All Things in Moderation

Vital Statistics:

Stocks are flattish this morning as riots continued overnight. Bonds and MBS are flat as well.

The share of loans in forbearance rose slightly to 8.46%, according to the MBA. “MBA’s survey continues to indicate that fewer homeowners are seeking forbearance as more states across the country reopen their economies and prospects begin to improve,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “The share of loans in forbearance increased by only 10 basis points over the week of May 24. Policy support for households, including expanded unemployment insurance benefits and other transfers, have helped many stay on their feet during this crisis. With 11.82 percent of Ginnie Mae loans currently in forbearance, FHA and VA borrowers are struggling the most.”

For what its worth, housing seems to be picking up more or less right where it left off. Homebuilder Taylor Morrison said that home sales picked up significantly in May, and traffic was 3 times higher than it was in early April, the height of the pandemic. Note that Toll Brothers said that deposit activity (which is a leading indicator of signed contracts) was up on a YOY basis in May.

Despite COVID, construction spending did exceed last year’s numbers by 3%, which is impressive in of itself. Residential construction was up 6.3% on a YOY basis.

Home prices rose 5.4% YOY in April, according to CoreLogic. Inventory remains tight, especially for entry-level homes, which fell 25%.

The Congressional Budget Office says it will take 10 years for the economy to reach the levels it was forecasting in January. FWIW, I am skeptical that a 3 month lockdown will reverberate for a decade.

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