Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that the 30-year fixed-rate mortgage (FRM) averaged 2.98 percent, the lowest rate in the survey’s history dating back to 1971.
“Mortgage rates fell below 3 percent for the first time in 50 years. The drop has led to increased homebuyer demand and, these low rates have been capitalized into asset prices in support of the financial markets,” said Sam Khater, Freddie Mac’s Chief Economist. “However, the countervailing force for the economy has been the rise in new virus cases which has caused the economic recovery to stagnate, and this economic pause puts many temporary layoffs at risk of ossifying into permanent job losses.”
30-year fixed-rate mortgage averaged 2.98 percent with an average 0.7 point for the week ending July 16, 2020, down from 3.03 percent. A year ago at this time, the 30-year FRM averaged 3.81 percent.
15-year fixed-rate mortgage averaged 2.48 percent with an average 0.7 point, down from last week when it averaged 2.51 percent. A year ago at this time, the 15-year FRM averaged 3.23 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.
The volume of loans in active forbearance, in which borrowers are allowed to delay their monthly payments, fell by 435,000 from the previous week, according to mortgage data firm Black Knight.
That is the largest one-week drop yet.
Roughly 4.14 million loans were in forbearance, representing 7.8% of all active mortgages, down from 8.6% the prior week. That’s the lowest amount since April 28.
A man walks past the U.S. Capitol building in Washington, June 25, 2020.Al Drago | Reuters
The number of homeowners in government and private sector mortgage bailout plans declined for the second straight week, as borrowers who got in earliest saw their plans expire.
More borrowers, however, are getting extensions of those initial three-month plans, proving the pain in the market is not over yet.
As of Tuesday, the volume of loans in active forbearance, in which borrowers are allowed to delay their monthly payments, fell by 435,000 from the previous week, according to Black Knight, a mortgage data and technology firm. That is the largest one-week drop yet.
Roughly 4.14 million loans were in forbearance, representing 7.8% of all active mortgages, down from 8.6% the prior week. That’s the lowest amount since April 28. These loans together represent just under $900 billion in unpaid principal.WATCH NOWVIDEO03:31Covid-19 mortgage bailouts drop by 435,000 but extensions increase
By category, about 6% of all mortgages backed by Fannie Mae and Freddie Mac and 11.6% of all FHA/VA loans are in forbearance plans. Just over 8.2% of loans in private label securities or banks’ portfolios are also in forbearance. The largest drop in forbearances was in Fannie and Freddie mortgages, down by 200,000 during the week
“The reduction of roughly 435,000 was driven at least in part by the fact that more than half of all active forbearance plans entering the month were set to expire at the end of June,” said Andy Walden, an economist with Black Knight. “While the majority of those have been extended, this week’s data suggests a significant share were not.”
More than 26% of loans in forbearance were extensions, according to a count by the Mortgage Bankers Association for the week ending June 28. That share has increased steadily for the past three weeks.
The bulk of the loans in forbearance are government backed and part of the mortgage bailout program in the CARES Act, which President Donald Trump signed into law in March. It allows borrowers to miss monthly payments for at least three months and potentially up to a year. Those payments can be remitted either in repayment plans, loan modifications, or when the home is sold or the mortgage refinanced. For loans not backed by the government, most banks and private lenders have set up similar plans.
While the drop in active mortgage forbearances is encouraging, recent spikes in coronavirus cases in various states, in addition to the expiration of expanded unemployment benefits at the end of this month, present significant risk to the recovery in the mortgage market.
The National Multifamily Housing Council’s Rent Payment Tracker has found that 89% of apartment households—sourced from 11.4 million professionally managed units across the country—had made a full or partial June 2020 rent payment by June 13.
This number represents an increase in the share of collections over the same periods in May and April, when 87.7% and 85% of renters had made a rent payment, respectively. Notably, it also shows a 0.1 percentage point increase over the share of collections during the same period in June 2019.
“Once again, it appears that residents of professionally managed apartments were able to largely pay their rent. However, there is a growing realization that renters outside of this universe are experiencing profound hardships as the nation continues to grapple with historic unemployment and economic dislocation,” says Doug Bibby, NMHC president.
While rent collections appear to be on the rise, NMHC vice president of business strategy Sarah Yaussi warns that this data is not necessarily a forward-looking indicator, and no sources are available to show how rent is being paid based on income resources. About half of renter households report being affected by unemployment, which suggests that unemployment benefits could make a difference in renters’ ability to pay. This could become a concern in August, when expanded unemployment benefits are due to expire.
When asked if the worst is behind us, Chase Harrington, COO of Entrata, says it’s hard to tell. Despite rising leasing activity in May and into June, he also notes a decrease in renewals, as well as a rise in month-to-month leases. Brian Zrimsek, industry principal at MRI Software, reports a substantial spike in credit card payments in May, which could suggest either rent payment by credit card out of necessity or an attempt to receive credit card perks based on the relaxing of limits.
“In the midst of a pandemic and a recession, it is critical that those on the front lines are safely and securely housed,” Bibby adds. “Accordingly, we urge lawmakers to take swift action to create a Rental Assistance Fund and extend unemployment benefits so we can avoid future eviction-related problems and don’t undermine the initial recovery.”
Construction of new homes plunged just over 30 percent in April from the previous month, amid the widespread US lockdowns to prevent the spread of COVID-19, according to government data released Tuesday.
The collapse to just 897,000 units put the annual rate of housing starts 29.7 percent below the same month of 2019, the Commerce Department reported.
The declines were widespread across the country, with the Northeast taking the worst hit — a 44 percent drop in construction starts — while the Midwest saw a relatively small 15 percent decline.
Building of multifamily housing saw the most severe impact in most regions.
Meanwhile, permits for new construction, which in normal times is a sign of demand in the pipeline, fell 20.8 percent compared to March.
But with the ongoing coronavirus pandemic, these are hardly normal times.
“Due to recent events surrounding COVID-19, many governments and businesses are operating on a limited capacity or have ceased operations completely,” the Commerce Department said, adding that the data quality still meet publication standards.
Housing is a critical sector of the US economy and demand was high before the crisis, given low mortgage lending rates, and builders were struggling to keep up with demand while prices were moving higher.
Since the pandemic hit, the Federal Reserve has slashed the benchmark interest rate to zero, which could be expected to help support home buying. But with 30 million jobs lost to the pandemic — at least temporarily — the outlook remains uncertain.
Still, Ian Shepherdson of Pantheon Macroeconomics said, “Housing construction likely has hit bottom.”
“A steep drop in activity was inevitable given the lockdowns, but we think these numbers will mark the floor; May will be better, and June better still,” he said in an analysis, noting that mortgage applications had picked up, recovering more than half the pandemic-related declines.
The Mortgage Bankers Association’s latest Weekly Application Survey shows a 0.3% seasonally adjusted decline in loan application volume from the previous week. The Refinance index decreased by 1% from the previous week and was 225% higher than it was the same week one year ago. The Purchase Index increased 2% from one week earlier but was 31% lower than it was the same time a year ago. The MBA notes that the pandemic-related economic stoppage has caused some buyers and sellers to delay their decisions until there are signs of a turnaround. This has resulted in reduced buyer traffic, less inventory, and March existing-homes sales falling to their slowest annual pace in nearly a year. Most importantly, the economic stoppage has halted the momentum in the housing market generated by young, would-be homebuyers, mostly from the millennial generation, preventing them from entering the market.
With the federal government’s recent passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act, not only did qualifying individuals receive economic impact payments, i.e., stimulus checks, but small businesses were also extended emergency advances of up to $10,000 as part of the Small Business Administration’s economic injury grant. With these measures in place, expanding businesses and families’ balance sheets to accommodate for more real estate is less of a priority than keeping their existing assets afloat. The CARES act also provides options for mortgage forbearance. As can be seen from the above figure, year-over-year gains in refinancing skyrocketed in the middle of March and continued their upward trajectory towards the end of the second week of April. Year-over-year purchasing changes, however, slipped into negative territory for that period, posting a year-over-year decline of 31% in the latest week. The National Association of Realtors cites that lender credit standards such as higher down payments and credit scores would likely deter home sales’ bounce when the pandemic is over. Before the outbreak, foreclosure rates were at historic lows.
In the third week of NAHB’s online poll, the coronavirus’s impact on traffic of prospective buyers has become almost ubiquitous. A full 96 percent of respondents said the virus was having at least some adverse effect on traffic, and 72 percent characterized it as a major adverse effect. However, if you are in need of professional home builders, then you can contact the Randy Jeffcoat Builders for their expertise.
This result is based on 256 responses collected online between March 31 and April 6. As in the first two weeks of the poll, the largest share of responses in week 3 came from single-family home builders; and most were owner, president or CEO of their companies. The geographic distribution of the responses continues to be somewhat variable, with the share of from Northeast increasing regularly, from 6 percent of all responses in week 1 of the poll to 15 percent in week 3.
The week 3 poll listed nine possible impacts of the coronavirus and asked if each has so far had a major, minor, or no adverse effect on respondents’ businesses. Many of the adverse impacts have become extremely widespread. In addition to traffic, over 80 percent of respondents for whom the items were applicable said the virus was having a noticeable, adverse impact on six aspects of their businesses: cancellations or delays of existing remodeling projects (87 percent), homeowners’ concerns about interacting with remodeling crews (86 percent), how long it takes to obtain a plan review for a typical single-family home (also 86 percent), rate at which inquiries for remodeling work are coming in (85 percent), and how long it takes the local building department to respond to a request for an inspection (82 percent).
Less widespread but still cited as virus-induced problems by over 70 percent of respondents were willingness of workers and subs to report to a construction site and supply of building products and materials. A new item added to the list in week 3, ability to obtain new business loans or deal with banks on existing loans, turned out to be the least common problem in the poll, but even that was cited by over half of respondents.
There has been a general tendency for the incidence of the various virus-induced problems to increase over time during the first three weeks of the online poll. It is necessary to interpret this trend with caution, however, due to the rising share of responses coming from the Northeast, where problems have tended to be particularly widespread and severe. Nevertheless, it is evident that willingness of workers to report to construction sites has become a growing concern, cited as a virus-induced problem by a consistently rising share of respondents in each of the four regions.
For additional details—including tables for each question broken down by respondents’ region, primary business, and position in the company—please see the full survey report.
The U.S. economy reported a plummet of 701,000 nonfarm payrolls in the early part of March, according to new data posted Friday by the U.S. Bureau of Labor Statistics.
This marked the first decline in payrolls since September 2010. As a result, the unemployment rate increased by 0.9 percentage point to 4.4%, the greatest over-the-month increase since January 1975 and the highest unemployment level since August 2017.
The number of unemployed persons spiked by 1.4 million to 7.1 million in March, with the BLS citing the COVID-19 crisis for the statistical mayhem. The number of unemployed persons who reported being on temporary layoff more than doubled in March to 1.8 million while the number of permanent job losers increased by 177,000 to 1.5 million.
It’s important to note that this BLS report does not take the entire month of March into account. And recent data shows that nearly 10 million filed for unemployment in the last few weeks, meaning the BLS figure will rise significantly in next month’s report.
“This report reflects the initial impact on U.S. jobs of the public health measures being taken to contain the coronavirus,” Secretary of Labor Eugene Scalia said in a statement. “It should be noted the report’s surveys only reference the week and pay periods that include March 12; we know that our report next month will show more extensive job losses, based on the high number of state unemployment claims reported yesterday and the week before.”
The leisure and hospitality industries were particularly hard hit with a loss of 459,000 jobs, and other industries experiencing acute declines included health care and social assistance, professional and business services, retail trade and construction.
Within the mortgage and housing industry, there was a grim acknowledgment of an unprecedented economic crisis – yet several thought leaders tried to find bright spots in the dismal data.
Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, noted the report “showed almost an additional 1.5 million households now working part-time when they would rather have full-time hours. The decline in the participation rate already indicates that some workers are stepping back from even looking for a job as the pandemic crisis continues.”
Fratantoni predicted next month’s employment numbers will record higher levels of job losses, which would lead to “a drop in demand for purchase mortgages,” although refinancing activity is expected to remain vibrant. He also noted one small bright spot in the new data regarding home construction.
“Although construction employment declined last month, there was a small increase in residential construction, with the decline driven by non-residential builders,” he continued. “When housing demand recovers later this year, we will once again be facing a supply shortage, so it is good to see that homebuilders are continuing to hire.”
Lawrence Yun, chief economist at the National Association of Realtors, also acknowledged that the residential side of the construction industry was stronger than the commercial property side, adding that residential construction jobs “were steady and higher by 27,000 from a year ago for actual building construction and higher by 44,000 among general contractors. We had a housing shortage before going into the crisis and home builders were gearing up to relieve the inventory tightness.”
Yun also maintained a sense of hopefulness for the newly out-of-work, explaining that “the enhanced unemployment insurance checks to make up for a good portion of lost income” and the post-pandemic weeks will be framed by “spending power ready to be unleashed once the all-clear signal is declared.”
Anthony Casa, chairman of the Association of Independent Mortgage Experts, warned that the U.S. economy in general and housing in particular could withstand continued waves of millions filing for unemployment benefits, with small businesses facing an existential crisis because most companies in that sector “do not have the money to shut down for multiple months.” And while Casa praised the mortgage industry for remaining “very strong” thanks to historically low rates, he expressed concern over the real estate industry.
“The longer this goes on, the bigger the impact on them,” he said. “Real estate is in for a tough year if home values decline.”
What do Americans do when so few new homes are being built? Remodel, according to the latest report for Buildfax.
According to the housing data and analytics company, 2019 marked the lowest rate of mobility in the U.S. since the metric was first tracked in 1947. Only 9.8% of Americans moved last year. Though this marks a new low, it’s not terribly far off from the only 10.1% who moved between 2017 and 2018.
Buildfax’s report pointed to new construction as part of the issue. Namely, the lack thereof. While single-family housing authorizations increased 4.82% year over year in 2019, the year did not close out on a strong note. According to the report, authorizations decreased by 2.61% from November to December 2019. Local Motion is a family run business, and we understand what families need when they long distance movers. Our administrative staff stays connected to you on your move day, ensuring every phase of your move is exemplary.
“The U.S. is facing a housing shortage, in part due to the slowdown in housing construction last year. This has been felt in both large metros and smaller cities across the country,” Buildfax Managing Director Jonathan Kanarek said. “Now, even though the economy is showing strong growth and mortgage rates remain low, those who want to buy a new home are experiencing challenges with increased competition on a tight housing supply.”
Instead, the report states, people are remodeling. Buildfax reports that existing maintenance volume and spending increased 9.47% and 16.26% year over year, respectively. In the past, Buildfax has often referred to home maintenance activity as a recession indicator. As this activity increases, Buildfax asserts that recession probability lowers, and vice versa.
That said, in its December Healthy Housing Report, Buildfax states that “maintenance and remodeling increased substantially, potentially fueled by homeowners who feel unable to buy a new home and therefore invest in their existing property.”
As many economists have pointed out, U.S. homeowners have been staying put for a while now. The concept of “aging in place” is not a new one. In August of 2018, AARP revealed that almost 90% of homeowners approaching retirement want to stay in their homes as they age.
And for the most part, they are.
Last February, Freddie Macreleased a study showing that seniors born after 1931 are staying in their homes longer than previous generations. According to the report, this generation held 1.6 million houses back from the market in 2018.
“Americans are staying in their homes longer because the house they have is perfectly suitable for their family’s need,” he writes. “For more than four decades, home sizes have been getting bigger while family size has been in decline.”
This villa breaks with all traditions and forms an unrestrained contrast to the otherwise natural surroundings. Like an artistic installation on a podium made of natural stone, which at the same time forms the underground car park, lies the two-storey villa and clearly focuses on the forest as the main point of reference. The shape of the building is based on the idea of an L, which borders the hillside of the plot while providing a sheltered outdoor-space for the terrace.
A small gap forms the entrance. From the street, three exposed shapes of concrete blend strikingly and puristically, leaving no room for a glimpse inside. The ground floor is completely closed to the street, dissolves to the forest by large glass elements, which flood the space with light following the advises from UR Design Mag, blog, and produces an intense connection to the environment and nature. The upper floor forms a creative contrast to the ground floor. Above the transparent construction of glass and steel hovers an imposing, twisted concrete body, which ensures a high degree of privacy and protection. a few, floor-to-ceiling window elements in the sleeping areas present targeted views into the forest. Large slats of steel are wrapped around the airspace in the middle of the house and create a connection of the levels. This is our vision of a sculptural, purist and modern villa that abstracts classical rules: for an incomparable sense of living in the midst of nature.
Nature as a starting point Focused on the essentials and at the same time rich in characteristic features, the innovative villa made of concrete sits on a base made of natural stone and convinces with a unique sense of living as well as an artistic installation. Nature and architecture not only meet each other, aligned with the forest they flow into each other. The generous glass elements provide plenty of light and reveal the view of nature from the exclusive living area.
The nature is omnipresent: The forest has significantly influenced our thoughts on a perfect facade for this place. He has set us the task to develop a surface that can not be impressed by moss, leaves and weather, but just by dignified aging. – Crosshead architects
Break up closed forms In pleasant seclusion and undisturbed, “Villa Neo” is the most attractive retreat someone from Hamburg can imagine. Concrete, glass and steel – these are the three main materials that determine the characteristic appearance of this villa.Surrounded by the nature as well as the restful forest, the inhabitants of this property can concentrate on the desirable contents of life. On the one hand closed by surfaces of concrete to the street, the construction of the object leads to a pleasant level of privacy and security. Opened to the other side to the pool, whirlpool and forest, the natural urge for free space is satisfied. “Villa Neo” scores with originality. The object is not a modular house, but emerged from a unique vision. With a mixture of Bauhaus and brutalism, it emits strength and security to the outside without losing its elegance, generosity and tranquility in the inside. It gives its inhabitants a sublime feeling of freedom. – Querkopfarchitekten Ground floor The paths in the house are efficiently aligned: One junction connects all rooms on the ground floor. The generosity of the ground floor come especially due to the open access to all living spaces to retribution. Coming through the main entrance, the view to the left falls past the luxurious Eggersmann fitted kitchen with high-quality Gaggenau appliances directly onto the living / dining area framed by a large glass front. The Minotti sofa set in the comfortable living area. The TV room of the right wing underlines the use of only the most exclusive furnishing materials. UpstairsThe artfully staged and wood-clad stairs lead through the impressive airspace to the upper floor. Custom-made, floor-to-ceiling fitted wardrobes line up impressively in the sophisticated overall concept together with high-quality bathroom fittings. The special living atmosphere is topped by stylish details, such as pebble stone walls or full-surface mirror installations in the bathroom. Targeted views of the garden and the forest are provided by the large windows in the bedroom and the study and invite you to dream.
Basement The rooms in the basement offer in addition to the impressive living space above, a spacious guest room and a hobby room and a bathroom with exclusive rain shower. On the same level are the four garage spaces, which are easily accessible from the living area. Enjoy the silence The impressively choreographed outdoor space of the plot offer the resident plenty of space for relaxation and a sweeping view of more than 960 square meters of lawn. The turquoise blue water of the unique infinity pool impresses even without going into it. The 170 square meters large south-facing terrace area invites you to a cozy get-together. The entire complex seduces to spend one or the other summer day in the fresh air. If it gets colder, a luxurious whirlpool provides the necessary warmth.
Day becomes night The room-high window fronts flood the living area with plenty of daylight, opening up the view into the green landscape. A highlight are the large steel blades which are wrapped around the space in the middle and connect the lower and upper levels in this way. As soon as the day is over, the numerous elegant designer lamps immerse the rooms in an atmospheric light and, together with exquisite designer furniture and a state-of-the-art fireplace, create irresistible coziness and warmth. Whether day or night, light or dark, inside or outside – Villa Neo is an architectural highlight at any time and from any perspective. We are grateful that we had the opportunity to develop this property without compromise.
Project Credits: Project: Villa Neo Architects: Querkopf Architekten. Fionn Mögel (lead archtiect), Simon Mögel, Frank Zander, Wasfy Taha (project team) Engineering:Weber & Poll Landscape: Querkopf Architekten TGA : Querkopf Architekten Photographs: Frank Löschke I Arnt Haug
August 2019 saw an annual increase of 3.2% for home prices nationwide, inching forward from the previous month’s pace, according to the Case-Shiller Home Price Index from S&P Dow Jones Indices and CoreLogic.
The 10-City and 20-City composites reported a 1.5% and 2% year-over-year increase, respectively. During the month, 11 of 20 cities reported increases before seasonal adjustment, whereas 17 of 20 cities reported increases after seasonal adjustment.
“The U.S. National Home Price NSA Index trend remained intact with a year-over-year price change of 3.2%,” said Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices. “However, a shift in regional leadership may be underway beneath the headline national index.”
According to the index, Phoenix, Charlotte, and Tampa reported the highest year-over-year gains among all of the 20 cities.
In August, Phoenix led with a 6.3% year-over-year price increase, followed by Charlotte with a 4.5% increase and Tampa with a 4.3% increase. Seven of the 20 cities reported larger price increases in the year ending August 2019 versus the year ending July 2019.
“Phoenix saw an increase in its year over year price change to 6.3% and retained its leading position,” Murphy said. “However, Las Vegas dropped from No. 2 to No. 8 among the cities of the 20-City Composite, falling from a 4.7% year-over-year change in July to only 3.3% in August.”
“Meanwhile, the Southeast region included three of the top four cities. Charlotte, Tampa, and Atlanta all recorded solid year-over-year performance with price changes of 4.5%, 4.3%, and 4.0%, respectively,” Murphy said. “In the Northwest, Seattle’s year-over-year change turned positive (0.7%) after three consecutive months of negative year-over-year price changes. The 10-City Composite year-over-year price change declined slightly from July to 1.5%, while the 20-City Composite year-over-year price change remained steady at 2.0%. San Francisco was the only city to record a negative YOY price change (-0.1%).”
The graph below highlights the average home prices within the 10-City and 20-City Composites: