THE LIVYJR FILES

MARKETWATCH

"Existing-home sales soar at a record pace in July as Americans make up for lost time — but two big caveats remain"

By Jacob Passy

Published: Aug. 21, 2020 at 10:09 a.m. ET

The numbers:

Sales of previously-owned homes in the U.S. rose 24.7% between June and July to a seasonally-adjusted annual rate of 5.86 million, the National Association of Realtors reported Friday.

It was the second consecutive month in which the monthly increase was the largest on record, according to the trade group.

Compared with a year ago, sales were up 8.7% in July.

“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” Lawrence Yun, NAR’s chief economist, said in the report.

“With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”

Economists polled by MarketWatch had expected existing-home sales to come in at a rate of 5.5 million in July.

What they’re saying:

Economists, however, say two big caveats remain: the job market and the supply of available homes for sale.

“Continued healing in the housing market is a positive for the overall economy, but elevated jobless claims raise concerns about how sustainable this housing demand is, especially in the face of rising prices,” Realtor.com chief economist Danielle Hale said.

“Bolstered by record low mortgage rates and demand stemming from millennials aging into their household formation years, the potential for existing-home sales will likely continue to rise,” First American Financial chief economist Mark Fleming wrote in a report Thursday.

However, he added, “You can’t buy what’s not for sale."

"The limited supply of existing homes for sale will continue to be an issue, and it will take builders years at a faster pace to build enough new supply to make up for the imbalance between supply and demand.”

What happened:

Sales of single-family homes were up 23.9% in July from a month earlier, while sales of existing condominiums and co-ops were up 31.8%.

Regionally, the Northeast experienced the biggest monthly increase in sales with a 30.6% jump, closely followed by the West’s 30.5% rise.

All four regions nationally reported increases.

The median price for existing homes was $304,100 in July, up 8.5% from a year ago.

It’s the first time that the national median home price surpassed the $300,000 threshold.

Unsold inventory was at a 3.1-month supply, down from 3.9 months in June and 4.2 months a year ago.

Generally, a 6-month supply of homes is considered indicative of a balanced market.

The big picture:

A number of factors suggested that existing-home sales were going to be high for July.

This report measures when deals are closed — and the pending home-sales report measures when contracts are signed for existing homes.

Pending home sales in June were up compared with the previous year — a massive turnaround from earlier in the COVID-19 crisis when contract signings were down sharply.

That makes sense given that by June most parts of the country had emerged from their coronavirus-related business shutdowns, which made consumers more willing to go out and make big purchases.

And other factors suggest a continued rise in existing-home sales.

For instance, home-improvement retailers Home Depot and Lowe’s both reported a strong increase in sales for the second quarter.

“Usually, home-improvement activity is closely correlated with existing home sales,” Christophe Barraud, chief economist and strategist at Market Securities, wrote on his personal blog.

However, there may be a limit to how much more sales can grow.

Before the start of 2020, economists worried about the low inventory of existing homes for sale and suggested it would curtail sales activity.

Since the pandemic began, there’s evidence some sellers have held off on listing their properties or pulled them from the market.

Plus, the low supply has pushed prices higher in the face of out-sized demand.

Eventually, some buyers will be priced out of the market.

And that could put a ceiling on existing-home sales in the near future.

Market reaction:

The Dow Jones Industrial Average and S&P 500 were both up slightly in Friday trades.

https://www.marketwatch.com/story/exist ... cle_inline

THE WASHINGTON POST

"Serious mortgage delinquencies soared to a 10-year high last month - Quicken Loans, and other mortgage lenders, are facing a growing number of borrowers who are seriously behind on their payments."

By Kathy Orton

August 21, 2020 at 7:40 a.m. EDT

Overall mortgage delinquency numbers are improving, but the delinquency rate for homeowners who are seriously behind in their payments is soaring, another indication of a bifurcated housing market.

The number of borrowers delinquent on their mortgages fell by 340,000 in July, a 9 percent drop from June, according to data released Friday by Black Knight, a mortgage data and technology company. (Black Knight counts all homeowners who are delinquent, regardless of whether they are in a forbearance plan.)

But the number of homeowners who were at least 90 days behind on their payments grew by 376,000 last month, a 20 percent increase from June.

Serious delinquencies are now 1.8 million higher than pre-pandemic levels and are at their highest level since early 2010.

“The good news is that overall delinquencies are trending downward and, in fact, the number of newly delinquent homeowners has fallen far below pre-pandemic levels,” Andy Walden, Black Knight economist and director of market research, wrote in an email.

“However, while this indicates that the inflow of new covid-19-related delinquencies has subsided, the number of homeowners who have missed three or more payments is now at a 10-year high."

More than 85 percent of these borrowers were in forbearance as of the end of July, making clear that “economic distress from the pandemic continues to impact their ability to make mortgage payments,” he said.

“It remains to be seen how those loans will perform as we move on into the fall.”

Foreclosures also ticked up, despite moratoriums still in place.

Mortgage delinquencies track closely with unemployment.

States that have been hard hit with job losses, particularly in the leisure and hospitality industry, are the ones facing the highest numbers of borrowers behind on their payments.

The top five states with borrowers who are not current on their mortgages are Mississippi, Louisiana, New York, Hawaii and New Jersey.

The top five states with borrowers who have serious delinquencies are Mississippi, Louisiana, Nevada, New Jersey and Alaska.

A survey of Mortgage Bankers Association members also found that delinquencies spiked in the second quarter.

The MBA releases its data on a quarterly basis, while Black Knight issues its data monthly.

The delinquency rate for loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.22 percent of all loans at the end of the second quarter, according to the MBA’s national delinquency survey.

Like Black Knight, the MBA includes loans in forbearance.

“The COVID-19 pandemic’s effects on some homeowners’ ability to make their mortgage payments could not be more apparent,” Marina Walsh, the MBA’s vice president for industry analysis, said in a statement.

“The nearly 4 percentage point jump in the delinquency rate was the biggest quarterly rise in the history of MBA’s survey."

"The second quarter results also mark the highest overall delinquency rate in nine years, and a survey-high delinquency rate for FHA loans.”

Many borrowers won't have to make up missed mortgage payments all at once

The MBA also noted the rise in seriously delinquent mortgages.

“There was also a movement of loans to later stages of delinquency, with the 60-day delinquency rate reaching a new survey-high, and the 90-plus-day delinquency rate climbing to its highest level since the third quarter of 2010,” Walsh said.

“On a more positive note, 30-day delinquencies dropped in the second quarter, which is an indication that the flood of new delinquencies may be dissipating.”

Although the data rouses fears of what befell the housing market in 2008, Walsh tamped down those concerns.

“Fortunately, there are several mitigating factors that make this current spike in mortgage delinquencies different from the Great Recession,” Walsh said.

“These factors include home-price gains, several years of home equity accumulation, and the loan deferral and modification options that present alternatives to foreclosure for distressed homeowners.”

https://www.washingtonpost.com/business ... ast-month/

MARKETWATCH

"New home sales surged to highest level since 2006 in July, but builders could soon face headwinds"

By Jacob Passy

Published: Aug. 25, 2020 at 10:41 a.m. ET

The numbers:

Sales of new single-family homes increased markedly for the third month in a row, rising to their highest level since 2006.

Sales of new single-family houses rose 14% between June and July to a seasonally-adjusted annual rate of 901,000, the U.S. Census Bureau reported Tuesday.

Compared with a year ago, new home sales were up 36%.

Economists polled by MarketWatch had expected a median pace of new home sales of 790,000.

The government also revised June’s new home sales figure to a rate of 791,000, up from 776,000.

The report’s small sample size has historically led to significant revisions.

What happened:

The surge in sales was driven by a nearly 59% increase in the Midwest month-over-month.

Sales also increased on a monthly basis in the South and the West, but fell by 23% in the Northeast.

The median sales price in July was $330,600, up 7% from a year ago.

The inventory of new homes fell to just 299,000, representing a 4-month supply.

That’s down from a 4.6-month supply in June.

A 6-month supply is considered the benchmark for a balanced market.

The big picture:

Americans have flooded into the pricier market for new homes in recent months as they’ve faced a very short supply of existing homes for sale.

Demand among home buyers that was pent-up at the height of the coronavirus lockdowns this spring has been unleashed this summer — and record-low mortgage rates have pushed even more buyers into the market.

But the nation’s housing market faces some headwinds.

Millions of Americans are delinquent on their mortgages right now.

While most of those homeowners are in forbearance plans that allow them to put off payments for as long as a year because of the COVID-19 pandemic, it does pose a risk for the industry.

“The danger is that rocketing delinquencies force lenders to pull back in order to preserve capital, thereby tightening the supply of mortgage credit,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note.

If those delinquencies turn into foreclosures eventually, home prices will fall and mortgage rates would likely rise, resetting the overall sales market.

Plus, the price of new homes is expected to continue to rise in part because of increasing lumber costs.

That price appreciation could push some buyers out of the market, when coupled with the price growth that’s also occurring in the market for existing homes.

What they’re saying:

“Builders are already having trouble keeping pace with demand, and materials costs are rising rapidly, which will add to upward pressure on new home prices, meaning affordability will be more sensitive to any given increase in mortgage interest rates."

"And, with the labor market still in a state of ill repair, it is reasonable to question how long the strength in demand seen over the past few months can be sustained, even absent a meaningful increase in mortgage interest rates,” Richard Moody, chief economist at Regions Financial Corp., wrote in a research note.

Market reaction:

The Dow Jones Industrial Average and the S&P 500 both fell in Tuesday morning trading, as did shares of home-building firms PulteGroup, LGI Homes, and Lennar Corp.

https://www.marketwatch.com/story/new-h ... cle_inline

MARKETWATCH

"Home prices continued to rise in June, Case-Shiller index finds — as Americans face a growing affordability crunch"

By Jacob Passy

Published: Aug. 25, 2020 at 9:42 a.m. ET

The numbers:

Home-price appreciation continued at a steady clip in June as many states began reopening businesses from shutdowns related to the coronavirus pandemic, according to a major price barometer released Tuesday.

Recent data suggests price appreciation should gain steam in the latter half of the year.

The S&P CoreLogic Case-Shiller 20-city price index posted a 3.5% year-over-year gain in June, down from 3.6% the previous month.

On a monthly basis, the index increased 0.2% between May and June.

What happened:

The separate national index released with the report noted a 4.3% increase in home prices across the country over the past year, unchanged from the rate of price growth in May.

Phoenix continued to lead all other markets nationwide with a 9% annual price gain in May, followed by Seattle with a 6.5% increase and Tampa, Fla., with a 5.9% uptick.

“As has been the case for the last several months, prices were particularly strong in the Southeast and West, and comparatively weak in the Midwest and (especially) Northeast,” Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, wrote in the report.

Overall, the pace of price growth increased in five of the 19 cities Case-Shiller analyzed — the 20-city list again didn’t include Detroit this month because transaction records for Wayne County, Mich. were unavailable, the report noted.

The big picture:

Since June, home price growth has only accelerated as buyers’ fervor has been met with a historically-low supply of homes.

Median home list prices rose 10.1% year-over-year for the week ending Aug. 15, according to a recent report from Realtor.com, marking the fastest growth in listing prices since January 2018.

It’s a significant turnaround from the start of the pandemic, when listing price appreciation slowed to the lowest level since at least 2013, according to Realtor.com’s calculations.

Record-low mortgage rates are boosting not only demand among buyers, but home prices as well, because, on the surface, they expand how much home buyers can afford.

But a recent report from UBS Financial Services questioned how affordable buying a home really is right now.

The report looked at the affordability index put out by the National Association of Realtors.

UBS recalculated the index to account for lower down payments (rather than a 20% down payment) and additional costs such as taxes and insurance.

“The vast majority of home buyers buy on monthly payment as opposed to price,” Jonathan Woloshin, a real estate and lodging analyst at UBS, wrote in the report.

“However, our concern is that many are only considering the principal and interest component of their monthly payment as opposed to the ‘fully loaded’ monthly payment associated with ownership.”

When the full cost of owning a home is added up, it is a much less affordable proposition.

Meanwhile, apartment rents have flattened or declined across much of the country as home prices have continued to rise.

Woloshin’s calculations found that it is cheaper to own than to rent in one-third of markets nationwide.

But that could change.

“If rents continue to flatline or decline and home prices continue their upward trajectory of the past several months, renting is likely to become more attractive for a greater number of markets,” he wrote.

Ultimately, if many buyers are priced out, that could throw some cold water on the buying frenzy across the country’s housing market right now.

What they’re saying:

“Recently, Case Shiller price metrics have been weakest in Northeastern metros, but there are signs that the economies in these areas are recovering well from the coronavirus."

"As these economies bounce back, so do their housing markets,” said Danielle Hale, chief economist at Realtor.com.

https://www.marketwatch.com/story/home- ... cle_inline

MARKETWATCH

"Mortgage rates fall to a new record low — but not all Americans will be able to access them"

By Jacob Passy

Published: Sept. 10, 2020 at 10:24 a.m. ET

Mortgage rates have dropped to all-time lows for the ninth time in 2020.

But Black Americans could face an uphill battle accessing this historically-cheap home financing.

The 30-year fixed-rate mortgage averaged 2.86% for the week ending Sept. 10, falling 13 basis points from the week prior, Freddie Mac reported Thursday.

The previous record low was set in early August at 2.88%.

In comparison, these loans had an average rate of 3.56% a year ago.

The 15-year fixed-rate mortgage decreased five basis points to an average of 2.37%, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage jumped 18 basis points higher to 3.11% on average.

The decline in the benchmark 30-year mortgage was a reflection of “a late summer slowdown in the economic recovery,” said Sam Khater, chief economist at Freddie Mac.

A more tumultuous week in the stock market also affected the rates lenders were offering.

“The 30-year fixed mortgage rate declined due to investors moving away from the steep drop in equity markets and towards the relative safety of bonds,” said George Ratiu, senior economist for Realtor.com.

But many Americans won’t be offered these rock-bottom rates — particularly people of color.

A recent LendingTree study found that Black home buyers are more likely to receive a high-cost mortgage to buy a home than the overall population.

High-cost mortgages are loans with an annual percentage rate (APR) higher than the benchmark Average Prime Offer Rate defined by the Federal Financial Institutions Examination Council.

The share of Black buyers who receive high-cost home loans was nearly nine percentage points higher than the overall population, LendingTree found based on an analysis of Home Mortgage Disclosure Act data.

However, all real-estate is local, and in some parts of the country Black Americans are far more likely to be presented with a high-cost loan.

In Cleveland, over one in four (26.6%) Black home buyers took out a high-cost mortgage, while the overall share of buyers with high-cost loans was just 9.5%.

That represents a difference of 17 percentage points.

LendingTree’s findings match what other researchers have reported about the discrepancies people of color face when they take out home loans.

Realtor.com recently reported that home buyers in predominately Black communities were issued mortgages with interest rates that were 13 basis points higher than in white neighborhoods.

And a recent analysis of Home Mortgage Disclosure data from Zillow found that Black mortgage applicants were denied loans at an 80% higher rate than white applicants.

To be sure, these discrepancies are not necessarily indicative of explicit racial bias on the parts of lending officers and banks.

Rather, it’s a reflection of how people of color in the U.S. are often at an economic disadvantage.

Black Americans are more likely to have lower credit scores or have thin credit files than their white peers, which can contribute to a mortgage company offering a higher rate or denying them a loan outright.

Plus, the racial gap in earnings makes it harder for people of color to amass the savings needed to make a larger down payment, which can lower the interest rate they are assigned.

“Not all consumers can take advantage of low rates,” Tendayi Kapfidze, chief economist at LendingTree, wrote in the credit comparison website’s report.

“Depending on factors like their income, employment history and credit score, the rates that some borrowers receive may be significantly higher than record lows.”

https://www.marketwatch.com/story/mortg ... cle_inline

MARKETWATCH

"New-home construction slows slightly in August, driven by pullback in multifamily starts"

By Jacob Passy

Published: Sept. 17, 2020 at 8:38 a.m. ET

U.S. home builders started construction on homes at a seasonally-adjusted annual rate of 1.42 million in August, representing a 5% decrease from the previous month but a 3% uptick from a year ago, the U.S. Census Bureau reported Thursday.

The dip in housing starts was driven by a 25% decline in multifamily construction activity.

Permitting activity occurred at a seasonally-adjusted annual rate of 1.47 million, down 1% from July but roughly even with the pace from August 2019.

Economists polled by MarketWatch had expected housing starts to occur at a pace of 1.52 million and building permits to come in at a pace of 1.55 million.

https://www.marketwatch.com/story/new-h ... 2020-09-17

MARKETWATCH

"Opinion: The COVID-19 lockdown is squeezing real estate from all sides and threatens to burst the housing and mortgage bubble"

By Keith Jurow

Published: Sept. 21, 2020 at 6:20 p.m. ET

Recently the Federal Housing Finance Administration (FHFA) — conservator of Fannie Mae and Freddie Mac — extended the moratorium for both evictions and foreclosures until the end of the year.

Many homeowners breathed a sigh of relief.

Indeed, over the past few months the number of borrowers with active forbearances has declined.

But that’s no reason for optimism.

The more serious matter is how many homeowners are now delinquent.

By the end of 2020, several million borrowers who have received mortgage forbearance will have gone nine months without making a mortgage payment.

What impact will this have on U.S. housing and mortgage markets?

Let’s start with FHA-insured loans.

According to HUD’s July 2020 “Neighborhood Watch” report, 17% of 8 million insured mortgages are now delinquent.

This percentage includes mortgages in forbearance as well as those not in forbearance.

Hard-hit metropolitan areas include New York City with 27.2%, Miami with 24.4% and Atlanta with 21%.

Another reason for alarm is the private, non-guaranteed (non-agency) securitized mortgages that go back to the crazy bubble years and which are still active.

These were the millions of sub-prime and other non-prime loans that were egregiously underwritten, many fraudulently.

At the peak of this activity in late 2007, more than 10 million of these mortgages were outstanding with a total debt of more than $2.4 trillion.

As recently as early 2018, 25% of all delinquent borrowers nationwide had not made a mortgage payment in at least five years.

In New York State, New Jersey and Washington, D.C., that percentage was more than 40%.

Keep in mind that these extremely high delinquency rates existed well-before the COVID-19 pandemic erupted.

Since March of this year, delinquency rates for subprime mortgages reversed a 10-year decline and climbed to 23.7% in July, according to TCW’s most recent Mortgage Market Monitor report.

Other non-prime bubble-era mortgage delinquency rates also were substantially higher.

According to Inside Mortgage Finance, mortgage servicers had eased the pain for owners of these non-guaranteed mortgage-backed securities (RMBS) by advancing the delinquent principle and interest to them.

But in TCW’s latest report, nearly one-third of these delinquent payments had not been advanced to the owners at the end of July.

The Dodd-Frank legislation of 2010 attempted to remedy the problems that had led to the housing collapse.

It created a new standard for lower-quality loans, which were named non-qualified mortgages (non-QM).

These were mortgages that did not meet Fannie Mae or Freddie Mac’s underwriting standards and hence could not be guaranteed by them.

The delinquency rate for these mortgages soared during the COVID-19 lockdowns and stood at 21.3% at the end of June.

As for Fannie Mae, $203 billion of the loans guaranteed by them were in forbearance as of June 30.

New York, Florida and New Jersey had forbearance rates in double digits.

Of the $100 billion in bubble era loans still guaranteed by Fannie Mae, 15% were in forbearance.

In its second quarter 2020 10-Q financial report, the agency showed $194 billion of seriously delinquent loans with arrears more than 90 days.

Major metros including Chicago, Philadelphia and New York saw an increased percentage of reduced listing prices.

Skeptics may ask why I am so concerned about these high delinquency rates.

After all, delinquency rates for subprime mortgages were much higher during the crash of 2008-2010.

Furthermore, home prices recovered since 2012 and prices haven’t even started to decline yet.

So what’s the big deal?

That is a fair question.

Obviously, prices have recovered since 2013.

But this recovery is totally contrived.

Mortgage servicers are just as reluctant now to foreclose on seriously delinquent borrowers as they were between 2010 and 2013.

Media reports are euphoric about the strong housing-market recovery over the past few months.

In truth, home sales in the U.S. were just 5% higher in July than a year earlier, according to online broker Redfin.

In New York City, sales in July collapsed by 35% from July 2019.

Even worse for New York, listings soared by 65% in July as residents continued to flee the lockdown calamity in the Big Apple.

A telling figure is the percentage of home sellers who had to drop their asking price in August.

San Francisco showed the highest percentage of reduced asking prices since Redfin began tracking it — 24.5%.

Other major metros including Chicago, Philadelphia and New York also saw an increased percentage of reduced listing prices compared to a year earlier.

Denver — one of the hottest markets in the nation a few years ago – led the nation in August with 41% of home sellers compelled to reduce their asking price.

Another former sizzling market — Seattle — was the second-highest at 31% along with Tampa, Fla.

These are signs of weakening markets.

It is essential to understand that the current housing and mortgage mess is the result of something we have never seen before — a lockdown of most of the U.S. economy for six months now, with little end in sight.

How bad is it now?

Online apartment broker Apartment List publishes a monthly survey of roughly 4,000 renters and homeowners.

The most recent survey published in early August found that 33% of those surveyed had been unable to make a full rent or mortgage payment the first week of August.

That was up from 21% in April.

Heading into August, 32% of those surveyed had unpaid housing bills left over from previous months.

For homeowners with mortgage arrears, 13% of them owed more than $2,000.

By extending the foreclosure moratorium until the end of 2020, the FHFA seemed to indicate that it is not prepared to open the foreclosure floodgates.

This may be true; they are unwilling to let servicers foreclose while the pandemic is still with us.

Yet COVID-related deaths and hospitalizations have been steadily declining around the nation for almost four months.

If this trend continues, it is hard to see how states with the most draconian lockdowns — including New York and California — can clamp down much longer.

What could happen when states finally lift their lockdowns?

First, the apparent strength of the housing market in most major metros has been caused more by the plunge in active home listings than by low interest rates.

Declining interest rates have led to a record amount of refinancing.

Although hundreds of thousands of residents in major metros such as New York, San Francisco and Los Angeles have fled for greener, less disruptive locations, the collapse in listings indicates that most have chosen not to put their home on the market.

That will likely change soon.

It may already be happening in New York City.

Second, small landlords have been devastated by the lockdowns.

The results of the latest survey published by the National Association of Independent Landlords (NAIL) revealed that the percentage of respondents who received a full rent payment from their tenants plunged to 55% in June from 83% in February.

Almost 20% had vacant rental properties due to COVID-19, while 60% were in a financial position to offer some kind of payment plan for tenants to pay back rent.

Keep in mind that there are at least 15 million properties owned by these small landlords nationwide.

Many were in a precarious financial situation even before the lockdowns began.

Unless the job situation of their tenants improves, millions of these investors could be wiped out and compelled to throw their properties onto the market.

Sooner or later, the piper must be paid.

Keith Jurow is a real estate analyst who covers the bubble-era home-lending debacle and its aftermath. Contact him at www.keithjurow.com.

https://www.marketwatch.com/story/the-c ... latestnews

MARKETWATCH

"Existing-home sales jumped in August to the fastest pace in over a decade — alongside rising prices and improving foot traffic"

By Jacob Passy

Published: Sept. 22, 2020 at 10:44 a.m. ET

The numbers:

Existing-home sales increased for the third consecutive month in August, as the U.S. housing market continued its rebound from the coronavirus pandemic.

Total existing-home sales rose 2.4% from July to a seasonally-adjusted, annual rate of 6 million, the National Association of Realtors reported Tuesday.

It was the fastest pace of home sales recorded since December 2006.

Compared with a year ago, home sales were up 10.5%.

Economists polled by MarketWatch had projected existing-home sales to rise to a median rate of 6.03 million.

What happened:

The Northeast experienced the biggest jump in sales, with a 13.8% increase from July.

All regions reported an increase in sales, though the pace of sales was only up 0.8% in the West and the South.

In the case of the West, economists noted that the ongoing wildfires across much of that region could be hampering sales activity, while the South likely displayed the effects of Hurricane Laura and Tropical Storm Marco.

As sales increased, so did prices.

The median existing-home price was $310,600 in August, up 11.4% from a year ago.

Tightening inventory contributed to the rise in prices.

Unsold inventory sat at a 3-month supply in August, down from 3.1 months in July and a 4-month supply a year ago.

A 6-month supply of homes is generally considered to be indicative of a balanced market.

The big picture:

A separate report from the National Association of Realtors found that buyer foot traffic was up in August, with home showings up 20% compared with a year ago.

Clearly, demand for homes is up — largely a reflection of the positive effect of record-low mortgage rates.

But the supply of homes remains historically tight, and that’s creating major challengers for Americans looking to buy.

“Even more homes would have been sold if more people would put their homes on the market,” said Holden Lewis, home and mortgage expert at personal-finance website NerdWallet.

“The inventory of homes for sale is low, probably because would-be sellers don’t want strangers in their homes.”

Plus, while mortgage rates are low, lenders are being stingier with credit in the face of the risks still posed by the coronavirus pandemic.

That could put a dent in foot traffic if a growing number of buyers are unable to secure financing.

What they’re saying:

“The downside to existing home sales is not from weak demand but from tight inventories and high prices,” Rubeela Farooqi, chief U.S. economist for High Frequency Economics, wrote in a research note.

“The rising trend in mortgage applications over the summer points to further gains through early fall."

"But the tightening of lending standards in recent months appears already to be crimping applications, so sales likely will peak around the year-end,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Market reaction:

The Dow Jones Industrial Average and the S&P 500 were both up slightly in Tuesday morning trading.

https://www.marketwatch.com/story/exist ... 2020-09-22

MARKETWATCH

"New home sales surge in August to levels not seen in 14 years"

By Jacob Passy

Published: Sept. 24, 2020 at 10:06 a.m. ET

Sales of new single-family homes in August exceeded an annual rate of 1 million for the first time since 2006.

New home sales occurred at a seasonally-adjusted, annual rate of 1.011 million, the Census Bureau reported Thursday.

That represents a 4.8% increase from an upwardly-revised pace of 965,000 homes in July.

Compared with last year, new home sales are up 43%.

https://www.marketwatch.com/story/new-h ... 2020-09-24

MARKETWATCH

"Home-builder confidence reaches record high for third consecutive month as buyers flood the market"

By Jacob Passy

Published: Oct. 19, 2020 at 10:37 a.m. ET

The numbers:

The construction industry’s outlook continued to improve in October, according to research from a trade group released Monday.

The National Association of Home Builders’ monthly confidence index rose two points to a reading of 85 in October, the trade group said Monday.

This was the third month in a row in which the index reading hit a record high, and together with September’s figure, only the second time that the confidence measure was at or above 80.

Index readings over 50 are a sign of improving confidence.

The index dropped below 50 in April and May as concerns related to the pandemic intensified.

What happened:

The index that measures sentiment regarding current sales conditions increased two points to 90, while the index of expectations for future sales over the next six months rose three points to 88.

The gauge regarding prospective buyers remained the same at 74.

At a regional level, though, confidence varied.

The indexes for the Northeast and the West both increased seven points in October to readings of 88 and 95 respectively.

But in the Midwest the index dropped one point to 77, and it fell two points in the South to 83.

“New single-family home sales are outpacing starts by a historic margin,” Robert Dietz, chief economist at the National Association of Home Builders, said in the report.

“Bridging this gap will require either a gain in construction volume or reductions in available inventory, which is already at a historic low in terms of month’s supply.”

The big picture:

While summer may now be gone, buyers are still searching for homes as if the weather was warm.

Interest rates continue to drop to all-time lows — on Thursday, Freddie Mac reported that the 30-year fixed-rate mortgage averaged a record low of 2.81.

Looking to take advantage of the low rates, Americans have flooded the real-estate market.

But with the inventory of existing homes so tight, many are considering newly-constructed homes instead.

The continued recovery in home sales should remain positive for the rest of the economy, though rising home prices could push some buyers out of the market eventually.

What they’re saying:

“Buy a home and it needs to be filled with all sorts of consumer goods: furniture, appliances, etc.,” Renaissance Macro Research head of economics Neil Dutta wrote in a research note.

“The link between consumption and home sales has been well established.”

Market reaction:

The Dow Jones Industrial Average and the S&P 500 index were flat Monday morning in spite of positive economic data out of China and hopes of a stimulus deal in the U.S.

https://www.marketwatch.com/story/home- ... quote_news