Discussing foreclosure starts and mortgage delinquencies, home price increases by price range, how mortgage are performing, if we have reached a peak in housing, the economy and construction activity!
Foreclosure Starts and Mortgage Delinquencies Decrease
From Black Knight:
- Mortgage delinquencies fell again in August and are now down 5.7% over the past two months
- This marks the strongest such decline during July-August on record, since before 2000
- Foreclosure starts are more than 12% below last year’s level
Check out the data for the US:
The improvements are impressive and very good news for the housing market. While there are still foreclosed homes for sale in the Anderson area, the number is much lower than after the housing market crashed.
Home Price Increases By Price Range
About 2 weeks ago, I shared some of the highlights from the latest CoreLogic Home Price Insights Report. While all US home prices have increased 6.2% year-over-year, if we deeper we see that lower priced homes are increasing faster than other price ranges.
Check out this chart showing the increase from July 2017 to July 2018 in 4 price ranges using CoreLogic’s data:
Home prices in the lower priced ranges are increasing due to the extremely strong demand. This chart shows the differences among 4 price ranges for the entire US BUT you must always look at how prices are changing in your local market.
You will see that home buyer demand in Anderson County varies greatly in the different price ranges. There are big differences from one area to another even in Anderson County as just a few blocks or a mile can make a big difference.
Over 95% of Mortgages Performing Q2 2018
Performance of first-lien mortgages remained largely unchanged during the second quarter of 2018 compared with a year earlier, according to the Office of the Comptroller of the Currency’s (OCC) quarterly report on mortgages.
The OCC Mortgage Metrics Report, Second Quarter 2018, showed 95.6 percent of mortgages included in the report were current and performing at the end of the quarter, compared to 95.4 percent a year earlier.
The report also showed that servicers initiated 29,612 new foreclosures during the second quarter of 2018, a 20.6 percent decrease from the previous quarter and a 17.7 percent decrease from a year ago. Servicers implemented 32,655 mortgage modifications in the second quarter of 2018, and 64.1 percent of the modifications reduced borrowers’ monthly payments.
The slight increase in mortgage performance is great news. This indicates just how healthy the housing market and economy is today.
Have The Peak in Housing Been Reached?
We have reached the peak in housing according to report from BofA chief economist Michelle Meyer:
The housing market is no longer a tailwind for the economy but rather a headwind. Call your realtor. We are calling it: existing home sales have peaked.
BofA is thinking that existing home sales will stay about the same but there is a bunch of room for new home sales. They also said that at this point they do not see home prices decreasing UNLESS demand increases.
In case you missed last week’s post about the latest existing home sales report, sales are down slightly compared to the previous year. Despite the slowdown in sales, the US median home price has increased YoY for 78 consecutive months.
It does look like the housing market is shifting according to Danielle Hale, chief economist of realtor.com:
The signs are pointing to a market that’s shifting toward buyers. But in most places, we’re still a long way from a full reversal.
Before you freak out, many experts are saying we are not experiencing another housing bubble. Of course, most of these experts did not see the housing market and economy crashing like it did in 2008…
Steady Economic Growth in August
From the Chicago Fed:
The Chicago Fed National Activity Index (CFNAI) was unchanged at +0.18 in August. Three of the four broad categories of indicators that make up the index increased from July, and two of the four categories made positive contributions to the index in August. The index’s three-month moving average, CFNAI-MA3, rose to +0.24 in August from +0.02 in July.
The 3-month moving average was slightly above the historic trend which means the economy is doing slightly better than it has in the past. Very good news!
Ongoing Expansion in Construction Activity
Construction contractors remained confident during the second quarter of 2018, according to the latest Construction Confidence Index released today by Associated Builders and Contractors.
More than three in four construction firms expect that sales will continue to rise over the next six months, while three in five expect higher profit margins. More than seven in 10 expect to bolster staffing levels, though that proportion has fallen relative to the previous quarter, perhaps in part due to the skilled labor shortage in the United States. All three key components measured by the survey—sales, profit margins and staffing levels—remain well above the diffusion index threshold of 50, signaling ongoing expansion in construction activity.
ABC Chief Economist Anirban Basu said:
The confidence expressed by contractors is consistent with a number of other leading indicators, including the Architecture Billings Index and ABC’s Construction Backlog Indicator. With financial markets surging, the nation producing a record number of available job openings, and both consumer and business confidence elevated, chances for a significant slowdown in nonresidential construction activity in late 2018 and into 2019 are remote. That helps explain why only about six percent of contractors expect sales to decline over the next six months.
The longer-term outlook is not as clear. Interest rates are rising, construction workers and materials have become more expensive and asset prices have become further elevated and therefore increasingly vulnerable to correction. There is also some evidence of overbuilding in certain real estate segments in some communities. Tariff increases and associated retaliation serve as yet another threat to longer-term economic momentum, as do faltering government pension funds.
But for now, construction firms can expect to remain busy improving the nation’s built environment. A shortage of skilled workers remains the primary issue, which is expected to continue as more workers retire and insufficient workers join the skilled construction trades.
Great news other than the not so clear outlook for the future. The future is always an unknown so as always, hope for the best and plan for the worst.
That is all I have time for today but be sure to check back ASAP for more housing, real estate and economic news!