Foreclosures Drop Again
|In yet another strong housing related report, foreclosure activity dropped for the 10th consecutive month.|
The April 2019 U.S. Foreclosure Market Report, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 55,646 U.S. properties in April 2019, down 5 percent from the previous month and down 13 percent from a year ago for the 10th consecutive month with an annual decline.
“While overall foreclosure activity is down nationwide, there are still parts of the country that we need to keep a close eye on,” said Todd Teta, chief product officer at ATTOM Data Solutions. “For instance, Florida is seeing a steady annual increase in total foreclosure activity for the 8th consecutive month, which is being sustained by a constant annual double-digit increase in foreclosure starts.”
Lenders started the foreclosure process on 30,524 U.S. properties in April 2019, down 5 percent from last month and down 10 percent from April 2018 –third consecutive month with an annual decline.
States that posted annual decreases in foreclosure starts in April 2019, included New York (down 43 percent); Nevada (down 36 percent); Colorado (down 34 percent); Maryland (down 31 percent); and Michigan (down 25 percent).
Those major metropolitan statistical areas with a population greater than 500,000 that saw a large annual increase in foreclosure starts from last year included Orlando, Florida (up 90 percent); Miami, Florida (up 45 percent); Columbus, Ohio (up 35 percent); Portland, Oregon (up 31 percent); and El Paso, Texas (up 22 percent).
What Happened to Rates Last Week?
|Mortgage backed securities (FNMA 4.00 MBS) gained +20 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower compared to the previous week.|
Overview: We had another round of fairly strong domestic economic data which normally pressures interest rates higher. But offsetting the continued strong U.S. economic growth is concern over trade talks between the U.S. and China as well as geo-political concern over Iran and instability in the EU with Brexit and Italy getting a lot of attention. This global uncertainty pushed more money into long-bonds like MBS which helped interest rates improve slightly.
Consumer Sentiment: The May preliminary University of Michigan’s Consumer Sentiment Index blew the doors off expectations with a very robust reading of 102.4. This is the highest reading since January 2004! Also, inflation expectations picked up to 2.5% over the next 12 months.
Philly Fed: Their Business Outlook Survey for May came in a double the reading of April (16.6 vs last of 8.5) and is the best reading since January. The internal employment component was very strong, at 18.2 for a 3.5 point gain.
Leading Indicators: The composite of 10 economic components for April matched market expectations with a reading of 0.2%.
Retail Sales: The April Retail Sales report was a mixed bag with upward revisions to the prior month but a miss on the headline reading for April. The headline reading showed a contraction of -0.2% vs expectations of +0.2%. But March was revised upward from 1.6% to 1.7%. Retail Sales Ex-Automobiles gained 0.1% but the market was expecting 0.7%. March was revised upward from 1.2% to 1.3%.
Manufacturing: The May NY Empire Manufacturing Index jumped to a very high reading of 17.8 vs est of 8.5. Industrial Production for April was much weaker than expected, -0.5% vs est of 0.0%. Capacity Utilization dropped from 78.5% down to 77.9%
Trade War: China announced tariffs of $60B on U.S. Goods which breaks down to 2,493 specific items but some of these tariffs are not new. 595 items were already tariffed at the rate of 5% and will remain at that rate. 974 new items will receive a 10% tariff and 1,078 items will move up to a new tariff rate of 20%. In response, the U.S. Commerce Department added Huawei Technologies Co Ltd and 70 affiliates to its “Entity List” – a move that will make it much more difficult for the telecom giant to buy parts and components from U.S. companies. U.S. officials said the decision would also make it difficult for Huawei to sell some products because of its reliance on U.S. suppliers.
On a separate front, the U.S. has decided to delay increasing auto tariffs on the E.U and Japan for six months.
Canada and the U.S. have agreed to end all pending WTO tariff litigation with the agreement taking effect in ‘no later than two days’. The move will also lift the 25% steel and 10% aluminum tariffs the U.S. placed on the two trading neighbors almost a year ago in the name of national security.
What to Watch Out For This Week:
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.