– 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.