members continue to be cautious around the slow rate of inflation. The core personal consumption expenditures index, which the central bank uses as its key inflation gauge, registered 1.7% in April, remaining below the Fed’s 2% target. “Some Fed watchers might see today’s jobs report as a sign for pause in today’s rate-raising environment, however, the labor market is reaching full employment and that should not be taken as a sign of weakness,” Rick said, adding that other factors including a cool spring season will likely been taken into account. The CME Group’s federal funds futures, a tool used to predict market expectations for changes in monetary policy, showed odds of 93.5% in favor of a rate rise in June, up from 87.7% a week ago.

RealtyTrac – finding real estate deals when distress dries up

Interest in foreclosures is heating up in 2017 even as the foreclosure market dries up.  “The REOs that come on, they are not that far off from the traditional stuff. Back in 2007 you were getting 20% off the actual value. … Now you have them selling for 5% off, if that,” said Leland DiMeco, owner and principal broker at Boston Green Realty. Meanwhile DiMeco said he has noticed an uptick in interest in foreclosures from investor clients. “Last year we just had low inventory. It became very competitive. Whatever it was listed for, it sold 1 or 2% over that,” he said. “Investors might have gotten fed up with that and were looking at the REO market, which is why they were reaching out to me.” DiMeco said investors and other buyers are also becoming more interested in “off-market” properties that aren’t listed for sale on the local Multiple Listing Service but may be available to purchase at the right price.

Across the country in Los Angeles, where the distressed market has also dried up and there is not much space to build large new developments, investors are turning to small-lot subdivision to add value and create inventory. “In my opinion small-lot subdivisions is the No. 1  for- sale trend,” said Jonathon Dilworth, founding principal of c&d partners, which is converting two single-story single family homes into four single family homes at the corner of North Mansfield Avenue and Fountain Avenue in Los Angeles. Dilworth said a 2005 ordinance by the city of Los Angeles opened up the possibility of building single family homes with zero lot lines. “Without that you’d be classified as townhome or condo, which is not valued as high.” A total of 3,020 construction loans were originated in the Los Angeles metro area in 2016, up 5% from the previous year to the highest level since 2007 — a nine-year high — according to ATTOM Data Solutions. Those 3,020 loans represented nearly $9.0 billion in dollar volume, up 73% from 2015. Dollar volume of construction loans secured by existing single family homes increased 20% while dollar volume of construction loans secured by residential vacant land increased 29%. Small-lot subdivision is a hot trend in several urban markets across the country, according to Chris Richter, co-founder of Audantic, a real estate analytics company that provides market research and leads for real estate investors. “They’re scraping full blocks in very expensive areas and putting in apartment buildings. And they’re getting what they ask for,” he said.

The drying up of the distress market is even showing up in hard-hit states like Ohio, where the he fight against blight is gaining traction thanks to a combination of state legislation, federal regulation along with home flippers taking advantage of a recovering housing market, according to Matthew Watercutter, broker of record and senior regional vice president at HER Realtors, covering the Columbus, Cincinnati and Dayton markets in Ohio. Ohio homes flipped in 2016 represented 5.6% of all single family home and condo sales during the year, up 11% from the previous year, according to the ATTOM Data Solutions 2016 US Home Flipping Report, which also shows Ohio home flips yielded the second highest average gross flipping profits in the year. According to Watercutter, home flippers are simply taking advantage of creating like-new inventory of homes that are move-in and rent-ready in a market without many new homes being built. “New home construction almost completely stopped several years ago and it just recently started. There is a lack of new move-up inventory to buy,” he said. ATTOM Data Solutions shows 3,749 construction loans were originated in Ohio in 2016, up 10% from 2015 to the highest level since 2008. Total dollar volume of those construction loans was more than $1.2 billion, up 15% from less than $1.1 billion in 2015. The number of construction loans secured by vacant land in Ohio increased 80%, while the dollar volume of those loans increased 121% from 2015 to 2016. Builders and developers acquired more vacant land in Ohio for residential development in 2016. Sales of residential vacant land in the state increased 9% in 2016 compared to 2015, compared to an increase of 2% in single family home sales over the same time period, according to ATTOM data.

US trade deficit rises to highest level since January

The US trade deficit rose in April to the highest level since January. The politically sensitive trade gap with China registered a sharp increase. The Commerce Department said Friday that the US trade gap in goods and services climbed 5.2% to $47.6 billion in April from March. Exports dropped 0.3% to $191 billion, pulled down by a drop in automotive exports. Imports rose 0.8% to $238.6 billion as Americans bought more foreign-made cellphones and other consumer goods. A widening trade deficit is a drag on economic growth. Donald Trump made the trade gap — the difference between exports and imports — a centerpiece of his presidential campaign. His administration has vowed to reduce the deficit, blaming it on abusive practices by America’s trading partners. The deficit in goods with China rose by 12.4% to $27.6 billion in April. So far this year, the trade deficit is up 13.4% from a year earlier to $186.6 billion. Exports are up 6.1% to $765.6 billion this year, but imports are up more — 7.5% to $952.2 billion. So far in 2017, the United States is running a $268.7 billion deficit in goods and an $82.1 billion surplus in services such as banking and tourism. Trump recently has singled out Germany for criticism, saying it is unfairly benefiting from a weak euro. When a country’s currency is weak, its products enjoy a price advantage in foreign markets. The trade deficit with Germany rose 4.3% in April to $5.5 billion.

CoreLogic – CoreLogic Storm Surge Analysis identifies nearly 6.9 million US homes at risk of hurricane storm surge damage in 2017

CoreLogic released its 2017 Storm Surge Report which shows that nearly 6.9 million homes along the Atlantic and Gulf coasts are at potential risk of damage from hurricane storm surge inundation with a total reconstruction cost value (RCV) of more than $1.5 trillion. The reconstruction cost value is the cost to completely rebuild a property in case of damage, including labor and materials by geographic location, assuming a worst-case scenario at 100-percent destruction. Storm predictions indicate the 2017 hurricane season will see fewer storms than both 2016 and the 30-year average. The National Oceanic and Atmospheric Administration (NOAA) predicts 12 total storms, six of which will develop into hurricanes, and three of those are predicted to be Category 3 or higher.  The CoreLogic analysis examines risk from hurricane-driven storm surge for homes along the Atlantic and Gulf coastlines across 19 states and the District of Columbia, as well as for 86 metro areas. Homes are categorized among five risk levels: Low (homes affected only by a Category 5 storm), Moderate (homes affected by Category 4 and 5 storms), High (homes affected by Category 3, 4 and 5 storms), Very High (homes affected by Category 2, 3, 4 and 5 storms) and Extreme (homes affected by Category 1-5 storms). “Despite the fact that this year’s hurricane season is predicted to have fewer storms than last year, it doesn’t mitigate the risk of storm surge damage,” said Dr. Tom Jeffery, senior hazard scientist at CoreLogic. “As we’ve seen with past storms, even one single hurricane at a lower-level category can cause significant damage if it makes landfall in a highly populated area.”

At the regional level, the Atlantic Coast has 3.9 million homes at risk of storm surge with an RCV of $970 billion, and the Gulf Coast has just under 3 million homes at risk with $593 billion in potential exposure to total destruction damage. At the state level, Texas and Florida – which have the longest coastal areas – consistently have more homes at risk than other states. Again this year, as in previous years, Florida ranks first with just under 2.8 million at-risk homes across the five risk categories, and Texas ranks third with 536,000 at-risk homes. Since the number of homes at risk strongly correlates with the accompanying RCV, these two states rank first and fifth, respectively, for having the largest RCV. States with less coastal exposure but lower-lying elevations that extend farther inland, such as Louisiana (ranked second at 808,000 at-risk homes) and New Jersey (ranked fourth at almost 470,000 at-risk homes), tend to have more total homes at risk because of the potential for surge water to travel farther inland. Louisiana and New Jersey are also near the top of the list for RCV, with Louisiana totaling almost $181 billion (ranked second) and New Jersey totaling $140 billion (ranked fourth). At the local level, 15 Core Based Statistical Areas (CBSAs) account for 67.3% of the 6.9 million total at-risk homes and 68.6% of the total $1.56 trillion RCV. This disproportionate distribution of homes suggests that the location of hurricanes that make landfall is often a more important factor than the number of storms that may occur during the year. The Miami CBSA, which includes Fort Lauderdale and West Palm Beach, has the most homes at risk totaling almost 785,000 with an RCV of $143 billion. By comparison, the New York City CBSA has slightly fewer homes at risk at 723,000, but a significantly higher total RCV totaling $264 billion due to the greater home values and high construction costs in this area.

Black Knight Financial Services – First Look at April 2017    

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

–  Calendar-driven spike in delinquencies results in largest monthly rise in more than eight years

–  First-lien mortgage delinquencies rose by 13%, the largest monthly increase since November 2008

–  Month-over-month, the number of borrowers past due on mortgage payments increased by 241,000

–  April’s delinquency rate increase was primarily calendar-driven (due to both the month ending on a Sunday and March being the typical calendar-year low) and largely isolated to early-stage delinquencies

–  The inventory of loans in active foreclosure continues to decline, hitting a 10-year low in April

–  At just 52,800, April saw the fewest monthly foreclosure starts since January 2005

–  Prepayment speeds (historically a good indicator of refinance activity) fell by 11% from March​

Oil prices steady as market await US data, extended output cut

Oil prices were little changed on Wednesday as investors awaited official data on inventories in the United States and the outcome from Vienna where ministers from OPEC and other exporting countries were discussing whether to extend production cuts. Data from the US Energy Information Administration is due to be released at 10:30 a.m. EDT (1430 GMT). Late Tuesday, data from industry group American Petroleum Institute showed crude inventories fell by 1.5 million barrels to 521.9 million barrels in the week to May 19, compared with analysts’ expectations for a decrease of 2.4 million barrels. Benchmark Brent crude oil was up 11 cents a barrel at $54.26 at 9:47 a.m. EDT. US light crude was up 1 cent at $51.48. Both benchmarks have gained more than 10% from their May lows below $50 a barrel, rebounding on a consensus that the Organization of the Petroleum Exporting Countries and other producers will maintain strict limits on oil production in an attempt to drain a global oversupply. OPEC has promised to cut supplies by 1.8 million barrels per day until June and was expected on Thursday to extend that cut as long as nine months.

CoreLogic – US economic outlook: May 2017

Mortgage originations are affected by economic growth and the level of mortgage rates.  Economic growth is expected to be stronger in 2017 than last year, which creates jobs, income, and additional construction, each of which supports purchase-mortgage lending.  However, higher mortgage rates work in the opposite direction: as mortgage loans become more expensive, originations generally fall.  Mortgage rates have begun to move higher.  To date, rates on 30-year fixed-rate mortgages are up more than one-half percentage point from the 3.5% low of last summer, and are predicted to rise to about 4.5% by year-end 2017. In the past, when mortgage rates have moved up from a recent low, refinance activity has fallen sharply, and we expect this to happen with the latest rise in rates.  For example, the interest rate on fixed-rate mortgages rose by just over one percentage point during 2013, and the refinance volume in 2014 fell about 50%.  With interest rates up from last summer’s lows and expected to trend higher, housing economists project refinance volumes to drop during 2017. Serving as a partial offset to the drop in refinance, home-purchase lending is expected to rise because of more new-home building and stronger income growth. (Figure 2)  Also, homeowners who want to tap home equity for remodeling are likely to turn to HELOCs or other second-lien products to finance their home improvements, rather than refinance their low-rate first mortgage.  Still, the expected increase in home-purchase and HELOC activity will offset only a portion of the reduction in refinance. Overall, housing economists are expecting about an 18 to 20% decline in the dollar amount of single-family originations in 2017, or about a 23 to 25% drop in new loan counts after adjusting for the projected 5% rise in home prices during 2017.  Moreover, after the drop in 2017, no further big declines are expected:  Origination volumes in 2018 are expected to be similar to 2017, as home-purchase gains match any further erosion in refinance volume.

House speaker Ryan says confident tax reform will pass in 2017

Republicans will be able to push through tax reform by the end of this year even as they continue to debate whether or not a final plan will include a border adjustment tax, US House Speaker Paul Ryan said an interview with Axios news outlet on Wednesday. Asked if he could envision a scenario where tax reform passes the House of Representative without including a border adjustment tax, Ryan said yes but added that internal negotiations are still ongoing.

NAHB – new home sales slip in April after strong start to year

Sales of newly built, single-family homes in April dropped for the first time in 2017, falling 11.4% to a seasonally adjusted annual rate of 569,000 units, according to newly released data by the US Department of Housing and Urban Development and the US Census Bureau. Sales numbers for the first three months of the year were all upwardly revised, and the March sales pace was the highest since October 2007. “Despite some slowness this month, total new home sales in 2017 are up more than 11% from this time last year and builders are optimistic about future market conditions,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “We should see further gains in the months ahead as more prospective home buyers enter the market.” “New home sales were strong in the first three months of 2017, so some pullback in April is to be expected,” said NAHB Chief Economist Robert Dietz. “However, our forecast calls for new home sales to increase throughout the year, buoyed by rising household formations, continued job growth and tight existing home inventory.”The inventory of new home sales for sale was 268,000 in April, which is a 5.7-month supply at the current sales pace. The median sales price of new houses sold was $309,200. Regionally, new home sales decreased 4.0% in the South, 7.5% in the Northeast, 13.1% in the Midwest and 26.3% in the West.

NAR – existing-home sales slip 2.3% in April; days on market falls to under a month

Stubbornly low supply levels held down existing-home sales in April and also pushed the median number of days a home was on the market to a new low of 29 days, according to the National Association of Realtors (NAR).  Total existing-home, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 2.3% to a seasonally adjusted annual rate of 5.57 million in April from a downwardly revised 5.70 million in March. Despite last month’s decline, sales are still 1.6% above a year ago and at the fourth highest pace over the past year. The median existing-home price for all housing types in April was $244,800, up 6.0% from April 2016 ($230,900). April’s price increase marks the 62nd straight month of year-over-year gains. Total housing inventory at the end of April climbed 7.2% to 1.93 million existing homes available for sale, but is still 9.0% lower than a year ago (2.12 million) and has fallen year-over-year for 23 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.6 months a year ago.  Properties typically stayed on the market for 29 days in April, which is down from 34 days in March and 39 days a year ago, and surpasses last May (32 days) as the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 88 days in April, while foreclosures sold in 46 days and non-distressed homes took 28 days. Fifty-two% of homes sold in April were on the market for less than a month (a new high).

Inventory data from reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in April were San Jose-Sunnyvale-Santa Clara, Calif., 23 days; San Francisco-Oakland-Hayward, Calif., 25 days; Denver-Aurora-Lakewood, Colo., 27 days; and Seattle-Tacoma-Bellevue, Wash., 28 days.  According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage declined for the first time in six months, dipping to 4.05% in April from 4.20% in March. The average commitment rate for all of 2016 was 3.65%. Matching the highest percentage since last September, first-time buyers were 34% of sales in April, which is up from 32% both in March and a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35%. President William E. Brown says it’s not only prospective homebuyers who are facing housing issues; many middle-income homeowners who benefit from the mortgage interest deduction could be slapped with a tax increase if some of the tax reform proposals currently being discussed go through. A recently released study commissioned by NAR titled, “Impact of Tax Reform Options on Owner-Occupied Housing,” (link is external) estimated taxes would rise on average by $815 each year for homeowners with adjusted gross incomes between $50,000 and $200,000. Furthermore, home values could shrink by an average of more than 10%, with areas with higher property taxes or state income taxes experiencing an even steeper decline.  “Realtors support tax reform, but any plan that effectively nullifies the current tax benefits of owning a home is a non-starter for the roughly 75 million homeowners and countless prospective first-time buyers that see owning a home as part of their American Dream,” said Brown. Thousands of Realtors® took this message to Capitol Hill last week during NAR’s annual legislative meetings in Washington, D.C.

All-cash sales were 21% of transactions in April, down from 23% in March and 24% a year ago. Individual investors, who account for many cash sales, purchased 15% of homes in April, unchanged from March but up from 13% a year ago. Fifty-seven% of investors paid in cash in April. Distressed sales – foreclosures and short sales – were 5% of sales in April, down from 6% in March and 7% a year ago. Three% of April sales were foreclosures and 2% were short sales. Foreclosures sold for an average discount of 18% below market value in April (16% in March), while short sales were discounted 12% (14% in March). Single-family home sales decreased 2.4% to a seasonally adjusted annual rate of 4.95 million in April from 5.07 million in March, but are still 1.6% above the 4.87 million pace a year ago. The median existing single-family home price was $246,100 in April, up 6.1% from April 2016. Existing condominium and co-op sales declined 1.6% to a seasonally adjusted annual rate of 620,000 units in April, but are still 1.6% higher than a year ago. The median existing condo price was $234,600 in April, which is 5.6% above a year ago. April existing-home sales in the Northeast dipped 2.7% to an annual rate of 730,000, and are now 2.7% below a year ago. The median price in the Northeast was $267,700, which is 1.6% above April 2016. In the Midwest, existing-home sales increased 3.8% to an annual rate of 1.36 million in April, but are 0.7% below a year ago. The median price in the Midwest was $194,500, up 7.8% from a year ago.  Existing-home sales in the South in fell 5.0% to an annual rate of 2.30 million, but are still 3.6% above April 2016. The median price in the South was $217,700, up 7.9% from a year ago.  Existing-home sales in the West declined 3.3% to an annual rate of 1.18 million in April, but are still 3.5% above a year ago. The median price in the West was $358,600, up 6.8% from April 2016.

MBA – refi apps up, purchase apps slightly down in latest MBA weekly survey

Mortgage applications increased 4.4% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 19, 2017. The Market Composite Index, a measure of mortgage loan application volume, increased 4.4% 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 11% from the previous week to its highest level since March 2017. The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 3% higher than the same week one year ago. The refinance share of mortgage activity increased to 43.9% of total applications from 41.1% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.2% of total applications.  The FHA share of total applications increased to 10.8% from 10.6% the week prior. The VA share of total applications decreased to 10.5% from 10.7% the week prior. The USDA share of total applications remained unchanged at 0.8% from the week prior.

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