MetroIntelligence Economic Update by P. DUFFY
Home Purchase Sentiment Index rebounds in August but still down sharply year-on-year
The Home Purchase Sentiment Index® (HPSI) increased 3.3 points in August to 77.5, recovering after falling slightly in July and continuing the rebound from May and June. Still, year-on-year, the HPSI is down 16.3 points. Five of the six HPSI components increased month over month, with consumers reporting a more optimistic view of both homebuying and home-selling conditions, but a slightly more pessimistic view of expected home price growth.
Purchase mortgage applications continue to rise in weekly report
The Market Composite Index increased 2.9 percent on a seasonally adjusted basis from one week earlier, with purchase loans rising 3 percent (and up 40 percent year-on-year) and refinance activity rising 3 percent (and up 60 percent year-on-year). However, these annual increases are skewed by being compared to the week of 2019 which included Labor Day (i.e., five business days versus four). The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.07 percent.
Employment Trends Index rises for fourth month, but still 52 percent down year-on-year
The Employment Trends Index increased in August by 2.29 percent, following increases in May, June, and July. The index now stands at 52.55, up from 51.37 (an upward revision) in July. However, the index is down from 109.8 a year ago, a decline of 52 percent. However, another wave of infections this fall would limit the expansion of the US labor market.
CoreLogic warns about rising tide of mortgage delinquencies
On a national level, 7.1 percent of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in June. This represents a 3.1-percentage point increase in the overall delinquency rate compared to June 2019, when it was 4 percent. Barring additional government programs and support, serious delinquency rates could nearly double from the June 2020 level by early 2022. This also could create downward pressure on home prices — and consequently home equity — as distressed sales are pushed back into the for-sale market.