When American Homebuilder’s Confidence Stands to Record, Mortgage Crimes Increase

(Reuters) – US homebuilder confidence boosted for a third straight month in August to hit its highest level ever, as record-low interest rates boost the buyer’s sales, data released Monday in the latest indication show that the housing market is a rare bright spot in the economic crisis triggered by the coronavirus pandemic.

At the same time, however, a growing number of homeowners are falling behind on their mortgages, with tens of millions not yet at work and growing signs that the recovery of the labor market is softening.

The National Association of Home Builders / Wells Fargo Housing Market Index increased 6 points to 78, according to a series record set in 1998. The median expectation among 30 economists in a Reuters interview was for a rise to 73 from the July reading of 72.

The NAHB’s measures of both current and future home sales outlets have improved.

Housing construction has clearly been a bright spot during the pandemic and the sharp spike in builder confidence over the summer has led NAHB to upgrade its single-family startup forecast, which is now projected to be only a slight decline for 2020. display, “said NAHB Chief Economist Robert Dietz. “Building for single-family homes benefits from low interest rates and a noticeable suburban shift in demand for housing in suburbs, suburbs and rural areas, as tenants and buyers seek more affordable, lower density markets.”

But even as homebuilder confidence grows, more homeowners affected by the crisis have stopped paying off their mortgages, a separate report showed.

The delinquency rate for mortgages for homes increased to 8.2% in the second quarter, up nearly 4 percentage points from the first quarter and the largest four-year increase on record, according to the Association of Mortgage Bankers.

Loans backed by the Federal Housing Administration, a program used by many first-time buyers and those on lower incomes, saw their delinquency rate jump to nearly 16% – the highest since the survey began more than four decades ago.

The figures reflect the plight of millions of homeowners during the crisis, including many who participated in a rewards program that put people in financial trouble because of the pandemic to pay off their mortgage payments for up to one year. An estimated 4.2 million homeowners had loans by the end of June, according to the MBA.

That rewards program, combined with increasing home values ​​and other options for modifying loans, can provide relief to homeowners’ struggles, said Marina Walsh, vice president of sector analysis for the MBA.

There was a glimmer of positive news in the delinquency report: the 30-day delinquency rate dropped by 0.33 percentage point to 2.34% in the second quarter.

That suggests fewer homeowners fell behind on payments because unemployment fell in May and June, Walsh said. “The flood of new delinquencies is slowing down,” Walsh said, adding that mortgage abuse is on the rise as unemployment rates rise and vice versa.

The U.S. Census Bureau will report data on Tuesday on July’s hub start, and economists surveyed by Reuters are looking for an increase to 1.24 million units on an annual basis from 1,186 million in June.

Housing begins this spring under widespread lockdown orders issued to try to contain the virus, but have sharply recovered from a six-year low hit in April. The economy fell into recession in February as a result of the COVID-19 pandemic.

A separate report from the New York Federal Reserve Bank on Monday showed the pace of growth in manufacturing activity, which in August is much higher than expected from a 14-month high in July.

The index of the Empire State Manufacturing Survey of the New York Fed dropped to 3.7 from 17.2. Economists surveyed by Reuters had expected a reading of 15, with a reading above zero indicating expansion.

The measurements of the survey of new orders and shipments both dragged back to three straight months of increases.