National Economic Council Director Larry Kudlow told CNBC on Thursday that there are encouraging economic signs in states that have reopened businesses and that the Trump administration expects a strong rebound.
The U.S. economy is showing signs of recovering from the shock of the coronavirus, though the pain is far from over and is actually intensifying in some areas.
With all states having taken some steps toward loosening restrictions on business, most indicators on Bloomberg Economics’s latest weekly dashboard of high-frequency, alternative and market-based data are showing slight but steady improvement from distressing levels. Those include filings for unemployment benefits, mortgage applications and travel by air and public transit. Meanwhile, stocks have rebounded to levels from early March.
-Mortgage applications to purchase a home also rose 9% last week from the previous week, according to the Mortgage Bankers Association.
-That is the sixth consecutive week of gains and a 54% jump since early April.
-Refinance volume has not been as strong. Those applications fell 0.2% for the week but were still 176%.
An update on the 5 indicators that will show when the market is back on track from the pandemic:
1. Flattened Curve
Status: Close, but stay vigilant
2. End of Stay-at-Home Orders
Status: On Our Way
3. 10-year Yield Goes Above 1%
Status: Not Yet
4. Decline in Credit Stress and Jobless Claims
Status: 1 out of 2
5. Data from the hardest-hit sectors start to trend upward
New home sales, rather than dropping like a rock, rose 0.6 percent in April according to the U.S. Census Bureau and the Department of Housing and Urban Development. Part of the gain is due to a revision of the March sales numbers from an original estimate of 627,000 seasonally adjusted annual units to 619,000. This added to the month’s 15.4 percent decline from February. While April’s sales of newly constructed homes were down 6.2 percent from a year earlier, the April estimate of 623,000 units is totally unexpected.
Demand is being boosted by mortgage rates near record lows, says NAHB’s chief economist
New-home sales rose in April as Americans went on a buying spree as soon as state lockdowns were lifted.
Builders sold 623,000 houses at an annualized and seasonally adjusted pace, a gain of 0.6% from the revised March rate of 619,000, the Commerce Department said Tuesday in a report that records signed contracts as sales. Economists had expected sales would drop for a third consecutive month in April because of the economic shock caused by the COVID-19 pandemic.
“I was among the group expecting to see a decline in sales, but instead we’re seeing the stabilization of the housing market in April,” said Robert Dietz, chief economist for the National Association of Home Builders. “March may have been the low point.”
Inventory has also hit new lows
In the week ending May 10, newly pending sales nationwide were up almost 50% from the same period in April, according to Zillow’s April 2020 Market Report.
Washington, D.C. – U.S. house prices rose in the first quarter of 2020, up 1.7 percent according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 5.7 percent from the first quarter of 2019 to the first quarter of 2020. FHFA’s seasonally adjusted monthly index for March was up 0.1 percent from February.
“Home price growth in the first quarter outpaced annual growth from the same period a year ago as falling interest rates and shrinking inventories for sale led prices higher just prior to the crisis. Prices in the Mountain Division, encompassing the top four states by growth, grew by 8 percent on a year over year basis,” said Dr. Lynn Fisher, Deputy Director of the Division of Research and Statistics at FHFA. “Because of the lag between contract signing and sale closing when our data are recorded, we judge the first quarter’s housing statistics were relatively unaffected by the COVID-19 outbreak. However, we are unable to account for any modifications or cancellations of sales later in March.”
About 8.4% of U.S. home loans have suspended payments amid COVID-19 economic shock. FHA and VA loans have a high share of loans in forbearance.
About 4.2 million mortgages are now in forbearance, representing 8.4% of outstanding home loans, the Mortgage Bankers Association said on Tuesday.
The numbers increased from 4.1 million mortgages last week and an 8.2% share, MBA said.
Measured by the type of investor, Ginnie Mae mortgages were most likely to be in forbearance, the report said. Ginnie Mae loan pools, containing mortgages primarily backed by the Federal Housing Administration and the Veterans Administration, had an 11.6% share of loans in forbearance, up from 11.3% in the prior week, the MBA report said.
Those borrowers, who tend to have lower credit scores and slimmer savings, are being harder-hit by a spike in job losses, said Mike Fratantoni, MBA’s chief economist. The U.S. unemployment rate spiked to a record high of 14.7% in April, more than tripling from March, after states trying to stem the spread of the COVID-19 pandemic shuttered businesses.
“The decline in employment and income is hitting FHA and VA borrowers harder,” Fratantoni said.
Multnomah County may ask the state to enter the first stage of reopening on June 5, making it the last Oregon county to request a soft reopening of businesses such as salons and restaurants.
Multnomah has held out as neighboring counties Washington and Clackamas pushed to reopen their economies under Phase 1 of state officials’ reopening parameters, which were announced in early May.
But Multnomah County Chair Deborah Kafoury in a Wednesday board briefing said officials believe the county will be prepared to submit a reopening application June 5. The county could move to Phase 1 of reopening on Friday, June 12, with state approval, Kafoury said.
Thanks for reading, and be well.