MARKETWATCH
"Mortgage rates edge higher as housing market cracks appear"
By Andrea Riquier
Published: Oct 25, 2018 2:27 p.m. ET
Rates for home loans ticked up, and may be starting to take a toll on buyer demand, according to data out this week.
The 30-year fixed-rate mortgage averaged 4.86% in the Oct. 25 week, up one basis point, mortgage finance provider Freddie Mac said Thursday.
The 15-year fixed-rate mortgage averaged 4.29%, up from 4.26%.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.14%, up four basis points.
Those rates don’t include fees associated with obtaining mortgage loans.
Fixed-rate mortgages track the 10-year U.S. Treasury note, but they move more slowly.
Even though bonds have benefited from a surge of investor interest in safe-haven assets as stocks sold off, that may have happened too late to be reflected in Freddie’s most recent survey results.
Bond yields decline as prices rise.
Meanwhile, the challenging housing market conditions of the past few years may finally be taking a toll.
Mortgage applications to purchase homes – not to refinance – had held steady through most of the year, even as rates thundered steadily higher.
But they’ve turned sharply lower since the end of the summer.
Mortgage lenders have consistently told MarketWatch that the biggest concern among their customers isn’t rates, but the lack of homes to buy.
Together, though, they may prove to be too much for would-be buyers.
“While higher borrowing costs will keep some people out of the market, buyers with more flexibility could take advantage of the decreased competition,” Freddie Chief Economist Sam Khater said.
But it’s worth noting that “more flexibility” tends to mean “more privilege” – either the ability to pay for a home with cash, or to spend a little more.
That dynamic keeps the housing market less democratic and possibly less dynamic.
https://www.marketwatch.com/story/mortg ... ewer_click
THE HOUSING MARKET
Re: THE HOUSING MARKET
MARKETWATCH
"House price gains lurch to a 20-month low, Case-Shiller says"
By Andrea Riquier
Published: Oct 30, 2018 12:59 p.m. ET
The numbers:
The S&P/Case-Shiller 20-city index rose a seasonally adjusted 0.1% and was 5.5% higher compared to its level a year ago, the lowest annual increase in 20 months.
What happened:
Something had to give in the super-hot housing market, and finally it has.
Annual gains dipped below 6% for the first time in 12 months, according to the closely-watched index of home prices.
To be sure, annual price increases of more than 5% still outpace wage growth and inflation, but it’s a step in the right direction toward housing market equilibrium.
Tuesday’s Case-Shiller report covers a three-month period ending in August.
Big picture:
Las Vegas is the new Seattle.
The beaten-down poster child of the housing bust charted its 11th-straight month of double-digit annual gains, while the home of Amazon and Boeing saw the biggest monthly decline among the 20 cities.
What they’re saying:
In an interview with Bloomberg Television recently, Dallas Fed President Robert Kaplan was asked if the recent housing slowdown was due to rising interest rates.
Kaplan, who noted that he watches the housing sector “very carefully,” said there are other factors at work.
“We’ve been trying to understand how that weakness fits in with economic growth and one of the conclusions I would come to is…the input costs, labor shortages, higher input costs and yes, higher mortgage rates are all part of the story,” Kaplan said.
“I’m not ready yet to say it is an indicator of weakening in the economy, but I can say we’re watching it carefully."
"It comes in context in my own base case expectation that growth was going to weaken as we head into 2019.”
Market reaction:
The 10-year U.S. Treasury has rallied in recent weeks in line with the stock sell-off, but that may be reversing, in a gloomy sign for mortgage borrowers.
Yields rise as prices decline, and fixed-rate mortgages track the 10-year.
https://www.marketwatch.com/story/house ... 2018-10-30
"House price gains lurch to a 20-month low, Case-Shiller says"
By Andrea Riquier
Published: Oct 30, 2018 12:59 p.m. ET
The numbers:
The S&P/Case-Shiller 20-city index rose a seasonally adjusted 0.1% and was 5.5% higher compared to its level a year ago, the lowest annual increase in 20 months.
What happened:
Something had to give in the super-hot housing market, and finally it has.
Annual gains dipped below 6% for the first time in 12 months, according to the closely-watched index of home prices.
To be sure, annual price increases of more than 5% still outpace wage growth and inflation, but it’s a step in the right direction toward housing market equilibrium.
Tuesday’s Case-Shiller report covers a three-month period ending in August.
Big picture:
Las Vegas is the new Seattle.
The beaten-down poster child of the housing bust charted its 11th-straight month of double-digit annual gains, while the home of Amazon and Boeing saw the biggest monthly decline among the 20 cities.
What they’re saying:
In an interview with Bloomberg Television recently, Dallas Fed President Robert Kaplan was asked if the recent housing slowdown was due to rising interest rates.
Kaplan, who noted that he watches the housing sector “very carefully,” said there are other factors at work.
“We’ve been trying to understand how that weakness fits in with economic growth and one of the conclusions I would come to is…the input costs, labor shortages, higher input costs and yes, higher mortgage rates are all part of the story,” Kaplan said.
“I’m not ready yet to say it is an indicator of weakening in the economy, but I can say we’re watching it carefully."
"It comes in context in my own base case expectation that growth was going to weaken as we head into 2019.”
Market reaction:
The 10-year U.S. Treasury has rallied in recent weeks in line with the stock sell-off, but that may be reversing, in a gloomy sign for mortgage borrowers.
Yields rise as prices decline, and fixed-rate mortgages track the 10-year.
https://www.marketwatch.com/story/house ... 2018-10-30
Re: THE HOUSING MARKET
MARKETWATCH
"Housing market now ‘reminds me of 2006,’ Robert Shiller says"
By Andrea Riquier
Published: Oct 31, 2018 8:35 a.m. ET
Famed housing-watcher Robert Shiller said Tuesday that the weakening housing market reminded him of the last market top, just before the subprime housing bubble burst, slashing prices by nearly a third and costing millions of Americans their homes.
Home price gains moderated again in the most recent version of the closely-watched housing index that bears his name, which was released Tuesday, and Shiller, a Nobel Prize-winning economist, told Yahoo Finance that such data shows “a sign of weakness.”
Housing pivots take more time than those in the stock market, Shiller said.
Still, “the housing market does have a momentum component and we’re seeing a clipping of momentum at this time.”
“If the markets go down, it could bring on another recession."
"The housing market has been an important element of economic activity."
"If people start to get pessimistic about housing and pull back and don’t want to buy, there will be a drop in construction jobs and that could be a seed for another recession."
"By the way, we’re overdue for another recession.”
- Robert Shiller
When a startled reporter reminded Shiller that 2006 predated the greatest financial crisis in a lifetime, the Yale economist acknowledged that any correction would likely be far less severe.
“The drop in home prices in the financial crisis was the most severe drop in the U.S. market since my data begin in 1890,” Shiller said.
“It could be that we’re primed to repeat it because it’s in our memory and we’re thinking about it but still I wouldn’t expect something as severe as the Great Financial Crisis coming on right now."
"There could be a significant correction or bear market, but I’m waiting and seeing now.”
https://www.marketwatch.com/story/housi ... ewer_click
"Housing market now ‘reminds me of 2006,’ Robert Shiller says"
By Andrea Riquier
Published: Oct 31, 2018 8:35 a.m. ET
Famed housing-watcher Robert Shiller said Tuesday that the weakening housing market reminded him of the last market top, just before the subprime housing bubble burst, slashing prices by nearly a third and costing millions of Americans their homes.
Home price gains moderated again in the most recent version of the closely-watched housing index that bears his name, which was released Tuesday, and Shiller, a Nobel Prize-winning economist, told Yahoo Finance that such data shows “a sign of weakness.”
Housing pivots take more time than those in the stock market, Shiller said.
Still, “the housing market does have a momentum component and we’re seeing a clipping of momentum at this time.”
“If the markets go down, it could bring on another recession."
"The housing market has been an important element of economic activity."
"If people start to get pessimistic about housing and pull back and don’t want to buy, there will be a drop in construction jobs and that could be a seed for another recession."
"By the way, we’re overdue for another recession.”
- Robert Shiller
When a startled reporter reminded Shiller that 2006 predated the greatest financial crisis in a lifetime, the Yale economist acknowledged that any correction would likely be far less severe.
“The drop in home prices in the financial crisis was the most severe drop in the U.S. market since my data begin in 1890,” Shiller said.
“It could be that we’re primed to repeat it because it’s in our memory and we’re thinking about it but still I wouldn’t expect something as severe as the Great Financial Crisis coming on right now."
"There could be a significant correction or bear market, but I’m waiting and seeing now.”
https://www.marketwatch.com/story/housi ... ewer_click
Re: THE HOUSING MARKET
MARKETWATCH
"Mortgage rates slide as echoes of 2006 haunt the housing market"
By Andrea Riquier
Published: Nov 1, 2018 4:29 p.m. ET
Rates for home loans declined as bonds caught a bid, offering some breathing room for stretched home buyers.
The 30-year fixed-rate mortgage averaged 4.83% in the Nov.1 week, down 3 basis points, mortgage finance provider Freddie Mac said Thursday.
The 15-year fixed-rate mortgage averaged 4.23%, down from 4.29%.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.04%, a 10-basis point drop.
Fixed-rate mortgages move in line with the U.S. 10-year Treasury note, although with a slight delay.
Bond yields tumbled late last week as investors fled to the perceived safety of fixed-income assets in the wake of a sharp stock sell-off.
As prices rise, bond yields decline.
Meanwhile, momentum in the housing market has waned enough that it’s starting to worry many observers.
Home prices rose at the slowest pace in nearly two years in August, according to the S&P CoreLogic Case-Shiller report released Tuesday.
Many analysts hope a more moderate pace of price increases will bring market conditions back into equilibrium, and help some frustrated buyers gain a foothold.
That’s what happened in San Francisco, one of the priciest metros in the country, where home values increased by double digits on an annual basis throughout 2015, then slowed to half that pace, before resuming acceleration late in 2017.
But some housing-watchers are more pessimistic.
Famed economist Robert Shiller, whose research helped develop the index released this week, raised eyebrows when he told Yahoo News that the housing market now reminded him of 2006, just before it fell off a cliff.
And David Blitzer, who manages the Case-Shiller report at S&P Dow Jones Indices, told MarketWatch that he thinks the market is at an inflection point.
“For 11 months straight, up until July, the national index has gone up by an annual rate of more than 6%,” Blitzer said.
“Inflation’s 2%, plus or minus, wage increases are between 2 and 3%, so home prices are going up almost twice as fast as anything else in sight."
"That shouldn’t happen forever."
"Something’s got to give in a market, whether it’s buying houses or groceries."
"So I’ve been waiting to see what gives.”
The bigger question now, for Blitzer, is whether the housing downturn will pull the broader economy along with it.
“Housing, because it’s interest-rate sensitive, turns up first in a recession and probably turns down first in a boom, but with a long lead time,” he said.
“I don’t think we’re going to be in a recession by Christmas this year."
"No bets for next year."
"But it probably does indicate that not everything is coming up perfectly roses."
"If we get a recession that starts sometime between now and the end of 2020 I think people will look back on it and say a-ha, back in October, the stock market was a little bit nervous and housing was going down, that’s when it began.”
https://www.marketwatch.com/story/mortg ... ewer_click
"Mortgage rates slide as echoes of 2006 haunt the housing market"
By Andrea Riquier
Published: Nov 1, 2018 4:29 p.m. ET
Rates for home loans declined as bonds caught a bid, offering some breathing room for stretched home buyers.
The 30-year fixed-rate mortgage averaged 4.83% in the Nov.1 week, down 3 basis points, mortgage finance provider Freddie Mac said Thursday.
The 15-year fixed-rate mortgage averaged 4.23%, down from 4.29%.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.04%, a 10-basis point drop.
Fixed-rate mortgages move in line with the U.S. 10-year Treasury note, although with a slight delay.
Bond yields tumbled late last week as investors fled to the perceived safety of fixed-income assets in the wake of a sharp stock sell-off.
As prices rise, bond yields decline.
Meanwhile, momentum in the housing market has waned enough that it’s starting to worry many observers.
Home prices rose at the slowest pace in nearly two years in August, according to the S&P CoreLogic Case-Shiller report released Tuesday.
Many analysts hope a more moderate pace of price increases will bring market conditions back into equilibrium, and help some frustrated buyers gain a foothold.
That’s what happened in San Francisco, one of the priciest metros in the country, where home values increased by double digits on an annual basis throughout 2015, then slowed to half that pace, before resuming acceleration late in 2017.
But some housing-watchers are more pessimistic.
Famed economist Robert Shiller, whose research helped develop the index released this week, raised eyebrows when he told Yahoo News that the housing market now reminded him of 2006, just before it fell off a cliff.
And David Blitzer, who manages the Case-Shiller report at S&P Dow Jones Indices, told MarketWatch that he thinks the market is at an inflection point.
“For 11 months straight, up until July, the national index has gone up by an annual rate of more than 6%,” Blitzer said.
“Inflation’s 2%, plus or minus, wage increases are between 2 and 3%, so home prices are going up almost twice as fast as anything else in sight."
"That shouldn’t happen forever."
"Something’s got to give in a market, whether it’s buying houses or groceries."
"So I’ve been waiting to see what gives.”
The bigger question now, for Blitzer, is whether the housing downturn will pull the broader economy along with it.
“Housing, because it’s interest-rate sensitive, turns up first in a recession and probably turns down first in a boom, but with a long lead time,” he said.
“I don’t think we’re going to be in a recession by Christmas this year."
"No bets for next year."
"But it probably does indicate that not everything is coming up perfectly roses."
"If we get a recession that starts sometime between now and the end of 2020 I think people will look back on it and say a-ha, back in October, the stock market was a little bit nervous and housing was going down, that’s when it began.”
https://www.marketwatch.com/story/mortg ... ewer_click
Re: THE HOUSING MARKET
MARKETWATCH
"Mortgage rates surge to a near 8-year high as house-hunters race the clock"
By Andrea Riquier
Published: Nov 8, 2018 3:22 p.m. ET
Rates for home loans roared higher, taking the benchmark mortgage product to a new high and setting up a fresh test for an already strained housing market.
The 30-year fixed-rate mortgage averaged 4.94% in the Nov. 8 week, a gain of 11 basis points, mortgage finance provider Freddie Mac said Thursday.
That was the highest for the popular loan product since February, 2011.
The 15-year fixed-rate mortgage averaged 4.33%, and the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.14%, both up 10 basis points during the week.
Those rates don’t include fees associated with obtaining mortgage loans.
Fixed-rate mortgages move in line with the U.S. 10-year Treasury note, although with a slight delay.
Bond yields have churned higher as investors increasingly expect the federal government to issue more debt to fund the growing deficit.
Yields rise as prices decline, and vice versa.
In the housing market, meanwhile, the slow and steady upward march of mortgage rates is taking a toll.
With options scarce and affordability stretched, higher borrowing costs are thwarting buyers like Andy and Emerline Hunte.
The Huntes and their two boys have been searching for a house for two years, while sticking it out in a cramped basement apartment in the East New York section of Brooklyn.
Saving for a down payment has been “arduous,” Andy told MarketWatch.
“We may end up dipping into our 401(k) to put 20% down in order to not carry mortgage insurance.”
Andy had held out hope of buying a two-family house, in order to rent the extra portion to “assist with mortgage payments and help build up equity faster,” he said.
But rising rates – and prices – have put that dream aside for now, and the Huntes are now targeting a single-family home with enough bedrooms and “a large enough backyard for our little one to play.”
The “little one” also needs a good school district, but his parents haven’t been able to find a home that they can afford that checks all those boxes.
The family has been house-hunting for so long that their first pre-approval had what bond traders sometimes call a “3-handle.”
That rate, 3.875%, was renewed a year later at 4.875%, and now Andy sees a 5% mortgage looming ahead.
“The increase has made it more difficult to afford the mortgage we could have afforded two years ago," Hunte said.
“Makes me really wish I had purchased when I first started looking.”
https://www.marketwatch.com/story/mortg ... ewer_click
"Mortgage rates surge to a near 8-year high as house-hunters race the clock"
By Andrea Riquier
Published: Nov 8, 2018 3:22 p.m. ET
Rates for home loans roared higher, taking the benchmark mortgage product to a new high and setting up a fresh test for an already strained housing market.
The 30-year fixed-rate mortgage averaged 4.94% in the Nov. 8 week, a gain of 11 basis points, mortgage finance provider Freddie Mac said Thursday.
That was the highest for the popular loan product since February, 2011.
The 15-year fixed-rate mortgage averaged 4.33%, and the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.14%, both up 10 basis points during the week.
Those rates don’t include fees associated with obtaining mortgage loans.
Fixed-rate mortgages move in line with the U.S. 10-year Treasury note, although with a slight delay.
Bond yields have churned higher as investors increasingly expect the federal government to issue more debt to fund the growing deficit.
Yields rise as prices decline, and vice versa.
In the housing market, meanwhile, the slow and steady upward march of mortgage rates is taking a toll.
With options scarce and affordability stretched, higher borrowing costs are thwarting buyers like Andy and Emerline Hunte.
The Huntes and their two boys have been searching for a house for two years, while sticking it out in a cramped basement apartment in the East New York section of Brooklyn.
Saving for a down payment has been “arduous,” Andy told MarketWatch.
“We may end up dipping into our 401(k) to put 20% down in order to not carry mortgage insurance.”
Andy had held out hope of buying a two-family house, in order to rent the extra portion to “assist with mortgage payments and help build up equity faster,” he said.
But rising rates – and prices – have put that dream aside for now, and the Huntes are now targeting a single-family home with enough bedrooms and “a large enough backyard for our little one to play.”
The “little one” also needs a good school district, but his parents haven’t been able to find a home that they can afford that checks all those boxes.
The family has been house-hunting for so long that their first pre-approval had what bond traders sometimes call a “3-handle.”
That rate, 3.875%, was renewed a year later at 4.875%, and now Andy sees a 5% mortgage looming ahead.
“The increase has made it more difficult to afford the mortgage we could have afforded two years ago," Hunte said.
“Makes me really wish I had purchased when I first started looking.”
https://www.marketwatch.com/story/mortg ... ewer_click
Re: THE HOUSING MARKET
MARKETWATCH
"Mortgage rates hold steady as housing market stresses mount"
By Andrea Riquier
Published: Nov 16, 2018 4:54 p.m. ET
Rates for home loans took a breather after churning to the highest in nearly eight years, mortgage liquidity provider Freddie Mac said Thursday.
The 30-year fixed-rate mortgage averaged 4.94% in the Nov.15 week, unchanged during the week.
The 15-year fixed-rate mortgage averaged 4.36%, up three basis points.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.14%, also unchanged.
Those rates don’t include fees associated with obtaining mortgage loans.
Fixed-rate mortgages move in line with the U.S. 10-year Treasury note, although with a slight delay.
Investors have snatched up bonds as concerns about the Chinese economy and geopolitics have prompted a stock sell-off.
Bond yields fall as prices rise, and vice versa.
Meanwhile, a sense of stagnation keeps creeping into the many corners of the housing market.
Fewer people expect they’ll be able to become homeowners in the coming months, according to a National Association of Home Builders survey.
Americans are staying in their homes for the longest stretches ever, an analysis out last month found.
And in a report out Wednesday, the Joint Center for Housing Studies at Harvard University examined the financial state of older Americans.
The share of households aged 50-64 with less than $20,000 in wealth stood at 22% in 2017, a big jump from 15% in 2001.
“Another potentially troubling trend is that more older homeowners carry mortgage debt,” the Harvard researchers noted.
In 2016, 41% of owners 65 and older owed money for their homes, more than double the 20% share from 1989.
It’s true that over the past decade, with interest rates at historic lows, it may have been a smart choice to finance housing costs, freeing up funds to invest or use for other purposes.
But that may not describe the situation for all owners.
Some may have used their home equity to help children with education debt, or for their own living expenses.
“For financially constrained owners, carrying debt into their later years may mean having fewer resources for necessities other than housing,” the Harvard researchers wrote.
What’s more, it’s not clear what can be done for those people.
As rates rise, just 1.86 million people could refinance into a lower monthly payment, according to data from Black Knight.
https://www.marketwatch.com/story/mortg ... ewer_click
"Mortgage rates hold steady as housing market stresses mount"
By Andrea Riquier
Published: Nov 16, 2018 4:54 p.m. ET
Rates for home loans took a breather after churning to the highest in nearly eight years, mortgage liquidity provider Freddie Mac said Thursday.
The 30-year fixed-rate mortgage averaged 4.94% in the Nov.15 week, unchanged during the week.
The 15-year fixed-rate mortgage averaged 4.36%, up three basis points.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.14%, also unchanged.
Those rates don’t include fees associated with obtaining mortgage loans.
Fixed-rate mortgages move in line with the U.S. 10-year Treasury note, although with a slight delay.
Investors have snatched up bonds as concerns about the Chinese economy and geopolitics have prompted a stock sell-off.
Bond yields fall as prices rise, and vice versa.
Meanwhile, a sense of stagnation keeps creeping into the many corners of the housing market.
Fewer people expect they’ll be able to become homeowners in the coming months, according to a National Association of Home Builders survey.
Americans are staying in their homes for the longest stretches ever, an analysis out last month found.
And in a report out Wednesday, the Joint Center for Housing Studies at Harvard University examined the financial state of older Americans.
The share of households aged 50-64 with less than $20,000 in wealth stood at 22% in 2017, a big jump from 15% in 2001.
“Another potentially troubling trend is that more older homeowners carry mortgage debt,” the Harvard researchers noted.
In 2016, 41% of owners 65 and older owed money for their homes, more than double the 20% share from 1989.
It’s true that over the past decade, with interest rates at historic lows, it may have been a smart choice to finance housing costs, freeing up funds to invest or use for other purposes.
But that may not describe the situation for all owners.
Some may have used their home equity to help children with education debt, or for their own living expenses.
“For financially constrained owners, carrying debt into their later years may mean having fewer resources for necessities other than housing,” the Harvard researchers wrote.
What’s more, it’s not clear what can be done for those people.
As rates rise, just 1.86 million people could refinance into a lower monthly payment, according to data from Black Knight.
https://www.marketwatch.com/story/mortg ... ewer_click
Re: THE HOUSING MARKET
MARKETWATCH
"Home builder confidence tumbles the most since 2014 as housing headwinds catch up"
By Andrea Riquier
Published: Nov 19, 2018 4:18 p.m. ET
The numbers:
The National Association of Home Builders’ monthly confidence index plunged eight points to 60 in November.
What happened:
The many headwinds that have been dogging the industry finally showed up in this report.
Labor is still expensive, lots are still scarce, lumber is at the mercy of tariff politics, and now, mortgage rates are rising and customers are holding back.
NAHB, the building industry’s Washington lobby, noted in a press release that the reading of 60 is still “positive,” but that “customers are taking a pause.”
The eight-point plunge is only reminiscent of the nine-point drop just after the 9/11 attacks and one other instance, a 10-point drop, in early 2014.
The overall reading is the lowest since mid-2016.
November’s results badly missed the Econoday consensus of a flat reading.
In November, the sub-gauge of current conditions fell seven points to 67, the tracker of expected future conditions plunged 10 points to 65, and the gauge of buyer traffic was down eight points, to 45.
Any reading over 50 signals improvement.
Big picture:
The gauge of builder sentiment has long been considered an early read on the pace of construction, an important economic indicator considering how desperately more new homes have been needed.
But such a sharp drop may presage something more sinister than a slower pace of building.
Home builders were one of the first groups to feel the top of the market cycle just before the Great Recession.
In June 2005, NAHB’s index hit 72, its cycle high.
It started to tumble the next month, and by mid-2006 stood in contraction territory.
To be sure, builders may not be the canary in the coal mine now as they were a decade ago.
And many economists have called the top of the housing cycle already.
Still, such a sharp drop can only seem ominous.
What they’re saying:
“Housing is performing at a moderately high level, but it also appears to be settling into a plateau,” Jefferies economists wrote after the NAHB release.
“Moderation in housing activity is a blessing that delays what has previously been an inevitable development of excesses."
"While the pace of housing market activity has decelerated, there are no signs of threatening excesses such as inventory overhangs and a surge in delinquencies.”
The Jefferies economics team also noted that November’s NAHB survey had far fewer respondents than October’s: 315 versus 360.
“Some of the volatility in this data can be traced to the month-to-month changes in the sample,” they observed.
Moody’s Investors Service on Monday downgraded its outlook on the U.S. building materials industry, saying that “private residential construction growth is decelerating.”
Market reaction:
All the headwinds that builders have been complaining about may already be baked into big-company stocks.
Shares of D.R.Horton, Inc. are down 32% in the year to date, while KB Home shares have lost 41% in that time.
https://www.marketwatch.com/story/home- ... 2018-11-19
"Home builder confidence tumbles the most since 2014 as housing headwinds catch up"
By Andrea Riquier
Published: Nov 19, 2018 4:18 p.m. ET
The numbers:
The National Association of Home Builders’ monthly confidence index plunged eight points to 60 in November.
What happened:
The many headwinds that have been dogging the industry finally showed up in this report.
Labor is still expensive, lots are still scarce, lumber is at the mercy of tariff politics, and now, mortgage rates are rising and customers are holding back.
NAHB, the building industry’s Washington lobby, noted in a press release that the reading of 60 is still “positive,” but that “customers are taking a pause.”
The eight-point plunge is only reminiscent of the nine-point drop just after the 9/11 attacks and one other instance, a 10-point drop, in early 2014.
The overall reading is the lowest since mid-2016.
November’s results badly missed the Econoday consensus of a flat reading.
In November, the sub-gauge of current conditions fell seven points to 67, the tracker of expected future conditions plunged 10 points to 65, and the gauge of buyer traffic was down eight points, to 45.
Any reading over 50 signals improvement.
Big picture:
The gauge of builder sentiment has long been considered an early read on the pace of construction, an important economic indicator considering how desperately more new homes have been needed.
But such a sharp drop may presage something more sinister than a slower pace of building.
Home builders were one of the first groups to feel the top of the market cycle just before the Great Recession.
In June 2005, NAHB’s index hit 72, its cycle high.
It started to tumble the next month, and by mid-2006 stood in contraction territory.
To be sure, builders may not be the canary in the coal mine now as they were a decade ago.
And many economists have called the top of the housing cycle already.
Still, such a sharp drop can only seem ominous.
What they’re saying:
“Housing is performing at a moderately high level, but it also appears to be settling into a plateau,” Jefferies economists wrote after the NAHB release.
“Moderation in housing activity is a blessing that delays what has previously been an inevitable development of excesses."
"While the pace of housing market activity has decelerated, there are no signs of threatening excesses such as inventory overhangs and a surge in delinquencies.”
The Jefferies economics team also noted that November’s NAHB survey had far fewer respondents than October’s: 315 versus 360.
“Some of the volatility in this data can be traced to the month-to-month changes in the sample,” they observed.
Moody’s Investors Service on Monday downgraded its outlook on the U.S. building materials industry, saying that “private residential construction growth is decelerating.”
Market reaction:
All the headwinds that builders have been complaining about may already be baked into big-company stocks.
Shares of D.R.Horton, Inc. are down 32% in the year to date, while KB Home shares have lost 41% in that time.
https://www.marketwatch.com/story/home- ... 2018-11-19
Re: THE HOUSING MARKET
MARKETWATCH
"Housing starts rebound in October but single-family drought lingers"
By Andrea Riquier
Published: Nov 20, 2018 9:50 a.m. ET
The numbers:
Housing starts ticked up 1.5% to a seasonally adjusted annual rate of 1.228 million in October, the Commerce Department said Tuesday.
That was 2.9% lower than a year ago, however.
Permits ran at a seasonally adjusted annual 1.263 million pace during the month, 0.6% lower than in September and 6% lower than year-ago levels.
What happened:
Builders broke ground on more homes in October, but they applied for fewer permits to start work in the future, another reminder that housing market activity is still moving in fits and starts.
October’s pace of starts just missed the MarketWatch consensus of a 1.232 million rate.
Big picture:
The government’s data on new residential construction is notoriously choppy and subject to hefty revisions.
Figures on starts and permits from prior months were revised up.
But construction activity is clearly slowing.
Year-to-date, starts were only 3.9% higher than in the same period of 2017.
That year-to-date measurement has been falling steadily throughout 2018.
Another measurement, single-family starts, is also losing ground.
In October, they were 1.8% lower than in September and 2.6% lower than a year ago.
Analysts watch single-family starts closely because those homes are mostly built for purchase, rather than rent.
If builders start more of them, it’s a vote of confidence in the economy and buyers’ ability to finance their homes.
They are also more labor-intensive, which means the economy will get more of a boost from such construction than from work on multi-family structures.
What they’re saying:
“With rising mortgage rates and increases in house prices that continue to outstrip disposable income, housing affordability has dropped notably since peaking in 2012,” UBS analysts wrote in a recent note.
“But housing remains relatively affordable on a historic basis and the decline in affordability does not seem to fully explain the slowdown."
"Further, high prices should lead to increases in housing starts, but that has not occurred."
"As we cannot full explain the weakness in housing this year, and we expect a general slowing in the economy as a result of trade policy, we project that housing will stay weak through the first part of next year.”
“We likely saw a September and October impact from hurricanes Florence and Michael, and we may see November weakness due to the fires in California, though housing entered the period on a weak trajectory,” Action! Economics analysts said after the release.
“We should see a lift for all the housing data from disaster rebuilding as we approach 2019.”
Market reaction:
Stocks tumbled Monday on the heels of a disappointing report on home-builder confidence, among other issues.
Futures pointed to another rocky start for the Dow Jones Industrial Average.
https://www.marketwatch.com/story/housi ... 2018-11-20
"Housing starts rebound in October but single-family drought lingers"
By Andrea Riquier
Published: Nov 20, 2018 9:50 a.m. ET
The numbers:
Housing starts ticked up 1.5% to a seasonally adjusted annual rate of 1.228 million in October, the Commerce Department said Tuesday.
That was 2.9% lower than a year ago, however.
Permits ran at a seasonally adjusted annual 1.263 million pace during the month, 0.6% lower than in September and 6% lower than year-ago levels.
What happened:
Builders broke ground on more homes in October, but they applied for fewer permits to start work in the future, another reminder that housing market activity is still moving in fits and starts.
October’s pace of starts just missed the MarketWatch consensus of a 1.232 million rate.
Big picture:
The government’s data on new residential construction is notoriously choppy and subject to hefty revisions.
Figures on starts and permits from prior months were revised up.
But construction activity is clearly slowing.
Year-to-date, starts were only 3.9% higher than in the same period of 2017.
That year-to-date measurement has been falling steadily throughout 2018.
Another measurement, single-family starts, is also losing ground.
In October, they were 1.8% lower than in September and 2.6% lower than a year ago.
Analysts watch single-family starts closely because those homes are mostly built for purchase, rather than rent.
If builders start more of them, it’s a vote of confidence in the economy and buyers’ ability to finance their homes.
They are also more labor-intensive, which means the economy will get more of a boost from such construction than from work on multi-family structures.
What they’re saying:
“With rising mortgage rates and increases in house prices that continue to outstrip disposable income, housing affordability has dropped notably since peaking in 2012,” UBS analysts wrote in a recent note.
“But housing remains relatively affordable on a historic basis and the decline in affordability does not seem to fully explain the slowdown."
"Further, high prices should lead to increases in housing starts, but that has not occurred."
"As we cannot full explain the weakness in housing this year, and we expect a general slowing in the economy as a result of trade policy, we project that housing will stay weak through the first part of next year.”
“We likely saw a September and October impact from hurricanes Florence and Michael, and we may see November weakness due to the fires in California, though housing entered the period on a weak trajectory,” Action! Economics analysts said after the release.
“We should see a lift for all the housing data from disaster rebuilding as we approach 2019.”
Market reaction:
Stocks tumbled Monday on the heels of a disappointing report on home-builder confidence, among other issues.
Futures pointed to another rocky start for the Dow Jones Industrial Average.
https://www.marketwatch.com/story/housi ... 2018-11-20
Re: THE HOUSING MARKET
MARKETWATCH
"Existing-home sales stage their first increase in six months as housing market clouds linger"
By Andrea Riquier
Published: Nov 21, 2018 4:11 p.m. ET
The numbers:
Existing-home sales ran at a seasonally adjusted annual rate of 5.22 million in October, the National Association of Realtors said Wednesday.
That was up 1.4% for the month, marking the first monthly increase in six months.
What happened:
Sales of previously owned homes finally perked up, beating the MarketWatch consensus forecast of a 5.18 million selling pace.
Still, October’s rate of sales was 5.1% lower than a year ago.
The median sales price in October was $255,400, up 3.8% versus a year ago, one of the lowest yearly increases in a long time.
Homes stayed on the market an average of 33 days in October, and first-time buyers made up 31% of all purchases, still below the long-term average of 40%.
Sales in the Northeast increased 1.5%, while sales in the South rose 1.9%.
In the West, sales jumped 2.8%.
The Midwest was the only region to pull back in October, with a 0.8% decline.
Big picture:
At the current pace of sales, it would take 4.3 months to exhaust available supply, a tick lower than the 4.4 months’ worth of unsold inventory notched last month, but still better than the conditions that likely caused many buyers to give up and exit the market late last year and early in 2018.
For some context, the long-term average that’s considered a sign of a “balanced” market is six months’ worth of inventory; in February, there were 3.4 months’ worth of unsold homes.
With so much demand, it’s not clear that any easing of the supply crunch won’t be met with a massive wave of buying that could even push prices to reaccelerate.
What they’re saying:
“Don’t get me wrong; I’m thankful for positive economic data but I wouldn’t mind another helping,” said Jennifer Lee, senior economist for BMO Capital Markets.
Even though the details of the October report were better, they still weren’t great, Lee noted.
“Prices are not rising as quickly as they once were but they are rising (~4% y/y) and, coupled with climbing interest rates, are hurting affordability.”
Stephens analyst John Campbell, who’s been a notable bull on housing stocks like Realogy and Zillow, wrote the following on Wednesday:
“While market trends remain challenged, we do think that the October existing-home sales clip represents some stabilization of trends and, perhaps, offers up some hope for the start of a modest recovery."
"We remain upbeat on several of our housing-related stocks given our view that estimates have reset/baked in current conditions and valuations remain very attractive relative to historical averages.”
Market reaction:
The 10-year U.S. Treasury note has rallied over the past week, offering a brief respite to anyone applying for a mortgage.
But if global stock markets continue to churn, that may take a toll on Americans’ confidence and make them less likely to make a major purchase like a home.
The Dow Jones Industrial Average is down about 1% in the year-to-date, but that measurement masks a lot of volatility.
https://www.marketwatch.com/story/exist ... 2018-11-21
"Existing-home sales stage their first increase in six months as housing market clouds linger"
By Andrea Riquier
Published: Nov 21, 2018 4:11 p.m. ET
The numbers:
Existing-home sales ran at a seasonally adjusted annual rate of 5.22 million in October, the National Association of Realtors said Wednesday.
That was up 1.4% for the month, marking the first monthly increase in six months.
What happened:
Sales of previously owned homes finally perked up, beating the MarketWatch consensus forecast of a 5.18 million selling pace.
Still, October’s rate of sales was 5.1% lower than a year ago.
The median sales price in October was $255,400, up 3.8% versus a year ago, one of the lowest yearly increases in a long time.
Homes stayed on the market an average of 33 days in October, and first-time buyers made up 31% of all purchases, still below the long-term average of 40%.
Sales in the Northeast increased 1.5%, while sales in the South rose 1.9%.
In the West, sales jumped 2.8%.
The Midwest was the only region to pull back in October, with a 0.8% decline.
Big picture:
At the current pace of sales, it would take 4.3 months to exhaust available supply, a tick lower than the 4.4 months’ worth of unsold inventory notched last month, but still better than the conditions that likely caused many buyers to give up and exit the market late last year and early in 2018.
For some context, the long-term average that’s considered a sign of a “balanced” market is six months’ worth of inventory; in February, there were 3.4 months’ worth of unsold homes.
With so much demand, it’s not clear that any easing of the supply crunch won’t be met with a massive wave of buying that could even push prices to reaccelerate.
What they’re saying:
“Don’t get me wrong; I’m thankful for positive economic data but I wouldn’t mind another helping,” said Jennifer Lee, senior economist for BMO Capital Markets.
Even though the details of the October report were better, they still weren’t great, Lee noted.
“Prices are not rising as quickly as they once were but they are rising (~4% y/y) and, coupled with climbing interest rates, are hurting affordability.”
Stephens analyst John Campbell, who’s been a notable bull on housing stocks like Realogy and Zillow, wrote the following on Wednesday:
“While market trends remain challenged, we do think that the October existing-home sales clip represents some stabilization of trends and, perhaps, offers up some hope for the start of a modest recovery."
"We remain upbeat on several of our housing-related stocks given our view that estimates have reset/baked in current conditions and valuations remain very attractive relative to historical averages.”
Market reaction:
The 10-year U.S. Treasury note has rallied over the past week, offering a brief respite to anyone applying for a mortgage.
But if global stock markets continue to churn, that may take a toll on Americans’ confidence and make them less likely to make a major purchase like a home.
The Dow Jones Industrial Average is down about 1% in the year-to-date, but that measurement masks a lot of volatility.
https://www.marketwatch.com/story/exist ... 2018-11-21
Re: THE HOUSING MARKET
MARKETWATCH
"Mortgage rates slide the fastest in four years, but it may be too late for the housing market"
By Andrea Riquier
Published: Nov 21, 2018 4:14 p.m. ET
Rates for home loans tumbled as turmoil rocked global financial markets, but any reprieve in rates may come too late for would-be home buyers or refinancers.
The 30-year fixed-rate mortgage averaged 4.81% in the November 21 week, down 13 basis points, mortgage liquidity provider Freddie Mac said Wednesday.
That’s the biggest weekly decline since January 2015 and the lowest level for the popular product since early October.
The 15-year fixed-rate mortgage averaged 4.24%, down 12 basis points during the week.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.09%, down from 4.15%.
Those rates don’t include fees associated with obtaining mortgage loans.
Fixed-rate mortgages follow the U.S. 10-year Treasury note, although with a slight delay.
As a global stock sell-off has raged over the past week, bonds have been the best house in a bad neighborhood.
The yield on the benchmark 10-year bond touched a six-week low Monday.
Bond yields decline as prices rise, and vice versa.
Meanwhile, this week has brought a raft of fresh information on the housing market, little of it cheery.
Sales of already-owned homes perked up in October, but are still lower than the year-ago selling pace by more than 5%.
Home builders broke ground on more — but not enough — homes.
And one fresh data point bears watching: mortgage applications for newly-constructed houses are plunging, according to the Mortgage Bankers Association.
As the chart above shows, they’re now lower than year-ago levels by double digits.
It’s possible more new-home buyers are making their purchases with cash as interest rates rise.
But it’s just as likely that the tumble in applications is an early warning sign on new-home sales in the coming months.
If so, that would mean trouble for the housing market — and the economy.
Only about 1.86 million Americans now have an “interest rate incentive” to refinance, data provider Black Knight said earlier in November.
And refis made up the smallest share of all mortgage applications since December 2000 this past week, the Mortgage Bankers said.
Housing market conditions may be easing enough for motivated buyers to catch a break, and there may be brief windows in which some homeowners can grab a refinance.
But if Americans aren’t watching, or aren’t ready to pounce, those opportunities may slip by.
https://www.marketwatch.com/story/mortg ... ewer_click
"Mortgage rates slide the fastest in four years, but it may be too late for the housing market"
By Andrea Riquier
Published: Nov 21, 2018 4:14 p.m. ET
Rates for home loans tumbled as turmoil rocked global financial markets, but any reprieve in rates may come too late for would-be home buyers or refinancers.
The 30-year fixed-rate mortgage averaged 4.81% in the November 21 week, down 13 basis points, mortgage liquidity provider Freddie Mac said Wednesday.
That’s the biggest weekly decline since January 2015 and the lowest level for the popular product since early October.
The 15-year fixed-rate mortgage averaged 4.24%, down 12 basis points during the week.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.09%, down from 4.15%.
Those rates don’t include fees associated with obtaining mortgage loans.
Fixed-rate mortgages follow the U.S. 10-year Treasury note, although with a slight delay.
As a global stock sell-off has raged over the past week, bonds have been the best house in a bad neighborhood.
The yield on the benchmark 10-year bond touched a six-week low Monday.
Bond yields decline as prices rise, and vice versa.
Meanwhile, this week has brought a raft of fresh information on the housing market, little of it cheery.
Sales of already-owned homes perked up in October, but are still lower than the year-ago selling pace by more than 5%.
Home builders broke ground on more — but not enough — homes.
And one fresh data point bears watching: mortgage applications for newly-constructed houses are plunging, according to the Mortgage Bankers Association.
As the chart above shows, they’re now lower than year-ago levels by double digits.
It’s possible more new-home buyers are making their purchases with cash as interest rates rise.
But it’s just as likely that the tumble in applications is an early warning sign on new-home sales in the coming months.
If so, that would mean trouble for the housing market — and the economy.
Only about 1.86 million Americans now have an “interest rate incentive” to refinance, data provider Black Knight said earlier in November.
And refis made up the smallest share of all mortgage applications since December 2000 this past week, the Mortgage Bankers said.
Housing market conditions may be easing enough for motivated buyers to catch a break, and there may be brief windows in which some homeowners can grab a refinance.
But if Americans aren’t watching, or aren’t ready to pounce, those opportunities may slip by.
https://www.marketwatch.com/story/mortg ... ewer_click