The Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB), dropped 10 points to 46 in the third quarter of 2017. This is the lowest reading since the second quarter of 2011. The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse. The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums. Two of the three components decreased in the third quarter: market-rate rental units and for-sale units both fell 17 points to 43 and 40, respectively, while low-rent units edged up one point to 54. The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, increased three points to 41, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI first improved dramatically, then edged back up, and has been fairly stable since 2013. “We’re starting to see various markets across the country become oversupplied with multifamily construction, so builders and developers are pulling back a bit,” said Dan Markson, senior vice president of The NRP Group in San Antonio, Texas, and chairman of NAHB’s Multifamily Council. “Multifamily production had been quite strong, although it slowed down in the past three months,” said NAHB Chief Economist Robert Dietz. “And with approximately 600,000 units in the pipeline, builders and developers are taking a cautious approach until they see how the market absorbs these units when they come online.”
US jobless claims fall after two straight weekly increases
The number of Americans filing for unemployment benefits fell last week after two straight weekly increases, pointing to continued steady job growth after recent hurricane-related disruptions. Initial claims for state unemployment benefits declined 13,000 to a seasonally adjusted 239,000 for the week ended Nov. 18, the Labor Department said on Wednesday, reversing the prior week’s increase. Claims had risen in recent weeks as a backlog of applications from Puerto Rico was processed following repairs to infrastructure damaged by Hurricanes Irma and Maria. A Labor Department official said claims-taking procedures continued to be disrupted in the Virgin Islands. The claims report was released a day early because of the US Thanksgiving holiday on Thursday. Economists polled by Reuters had forecast claims falling to 240,000 in the latest week. Last week marked the 142nd straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was smaller.
Black Knight – First Look at October 2017 mortgage data
– National Delinquency Rate Sees Second Consecutive Annual Rise as Impact from Hurricanes Continues
– October’s 4BPS increase in the national delinquency rate can be directly linked to continued hurricane impact, while delinquencies fell 14BPS in non-affected areas
– Though delinquencies were down in all states except Texas and Florida, in FEMA-declared Hurricanes Harvey and Irma disaster areas, they rose another 24% (186BPS) in October
– The most notable increase was in Florida, where delinquencies spiked 36% from September 2017 in hurricane-affected areas
– Over 229,000 past-due mortgages can now be attributed to Hurricanes Irma (163,000) and Harvey (66,000)
– Total non-current inventories in Florida and Texas (all loans 30 or more days past due or in foreclosure) have risen 79 and 30%, respectively, over the past six months
– Prepayment activity rebounded in October, up 17% month-over-month, but still 25% below last year’s level
– The inventory of loans in active foreclosure continues to improve, falling below 350,000 for the first time since 2006
Consumer sentiment hits 98.5 in November vs. 98 estimate
US consumer sentiment saw slight gains in November compared to the mid-month reading, though the index remained below the decade high reached in October. The University of Michigan’s survey of consumer attitudes for November rose to 98.5 in a Wednesday release. The measure was forecast by Reuters economists to hit 98. The indicator has remained largely unchanged in 2017, which reflects American consumers’ increasing confidence and certainty about their income and employment prospects, said Richard Curtin, chief economist for the Surveys of Consumers. “Increased certainty about future income and job prospects has become a key factor that has supported discretionary purchases,” Curtin said in the survey release. While the longevity of the record economic expansion — the second-longest since the mid-1800s, Curtin says — leaves room for caution, he notes that “neither changes in fiscal nor monetary policies have yet had any noticeable impact on consumer expectations.” He also says that the data indicate “the best runup to the holiday shopping season in a decade.” An earlier reading this month saw consumer sentiment tumble to 97.8, a much weaker number than forecast by economists who predicted little change from month to month. The measure soared to 101.1 on Oct. 13 — the highest level since 2004 — but has deflated steadily in subsequent readings. Expected changes in inflation rates for the following year, also tracked in the survey, are expected to creep up to 2.6 after landing at a 10-month low at 2.4 in October. The index measures 500 consumers’ attitudes on future economic prospects, in areas such as personal finances, inflation, unemployment, government policies and interest rates.
NAR – existing-home sales grow 2.0% in October
Existing-home sales increased in October to their strongest pace since earlier this summer, but continual supply shortages led to fewer closings on an annual basis for the second straight month, according to the National Association of Realtors(NAR). Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.0% to a seasonally adjusted annual rate of 5.48 million in October from a downwardly revised 5.37 million in September. After last month’s increase, sales are at their strongest pace since June (5.51 million), but still remain 0.9% below a year ago. The median existing-home price for all housing types in October was $247,000, up 5.5% from October 2016 ($234,100). October’s price increase marks the 68th straight month of year-over-year gains. Total housing inventory at the end of October decreased 3.2% to 1.80 million existing homes available for sale, and is now 10.4% lower than a year ago (2.01 million) and has fallen year-over-year for 29 consecutive months. Unsold inventory is at a 3.9-month supply at the current sales pace, which is down from 4.4 months a year ago. Properties typically stayed on the market for 34 days in October, which is unchanged from last month and down from 41 days a year ago. Forty-seven% of homes sold in October were on the market for less than a month.
Realtor.com®’s Market Hotness Index, measuring time on the market data and listings views per property, revealed that the hottest metro areas in October were San Jose-Sunnyvale-Santa Clara, Calif.; Vallejo-Fairfield, Calif.; San Francisco-Oakland-Hayward, Calif.; San Diego-Carlsbad, Calif.; and Boston-Cambridge-Newton, Mass. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage rose to 3.90% in October (matches highest rate since June) from 3.81% in September. The average commitment rate for all of 2016 was 3.65%. First-time buyers were 32% of sales in October, which is up from 29% in September but down from 33% a year ago. NAR’s 2017 Profile of Home Buyers and Sellers — released last month4— revealed that the annual share of first-time buyers was 34%. NAR President Elizabeth Mendenhall says the pending tax reform legislation in both the House and Senate is a direct attack on homeowners and homeownership, with the result being a tax increase on millions of middle-class homeowners in both large and small communities throughout the US “Making changes to the mortgage interest deduction, eliminating or capping the deduction for state and local taxes and modifying the rules on capital gains exemptions poses serious harm to millions of homeowners and future buyers,” said Mendenhall. “With first-time buyers struggling to reach the market, Congress should not be creating disincentives to buy and sell a home. Furthermore, adding $1.5 trillion to the national debt will raise future borrowing costs for our children and grandchildren.” All-cash sales were 20% of transactions in October, unchanged from September and down from 22% a year ago. Individual investors, who account for many cash sales, purchased 13% of homes in October, down from 15% last month and unchanged from a year ago.
Distressed sales — foreclosures and short sales — were 4% of sales in October, unchanged from last month and down from 5% year ago. Three% of October sales were foreclosures and 1% were short sales. Single-family home sales climbed 2.1% to a seasonally adjusted annual rate of 4.87 million in October from 4.77 million in September, but are still 1.0% under the 4.92 million pace a year ago. The median existing single-family home price was $248,300 in October, up 5.4% from October 2016. Existing condominium and co-op sales increased 1.7% to a seasonally adjusted annual rate of 610,000 units in October (unchanged from a year ago). The median existing condo price was $236,800 in October, which is 6.9% above a year ago. October existing-home sales in the Northeast rose 4.2% to an annual rate of 740,000, (unchanged from a year ago). The median price in the Northeast was $272,800, which is 6.6% above October 2016. In the Midwest, existing-home sales inched forward 0.8% to an annual rate of 1.31 million in October, but are still 1.5% below a year ago. The median price in the Midwest was $194,700, up 7.1% from a year ago. Existing-home sales in the South increased 1.9% to an annual rate of 2.16 million in October, but are still 1.8% lower than a year ago. The median price in the South was $214,900, up 4.6% from a year ago. Existing-home sales in the West grew 2.4% to an annual rate of 1.27 million in October, and are now 0.8% above a year ago. The median price in the West was $375,100, up 7.8% from October 2016.