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Let's hope so, but Freddie is still issuing CRTS, the Justices are all appointed for life, can retire at any time with full pay and as the head of the Judicial Branch of government are vested with quite a bit of power and significance. From their questioning at orals, I think they understand what is going on here, we will find out shortly whether or not they will do anything about it.
But for the CRT PROGRAM, $14.95B would have been available for capital building purposes, YET ANOTHER MOVE BY THE "CONSERVATOR" TO DO THE EXACT OPPOSITE OF CONSERVE AND PRESERVE THE ASSETS OF THE GSES!
Key Highlights
Existing-home sales are down 2.7% to 5.85 million, the third straight month of decline.
Year-to-date – months January to April – sales are still up 20%.
The median existing-home sales price rose to 19.1% year-over-year to $341,600, both record highs.
WASHINGTON (May 21, 2021) – Existing-home sales waned in April, marking three straight months of declines, according to the National Association of Realtors®. All but one of the four major U.S. regions witnessed month-over-month drops in home sales, but each registered double-digit year-over-year gains for April.
Existing-Home Sales, April 2021
See and share this infographic.
Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 2.7% from March to a seasonally-adjusted annual rate of 5.85 million in April. Sales overall jumped year-over-year, up 33.9% from a year ago (4.37 million in April 2020).
"Home sales were down again in April from the prior month, as housing supply continues to fall short of demand," said Lawrence Yun, NAR's chief economist. "We'll see more inventory come to the market later this year as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory.
"Despite the decline, housing demand is still strong compared to one year ago, evidenced by home sales from this January to April, which are up 20% compared to 2020," Yun continued. "The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year."
The median existing-home price2 for all housing types in April was $341,600, up 19.1% from April 2020 ($286,800), as every region recorded price increases. This is a record high and marks 110 straight months of year-over-year gains.
Total housing inventory3 at the end of April amounted to 1.16 million units, up 10.5% from March's inventory and down 20.5% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, slightly up from March's 2.1-month supply and down from the 4.0-month supply recorded in April 2020. These numbers continue to represent near-record lows. NAR first began tracking the single-family home supply in 1982.
Properties typically remained on the market for 17 days in April, down from 18 days in March and from 27 days in April 2020. Eighty-eight percent of the homes sold in April 2021 were on the market for less than a month.
First-time buyers were responsible for 31% of sales in April, down from 32% in March and 36% in April 2020. NAR's 2020 Profile of Home Buyers and Sellers – released in late 20204 – revealed that the annual share of first-time buyers was 31%.
"First-time buyers in particular are having trouble securing that first home for a multitude of reasons, including not enough affordable properties, competition with cash buyers and properties leaving the market at such a rapid pace," Yun said.
Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in April, up from 15% in March and 10% in April 2020. All-cash sales accounted for 25% of transactions in April, up from both 23% in March and 15% in April 2020.
Distressed sales5 – foreclosures and short sales – represented less than 1% of sales in April, equal to March's percentage but down from 3% in April 2020.
According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 3.06% in April, down from 3.08% in March. The average commitment rate across all of 2020 was 3.11%. Yun expects the 30-year fixed-rate mortgage to remain below 3.5% in 2021.
Single-family and Condo/Co-op Sales
Single-family home sales dropped to a seasonally-adjusted annual rate of 5.13 million in April, down 3.2% from 5.30 million in March, and up 28.9% from one year ago. The median existing single-family home price was $347,400 in April, up 20.3% from April 2020.
Existing condominium and co-op sales were recorded at a seasonally-adjusted annual rate of 720,000 units in April, up 1.4% from March and up 84.6% from one year ago. The median existing condo price was $300,400 in April, an increase of 12.6% from a year ago.
"The demand for homeownership in America is as strong as it's ever been, and NAR continues working with policymakers across the country to find solutions to the issues we face in our industry," said NAR President Charlie Oppler, a Realtor® from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby's International Realty. "Ultimately, though, buyers still recognize that securing a home is one of the best ways to build long-term wealth, and Realtors® continue their work to make that dream a reality for families everywhere."
Realtor.com®'s Market Hotness Index(link is external), measuring time-on-the-market data and unique viewers per property, revealed that the hottest metro areas as of May 13 were Manchester, N.H.; Concord, N.H.; Lafayette, Ind.; Janesville, Wis.; and Elkhart, Ind.
Regional Breakdown
Only the Midwest experienced higher sales from the prior month, but each of the four major U.S. regions recorded year-over-year increases.
Existing-home sales in the Northeast fell 3.9% from March, but the annual rate of 730,000 represents a 30.4% leap from a year ago. The median price in the Northeast was $381,100, up 22.0% from April 2020.
Existing-home sales in the Midwest grew 0.8% to an annual rate of 1,290,000 in April, a 13.2% increase from a year ago. The median price in the Midwest was $259,300, a 13.5% rise from April 2020.
Existing-home sales in the South decreased 3.7%, recording an annual rate of 2,600,000 in April, up 39.0% from the same time one year ago. The median price in the South was $289,600, a 15.8% jump from one year ago.
Existing-home sales in the West declined 3.1% from the month prior, posting an annual rate of 1,230,000 in April, a 53.8% surge from a year ago. The median price in the West was $501,200, up 19.9% from April 2020.
The National Association of Realtors® is America's largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.
# # #
For local information, please contact the local association of Realtors® for data from local multiple listing services (MLS). Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.
NOTE: NAR's Pending Home Sales Index for April is scheduled for release on May 27, and Existing-Home Sales for May will be released June 22; release times are 10:00 a.m. ET.
1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR's quarterly metro area price reports.
3 Total inventory and month's supply data are available back through 1999, while single-family inventory and month's supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90% of transactions and condos were measured only on a quarterly basis).
4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR's Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR's Realtors® Confidence Index, posted at nar.realtor.
The 10th Circuit on 1-27-21, invalidated an arbitrary and capricious decision by a federal agency under an APA Violation claim brought by the Plaintiff. https://casetext.com/case/nm-farm-livestock-bureau-v-us-dept-of-interior-1
The APA Claim seems to be the cleanest way to invalidate the governmental overreach and ultra vires act of the fhfa when it implemented the nws.
The SCOTUS may end their opinion there after ruling that the Director is removable at will by the POTUS since the Collins Plaintiffs will have received the remedy they seek.
Of course, we'd like to see them say something like this, "Given the federal governments abusive and coercive use of the powers granted to it under HERA, we hereby invalidate the statute and return the parties to their status before HERA." But that's very unlikely as I think that would set a new prong to the "Severability Analysis" Doctrine and could be unworkable in the lower courts as they wrestle with the term, "abusive and coercive federal agency power" in the next inevitable federal agency overreach cases...
I did glance roughly at the 2 year price chart for fnmas and fnma, I think it was 4:1 and today it was 3:1. I wonder what the high was, because for most of the 12.5 year "conservatorship" almost all commentators said jps was your best bet.
Ever wonder if Monday morning between 9:30am and 10:00am will be the final opportunity to convert 1 share of fnmas for 3 shares of common?
https://www.cnbc.com/2021/05/21/april-existing-home-sales-drop-marking-three-straight-months-of-declines.html
https://www.cnbc.com/2021/05/21/treasury-department-gives-out-6-billion-to-help-renters-.html
This is for J-Bear:
https://www.cnbc.com/2021/05/20/elevated-lumber-prices-to-last-for-foreseeable-future-says-executive.html?&qsearchterm=lumber
A major problem with lumber prices is mill capacity, it is running flat out but the mill owners are reluctant to build more mills because who wants to invest $100 million wait 3 years to complete the mill and finished lumber prices have dropped precipitously?
I believe last March 2020 showed EXACTLY why they are needed and many of the gse doubters could see why well capitalized gses are important.
Some have, I think economists refer to it as substitution. https://kutv.com/news/local/utah-home-builder-starts-using-bamboo-instead-of-relying-on-traditional-lumber#:~:text=Concord%20Homes%20is%20using%20bamboo,nationwide%20spike%20in%20lumber%20prices.
#Cancelrent!; Maybe the SCOTUS will rule against Collins and the Socialists and Communists can more rapidly begin their takeover! Isn't it true that the government will take care of all your needs from cradle to grave? I thought the world owed me a living and besides transferring wealth from one group to another can go on forever, right? Why take risks and sacrifices in life like Bezos did when you can just live an easy and stress free life milking the gubmint tithe...
Even with a dodge on the remedy issue by the SCOTUS in Collins, it looks like more and more decision makers that matter are realizing that the twins provide a valuable service to main street Americans, they need to continue building capital to protect the American taxpayer, there is just not a readily available replacement for them and the scars from the 2008/9 GFC are still felt by many and a return to the PLS MBS Market seems unlikely. We'll see what happens!
5/20/2021
FHFA Publishes First-of-its-Kind Comprehensive Dataset on Mortgage Risk from 1990-2019
Washington, D.C.— Today, to improve policymakers' understanding of how mortgage risk has evolved over time and the role it played in the 2008 recession, FHFA released a revised staff working paper, “A Quarter Century of Mortgage Risk." Using a comprehensive dataset that contains aggregated results using more than 200 million purchase-money and refinance mortgages from 1990 to 2019, the paper provides a summary measure of mortgage risk by estimating a “stressed default rate." The stressed default rate takes a loan made at any time from 1990-2019 and measures that loan's risk as though it originated at the dawn of the 2008 financial crisis.
The size and scope of the expanded dataset in the paper provides researchers and policymakers more complete and more accurate historical information of mortgage risk than ever before. Based on the expanded data, the paper presents key findings about mortgage risk in years leading up to the 2008 financial crisis and in America today.
The paper identifies three key findings related to the Great Recession:
Earlier mortgage risk accumulation: Mortgage risk started accumulating in the mid-1990s, sooner than previously thought. The new data shows that the buildup of mortgage risk in the nineties was a precursor to the market failing in 2008; previous research could not identify the fact that a refinance boom from 2000-2003 masked the mortgage risk accumulation.
Risk accumulated with borrowers across all credit scores: Leading up to the 2008 financial crisis, mortgage risk accumulated across the full spectrum of borrowers, not just those with low credit scores as some have previously asserted.
Relaxed lending standards: Mortgage rate spreads between not risky loans and very risky loans tightened for portfolio and private label securities mortgages in the mid-2000s indicating an expansion of credit supply right before the Great Recession.
Additionally, the expanded dataset leads to another key finding about mortgage risk in America today:
Mortgage risk is accumulating: Sustained house price appreciation is leading mortgage risk to increase.
The paper was written and researched by William Larson of FHFA, Morris Davis of Rutgers University, Stephen Oliner of the American Enterprise Institute, and Benjamin Smith of the University of Pennsylvania.
Link to the paper and data tables.
A classic! Chaser, is it wrong to buy a stock that is selling for 1/2 of 1Q21 EPS? I just did, GUILTY AS CHARGED!
https://www.fanniemae.com/research-and-insights/forecast
https://www.fanniemae.com/research-and-insights/forecast/supply-constraints-increasingly-come-focus-gdp-approaches-new-high
Economic & Housing Outlook
Supply Constraints Increasingly Come into Focus as GDP Approaches New High
May 19, 2021
Our 2021 real gross domestic product (GDP) forecast was modestly revised upward to 7.0 percent from a prior 6.8 percent on a fourth quarter-over-fourth quarter basis. This faster pace was driven by stronger first quarter growth than we expected, combined with a slightly improved outlook for near-term consumer spending. We believe the greater consumer expenditures over the first half represent a pulling forward of some growth from the second half of 2021 and early 2022, compared to our previous forecast. Our 2022 growth forecast was revised downward to 2.8 percent from a prior 3.0 percent. Recent indicators point to a continued recovery in the near term as COVID-19-related restrictions wane and the vaccination effort progresses. With second quarter growth forecast of 9.2 percent annualized, we expect this quarter’s GDP level to surpass the pre-COVID peak. However, supply chain disruptions, labor scarcity, and inflationary pressures are increasing risks to future growth. While we had previously expected the rate of inflation to modestly accelerate into 2022, we have revised upward our inflation forecast and now expect that the annual change will not fall below the Federal Reserve’s long-run 2.0 percent target within the forecast time horizon.
We downgraded our second quarter existing home sales forecast, but this was roughly offset by an upgrade to expected sales later in the year, in addition to a modest upgrade to new home sales. Combined, forecast revisions to total annual sales were minimal. We now expect 2021 sales to increase 6.3 percent for the year, compared to 6.2 percent previously. While demand for home purchases remains robust during the current spring buying season, a lack of listings is limiting the pace of purchases and putting upward pressure on home prices. This lack of existing homes for sale is helping bolster demand for new home construction. However, homebuilders are facing their own supply constraints, most notably the price of lumber and other materials, as well as a lack of buildable lots and hiring difficulties. While we forecast single-family housing starts to be 24.8 percent higher in 2021 compared to 2020, the construction pace would likely be even greater if not for the previously mentioned limiting factors. Our mortgage originations forecast was little changed. A slight downward revision to purchase originations based on updated incoming data was more than offset by an upgrade to refinancing activity on a modestly lower interest rate outlook. We forecast 2021 single-family mortgage market originations in 2021 will be $4.1 trillion, up from $4.0 trillion. Our forecast for 2022 originations remains at $3.0 trillion.
Supply Side Risks Becoming More Prevalent
In prior commentaries, we routinely highlighted risks around continued consumer spending recovery. Uncertainty over how extensively consumers will tap into roughly $3.5 trillion of accumulated savings from the past year and to what degree they will hesitate to return to previously restricted activities represent considerable risks to our GDP forecast. While this uncertainty, along with unknowns about future vaccination efforts, is still high, recent developments highlighted the growing comparative risk around constraints to the productive side of the economy. Surging commodity prices, continued supply chain disruptions for inputs, including semiconductors, and possible labor market scarcity represent downside risks to growth and upside risks to inflationary pressure. If surging demand intersects with a tighter-than-expected supply side of the economy, faster inflation and higher interest rates are likely. This may lead to an earlier-than-expected tightening of monetary policy, which could weigh on both growth and asset prices, and become a meaningful drag on home sales, depending on the magnitude of the increase in rates.
Beyond macroeconomic uncertainty, the housing outlook faces additional risks. We continue to believe that the bulk of abnormally high home purchase demand over this last year was due to a combination of last year’s delayed homebuying season and households’ pulling forward their plans to move. Additionally, stimulus checks have aided recent homebuyers’ ability to make down payments. Thus, our housing forecast is, in part, motivated by a view that as these factors dissipate, homebuyer demand will likely begin to wane later in the year. However, if people increasingly reassess their desired housing arrangements post-COVID, then a heightened level of sales could potentially be sustained for a longer period. Additional uncertainty involves the timing and implications of an end to forbearance policies and how that might impact the number and nature of home sales. However, we believe continued improvement in the labor market and higher levels of home equity will likely help limit distressed sales.
Employment Gains Soften; Signs of Hiring Difficulty Grow
Labor surveys differ on the magnitude of recent employment gains
The April employment report from the Bureau of Labor Statistics was disappointing. Market expectations were for a gain of near a million jobs, but the figure reported was a much smaller 266,000. We think that this comparatively weak reading was likely, in part, an anomaly. A combination of volatility in the recovery path, sampling issues with firm openings and closures, and atypical seasonal patterns may have led to the weaker number. The alternate ADP measure of private sector payroll employment showed a much stronger 742,000 jobs gain over the month, and a continued acceleration trend. The swift decline in initial unemployment claims over the period also suggests a much stronger pace of improvement. If this weak labor report is indicative of a faltering recovery, little evidence from other indicators support that claim. Auto sales, an early reading of consumer activity, rose in April to the highest level since 2005, following a surge in March. This occurred despite continued chip shortages dragging on auto manufacturing. High frequency measures, such as air travel passenger counts, restaurant reservations, and debit and credit card spending, all suggest continued expansion of activity as COVID-19-related restrictions wane. Consumer confidence measures also jumped in April, and, while the ISM manufacturing survey pulled back, it sat at 60.7, a level consistent with strong manufacturing sector growth. While the measure is delayed an additional month, job openings moved up again in March, hitting a record high of 8.1 million. These indicators suggest robust labor demand, despite the weak April jobs number, lending some support to the theory that this most recent reading was an anomaly.
However, further details within the employment report are consistent with a growing list of anecdotes from employers stating difficulties in finding workers. Job gains are perhaps being held back by supply-side factors. The average hours worked per week rose by one-tenth, and the share of workers working part time who would like to work full time fell sharply – both consistent with growing labor demand and employers having difficulty finding new workers. Additionally, despite the bulk of job gains over the month occurring in lower-wage sectors, the month-over-month average hourly wage rate rose by a brisk 0.7 percent, suggesting employers began to bid up wages to attract employees. Additionally, the quits rate moved up in March to a level similar to the pre-COVID rate. Quits tend to rise when workers feel confident enough to find other work. The quits rate therefore indicates a tighter labor market than the unemployment rate suggests. The NFIB survey showed in April a record share of small businesses reporting job openings unable to be filled, and “quality of labor” as their single most important issue. While it is uncertain how much this labor scarcity dynamic was the driving force behind the disappointing April employment report, this is clearly a growing drag.
Quits rate suggests a tighter labor market than does the unemployment rate
We believe these tight labor supply characteristics are likely occurring despite total employment still being about 8.2 million below the pre-COVID peak due to a mix of factors: 1) there is still a segment of workers who either cannot or do not wish to return to work due to COVID-19 worries; 2) school closures and a related surge in childcare prices are keeping some workers from reentering the workforce; 3) the relaxing of job search requirements in qualifying for unemployment benefits and the expanded size of the benefit may be keeping many unemployed from looking for employment; and 4) there is likely a significant geographic and industry mismatch between where labor is demanded and where workers are available. These effects should wane as COVID-19 concerns diminish, schools reopen, and expanded unemployment benefits expire. Yet, if this mix is currently restricting employment growth to the extent that many anecdotal stories suggest, rather than the last report being a data anomaly, labor scarcity will likely weigh heavily on economic growth. For now, our forecast implies a rebound in employment gains back to about 900,000 in May. However, if that report ends up disappointing as well, then our current near-term growth outlook would likely be revised meaningfully downward.
Inflation Comes in Hot
Following the completion of our forecast, but prior to this writing, the April consumer price index (CPI) report showed a greater-than-anticipated rate of inflation. The headline CPI jumped to 4.2 percent on an annual basis, up from 2.6 percent a month earlier. The core index, which removes volatile food and energy prices, rose to 3.0 percent, up from 1.6 percent in March. For headline CPI, this was the fastest annual rate of growth since September 2008, while for core CPI it was the fastest annual rate of growth since January 1996. While some of this annual gain was due to base effects (where the annual comparisons reflect the brief deflationary period a year prior following the initial COVID-19 lockdowns), the more recent trend shows acceleration. On a monthly basis, the headline and core indices rose 0.8 and 0.9 percent, respectively, the largest monthly increases since June 2009 and April 1982.
Reopening sectors and used car prices drive much of the monthly inflation gain
There is reason to believe that much of this jump in prices is due to one-off readjustments and temporary factors. Over a third of the monthly rise in headline CPI was driven by a 10.0 percent surge in the price of used cars, reflecting ongoing supply chain problems in auto manufacturing, as well as other COVID-19-related auto market dynamics. Additionally, much of the remaining rise was driven by sectors related to reopening now experiencing pricing power for the first time in a year. These include categories such as airline tickets, hotels, and eating establishments. Backing out auto purchases and these “reopening” sectors, the CPI would have risen by a lesser 0.4 percent over the month, a level in line with our forecast. We believe the headline number therefore exaggerates the underlying inflationary trend. Still, pricing pressures are clearly growing, and we continue to see upside risk to inflation going forward. Ongoing monthly gains of 0.3 to 0.4 percent translate into an annualized pace of inflation between 3.5 and 5.0 percent, a level well above the Federal Reserve’s long run 2.0 percent target.
For now, we believe the Fed is likely to continue to see the recent jump in inflation as a “transitory” increase, and therefore is unlikely to change its guidance. Following the inflation report, Fed vice chairman Richard Clarida downplayed it as “one data point.” Market participants seemed to largely discount the report as well, with no fundamental shift in monetary policy expectations. The Fed will get to see both another monthly inflation reading and employment report prior to its June meeting, where it will once again have to decide whether to provide additional clarity regarding the criteria or timing for reducing its purchases of Treasury and mortgage-backed securities. While our baseline forecast expects much of this inflation jump to pass, we still expect a modestly accelerating underlying inflation trend and see considerable upside risk going forward. Prior to the release, our forecast was for core CPI to remain above 2.0 percent annualized over the forecast horizon and to finish 2022 at 2.7 percent.
Supply Constraints Are Also Limiting Housing Activity
As expected, existing home sales fell in March, declining 3.7 percent to an annualized pace of 6.0 million units. While the limited supply of homes available for sale continued to drag on sales, the month’s decline was in part driven by the cold weather and related power outages a month earlier (existing sales are measured at the point of closing, which typically occurs 30-45 days after signing). While the decline was expected, recent data suggest that the forecast rebound in April sales will be smaller than we had previously anticipated. Pending sales, which measure contract signings, moved only modestly upward in March, rising 1.9 percent. Purchase mortgage applications have also trended lower in recent weeks. As such, we revised downward our forecast for second quarter existing sales to 5.88 million from 6.16 million annualized units. We have long expected that a combination of waning COVID-19-induced movement into single-family housing and continued tight inventories would lead to a slowing pace of existing home sales as the year progresses. However, the latter factor appears increasingly more limiting. The months’ supply of homes for sale at the end of March, even with the sales pace slowdown, was only 2.1 months, a near record low. More timely weekly data published by Redfin also indicate a record-high 48 percent of homes sold above list price in April and a record 45 percent of pending home sales under contract within 7 days of listing. For comparison, these metrics for the 2019 spring buying season were around 24 percent and 28 percent, respectively.
With demand continuing to outstrip the supply of listings available, home prices continue to surge. As measured by the CoreLogic National Home Price Index, home prices were up 11.3 percent in March from a year prior, the highest annual growth since 2006. While low interest rates and elevated savings from the past year are allowing buyers to absorb rising prices for now, continued strong price appreciation will increasingly weigh on affordability. The Fannie Mae Home Purchase Sentiment Index® (HPSI) pulled back in April by 2.7 points, driven in large part by a decline in the share of respondents indicating it was a good time to buy. This measure in turn was dragged on by a growing share of respondents pointing to elevated home prices and a lack of homes available for sale.
Supply constraints will likely limit rise of new home sales
Strong house price appreciation and a lack of available existing homes for sale continued to bolster demand for new homes. New home sales jumped 20.7 percent in March to an annualized pace of over 1 million units, the fastest pace since August 2006 (new sales are recorded at the point of contract signing). Single-family housing starts also rose over the month, increasing 15.3 percent. We modestly upgraded our single-family starts forecast, and we now expect an increase of 24.8 percent in 2021 compared to 2020. Homebuilders would probably increase the pace of construction even more if not for the supply constraints they currently face. Lumber prices continue to ascend, now up over 300 percent from February 2020 levels according to the NASDAQ. Meanwhile, a modest residential construction employment gain in April was consistent with difficulty hiring additional labor. The total level of homes for sale, regardless of the stage of construction, has largely moved sideways over the past year even as sales grew swiftly. Homebuilders are not only limited by material and labor costs, but also by lot availability. Until some of these supply constraints can be alleviated, a further acceleration in starts will likely be limited, even as demand for new home construction remains robust.
Multifamily starts also rose in March, rebounding 30.8 percent to an annualized pace of 501,000 units, following a weather-induced decline of 21.8 percent in February. Weather aside, multifamily construction has been surprisingly resilient in recent months, as demand for units in many smaller and less expensive metro areas and suburban locations likely drove developer interest. With rent metrics now moving upward and vacancy rates remaining low, we expect a healthy pace of multifamily construction moving forward. Still, the core of some larger metro areas will likely see continued weaker activity in the near term. We made slight upward changes to our multifamily construction forecast and now project starts in 2021 to be 410,000, 5.5 percent above 2020.
For more on multifamily market conditions please see the May 2021 Multifamily Market Commentary.
Interest Rates Take a Breather after Rapid Rise to Start the Year
Interest rates remained in a relatively tight band throughout April, with the 10-year Treasury starting the month at 1.69 percent and ending the month at 1.65 percent. The month averaged 1.64 percent, a modest 3 basis point increase from March but the highest level since January 2020. The pace of growth in rates has slowed considerably from the rapid rise earlier this year.
Mortgage rates have fallen somewhat since their recent peak of 3.18 percent the week of April 1. The week of May 6, the 30-year fixed mortgage rate sat at 2.96 percent, according to Freddie Mac. This was the third consecutive week of the mortgage rate sitting below three percent. Given the decline in mortgage rates and the slight increase in the 10-year Treasury, mortgage spreads compressed over the month, with the primary spread (30-year mortgage contract rate minus the 10-year Treasury yield) narrowing for the twelfth consecutive month to 143 basis points, the smallest gap since April 2011.
This month we made relatively modest revisions to our forecast for purchase mortgage originations. We downgraded our expectation for 2021 purchase volumes by $43 billion from last month’s forecast to $1.8 trillion. Our forecast for 2022 purchase volumes remains at $1.9 trillion, essentially unchanged from last month.
We expect refinance origination volume to be $2.2 trillion in 2021, a $125 billion upward revision from last month’s forecast, as incoming data continue to come in strong and interest rates have pulled back in recent weeks. Our lower forecasted interest rate path suggests there could be steam remaining in the current refi boom. We expect refinance volume in 2022 to total $1.1 trillion, an upward revision of $43 billion from last month’s forecast, but a decline of 49 percent from 2021. We will continue to monitor our expectation around interest rates and the effects of future rate volatility. At current interest rates, we estimate around 51 percent of all outstanding mortgages have at least a 50-basis point incentive to refinance, up from 42 percent in last month’s forecast given the recent rate declines.
Economic & Strategic Research (ESR) Group
May 12, 2021
For a snapshot of macroeconomic and housing data between the monthly forecasts, please read ESR’s Economic and Housing Weekly Notes.
Data sources for charts: Automatic Data Processing Inc., Bureau of Labor Statistics, Census Bureau, Fannie Mae ESR Group.
https://www.housingwire.com/articles/home-prices-rapidly-climbing-toward-375000/
"There simply aren’t enough homes for sale in America for everyone with the desire and the means to buy one right now,” Fairweather said. “Until new construction takes off — over the course of years, not months — home prices will continue to increase. This housing boom is nowhere close to over.”
"I’m helping buyers understand the current market by advising them that it’s no longer unusual for a home to sell for up to $50,000 above asking price,” said Andrea Ratcliff, an Indianapolis-based Redfin agent. “Builders have waiting lists of at least a year and people are hesitant to sell their homes because there are so few options available for them to buy.”
15. “That’s a crooked tree. We’ll send him to Washington.”
https://www.pinotspalette.com/logansquare/blog/pinot-state-of-mind/bob-ross-quotes
There's ZERO NEED for a perpetual PSPA, prior to the Mafia like takeover of the gses by Hank Paulson in 08 (so Uncle Suggy could calm an overly panicked financial market), the gses' ONLY federal government support was a $2B line of credit at UST.
I agree that the SCOTUS could punt on the Constitutional Remedy Severability Analysis and satisfy the Collins Plaintiffs with the APA Claim Remedy with invalidating the nws and that the LP=0.
But I'm thinking that the SCOTUS is largely POWERLESS without a live case and controversy in front of them. The Collins Plaintiffs has presented the SCOTUS with a perhaps once in a lifetime opportunity to revisit Humphreys Executor and clean it up a bit or overrule it.
This may or may not result in our case being one of the last ones, but it's a definite maybe.
I hope they do also clear up the Succession and Anti-injunction clause issues as well.
FYI, I think "I'm the shadow" for some reason made me think to answer the question, What happened with Seila Law? As I'm sure you are aware, it was remanded back to the 9th Circuit for the remedy of having the 9th Circuit decide whether or not the CID had been ratified by the Acting Director of the CFPB. Also recall that CFPB Director Krainger (a DJT appointed director) ratified the CID AFTER the SCOTUS made their Seila Law ruling last Summer.
Apparently that was good enough for the trial court and the 3 Judge Appellate Panel in the 9th Circuit to conclude that the Constitutionally NON INSULATED CFPB Director HAD INDEED RATIFIED THE CID AND THEREFORE IT SHOULD BE VALID! Seila Law then appealed that decision to a Full EnBanc Panel Hearing which was denied by the Full EnBanc Panel, with at least one Judge writing a Dissent of the denial. Not sure if Seila Law will petition for a Writ of Certerrori and whether or not the SCOTUS will accept or deny it.
So, all that legal work by Seila Law (btw, a solo practitioner law firm) really resulted in the end to back where he started from in 2017 when CFPB issued the CID to begin with. Luckily for Seila Law, a 3rd party nonprofit organization like the Pacific Legal Foundation, probably BANKROLLED the 7 or 8 figure legal expenses of taking Uncle Sugar all the way to the USSCT (and it still may not be over).
https://buckleyfirm.com/blog/2021-05-18/9th-circuit-denies-en-banc-rehearing-cfpb-case-against-seila-law#:~:text=On%20May%2014%2C%20the%20U.S.,Seila%20Law%2C%20LLC.&text=Seila%20Law's%20only%20cognizable%20injury,from%20the%20President's%20removal%20authority.
WSJ: ""As home values grow, people feel good about investing in their home overall," Home Depot Chief Executive Craig Menear said on a conference call with analysts. "That alone is, I think, a very positive outlook for home improvement as you move forward."
Sales for the Atlanta-based home-improvement retailer climbed to $37.5 billion in the three months ended May 2, from $28.26 billion in last year's fiscal first quarter. Profit rose to $4.15 billion, or $3.86 a share, from $2.25 billion, or $2.08 a share, a year earlier.
Wall Street analysts had forecast sales of $34.82 billion and profit of $3.02 a share, according to a FactSet survey.
On a comparable-store basis, the company's sales rose 31%, including a 30% climb in the U.S."
https://www.cnbc.com/amp/2021/05/19/homebuyers-are-applying-for-ever-bigger-mortgages-as-home-prices-soar.html
https://www.cnbc.com/2021/05/19/lowes-low-earnings-q1-2021.html
“Without the public’s trust, the Court would no longer be able to act as a check on the other branches of government and a guarantor of the rule of law, threatening the foundations of our constitutional system,” a snippet by Harvard University Press reads.
The possibility of Breyer's imminent retirement has hung over the Supreme Court as the current term enters its final weeks and Democrats cling to the slimmest of Senate majorities.
The Hill has reached out to the Supreme Court for comment.
https://thehill.com/homenews/administration/553997-breyer-announces-new-book-as-court-watchers-eye-his-retirement
Always enjoy Justice Breyers plain spoken talk, remember, "One thing Conservators Don't do is give away all their wards profits to the Government!"
Or "My nephew, WHOM I LOVE DEARLY, ...."
https://www.housingwire.com/articles/low-tax-states-are-winning-the-real-estate-battle/
Hilarious, good one jog! It looks like Justice Kagans quote in the IRS case it decided yesterday is true, "Americans don't enjoy paying taxes!"
Saw this today, thought you might like it, Leon Cooperman: We need to get away from this tax, spend 'fair share' bologna
Former CEO of Goldman Sachs Asset Management says the American dream is still alive but getting more difficult on 'Kudlow'
https://www.foxbusiness.com/shows/kudlow#
"Although employment was nearly stagnant for the month for both residential and nonresidential construction, the sectors differ sharply in their recovery since the pre-pandemic peak in February 2020. Residential construction firms—contractors working on new housing, additions, and remodeling—gained only 3,000 employees during the month but have added 46,000 workers or 1.6 percent over 14 months. The nonresidential sector—comprising nonresidential building, specialty trades, and heavy and civil engineering contractors—shed 3,000 jobs in April and employed 242,000 fewer workers or 5.2 percent less than in February 2020.
Association officials said that the temporary new federal unemployment supplements appear to be keeping some people from returning to work, while others are being forced to care for dependents not yet back in school or day care, or loved ones afflicted with the coronavirus. They added that federal tariffs and labor shortages within the shipping and manufacturing sector are a major reason for the rising materials prices and supply chain problems.
“Ironically, the latest coronavirus relief bill may actually be holding back economic growth by keeping people away from work at a time when demand is rebounding,” said Stephen E. Sandherr, the association’s chief executive officer. “Federal officials need to look at ways to encourage people to return to work, end damaging tariffs on materials like steel and lumber, and act to ease shipping delays and backlogs.”
https://www.agc.org/news/2021/05/07/construction-employment-stalls-april-soaring-costs-supply-chain-challenges-and
I responded earlier, I just checked the 5th Circuit EnBanc and they ruled that the anti-injunction clause was not applicable when the CONSERVATOR acts outside its powers (I'm not certain exactly how that would impact other Circuits that dismissed Plaintiffs cases based solely on the anti-injunction clause if the SCOTUS rules similar to the 5th Circuit EnBanc Panel ruling on the anti-injunction clause):
"Under the anti-injunction provision’s plain meaning,
we may not grant any relief that interferes with—“restrain[s] or affect[s]”—
FHFA’s conservator powers. Logically, then, we may still grant relief against
action taken outside those powers. The anti-injunction provision deflects
claims about how the conservator used its powers, not claims it exceeded the
powers granted. It distinguishes improperly exercising a power (not
restrainable) from exercising one that was never authorized (restrainable)."
The SCOTUS oral arguments didn't seem to bring this up much, but the SCOTUS could say, "HaaHaaa, you lose because we are powerless to rule against the Executive branch of government because the Legislative Branch is preventing us from intervening and therefore write a letter to your Congress person if you want a remedy!"
Seems unlikely to me but we'll see.
Nationalization didn't work here, I'm sure it's inappropriate US Policy:
https://www.reuters.com/lifestyle/sports/soccer-venezuela-battle-inner-demons-ahead-copa-america-2021-05-17/
https://www.wral.com/the-market-is-absolutely-crazy-5-on-your-side-looks-at-new-construction-buying-monday-at-6/19678420/?ref_id=19682652new-construction-buying-monday-at-6
Nationalization is NOT A SUSTAINABLE GOVERNMENTAL POLICY:
https://finance.yahoo.com/news/venezuela-oil-industry-needs-biden-170000818.html
Maybe JB could install AOC or BS as the new head of FHFA and they could send the gses profit sweeps to help revive the Venezuelan oil industry?
https://www.cnbc.com/2021/05/18/how-to-tap-your-house-for-cash-as-home-equity-hits-a-record-high.html
FFF, see bottom of post. New US Housing Starts Data released today: Building Permits
Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,760,000.
This is 0.3 percent (±1.2 percent)* above the revised March rate of 1,755,000 and is 60.9 percent (±1.8 percent) above the April
2020 rate of 1,094,000. Single-family authorizations in April were at a rate of 1,149,000; this is 3.8 percent (±1.0 percent) below
the revised March figure of 1,194,000. Authorizations of units in buildings with five units or more were at a rate of 559,000 in
April.
Housing Starts
Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,569,000. This is 9.5 percent (±10.8
percent)* below the revised March estimate of 1,733,000, but is 67.3 percent (±21.6 percent) above the April 2020 rate of
938,000. Single-family housing starts in April were at a rate of 1,087,000; this is 13.4 percent (±7.9 percent) below the revised
March figure of 1,255,000. The April rate for units in buildings with five units or more was 470,000.
Housing Completions
Privately-owned housing completions in April were at a seasonally adjusted annual rate of 1,449,000. This is 4.4 percent (±8.6
percent)* below the revised March estimate of 1,515,000, but is 21.7 percent (±15.8 percent) above the April 2020 rate of
1,191,000. Single-family housing completions in April were at a rate of 1,045,000; this is 0.1 percent (±8.4 percent)* above the
revised March rate of 1,044,000. The April rate for units in buildings with five units or more was 401,000."
For FFFacts: If the Anti-injunction clause in HERA is not valid, then I could see past Plaintiffs whose cases where dismissed solely because the judge thought that the anti-injunction clause was applicable could refile, but that may not matter if they invalidate the nws, which is what most of the cases (not all) are seeking.
You just have to be patient and wait for the SCOTUS to rule probably within the next 6 weeks. As you should be aware corporate litigation involving 100's of billions of dollars is rarely resolved quickly and EITHER party is able to drag it out as is the case here.
It's not to late to convert each of your JPS shares and get 3 common in return! The gses will retain earnings organically until all the litigation is finished and historically pre HERA, common was priced higher than jps.