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[ad_1] New home sales came in as a massive beat of sales estimates, with a 28% month-to-month increase. And, out of the 461,000 new homes available for sale, only 49,000 have been completed and are available to be occupied. These are both crazy stats! Monthly supply data fell — in normal times this would be looked at as a bullish report for housing. However, in this environment, with falling year-over-year purchase application data, this report isn’t as bullish as it seems. The explanation has a lot to do with the fact that new home sales are already very low, so these month-to-month reports can look wild. We had a period this summer when mortgage rates moved from 6.25% back down to 5% and some of the new home sales activity picked up. In general, however, these data lines are just very volatile and prone to revisions. In fact, we had this happen with new home sales in May, only for the data to revert back to the trend of declining sales. The Census Bureau reported that sales of new single-family houses in August were at a seasonally adjusted annual rate of 685,000. This is 28% above the revised July rate of 532,000, but 0.1% below the August 2021 estimate of 686,000. As you can see below, new home sales were historically low and as I’ve said before, we aren’t working from the peak 1.4 million level we saw in 2005. In fact, new home sales are below the recession level of 2000 and back to 1996 levels already. So, when we have a month where demand picks up, it can move the needle in a big way.  Now, revisions are always key and the revisions in this report were positive. So the data can be very extreme in this environment, especially in a brief period of time when rates fell and some deals were able to close. For that reason, I wouldn’t read too much into the revisions. However, it does show that the builders are in a much better spot to deal with their massive supply, compared to the 2005-2008 period.  Of course, mortgage rates are much higher right now. As I am writing this, we have hit 7% on mortgage rates and that means the builders will need to be more mindful of their future supply and demand issues. They are good at selling their inventory much quicker than existing home sellers, who might still be stingy on prices. My rule of thumb for anticipating builder behavior is based on the three-month average of supply: When supply is 4.3 months and below, this is an excellent market for the builders. When supply is 4.4 to 6.4 months, this is just an OK market for the builders. They will build as long as new home sales are growing. The builders will pull back on construction when the supply is 6.5 months and above.  The latest Census data shows that the seasonally adjusted estimate of new houses for sale at the end of August was 461,000, which is a supply of 8.1 months at the current sales rate. As you can see, the monthly supply data swings wildly and, unlike the existing home sales market, it can move a lot faster up or down, especially in this rising-rate environment where a lot of homes are still under construction. Until the monthly supply gets below 6.5 months on a three-month average and new home sales are rising, this sector is still in a recession. This rule of thumb for builders has worked for me in the past, as it adjusts to the difference between the new and existing home sales sector.  And remember: Out of the 461,000 new homes available for sale, only 49,000 are completed and available to be occupied. That’s not a lot of homes and the builders will take their sweet time building out the rest of the homes in construction and the homes that haven’t even been started yet.  Out of 8.1 months of supply, 5.36 months are under construction, 1.86 months have not been started yet and only 0.86 months are completed.  You have to understand, the builders are here to make money and they have ways to move product much more efficiently than existing home sellers because they don’t need to obtain shelter once the home is sold. They just need to manage the supply and demand of their product and make sure they sell it at a price that works with their business model.So, it’s not surprising that housing completion data hasn’t gone anywhere for some time now. Hopefully, this can explain the crazy report we got today: not only was the headline a massive beat of estimates, but the previous month’s sales missed was revised higher. Because sales levels are so low and the data can get wild on a month-to-month basis, we do have reports like this from time to time. The existing home sales marketplace is much bigger and has a lot more sales than the new home sales market, so it tends to not have crazy moves like this outside of some one-month event like the TRID implementation or COVID-19 pause in buying. However, in general terms, the new home sales sector — just like the larger housing market is still in a recession as sales, production, jobs, and incomes are down. At some point in the future this changes, however, for now, rates are too high and I don’t see a change until they go lower. Once the monthly supply data can break under 6.5 months on a three-month average and sales trends are positive, I will change my tune.  The post New home sales are up 28% — but don’t believe the hype appeared first on HousingWire. [ad_2] Source link

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[ad_1] Fed to take rates higher than previously expected; more pain ahead – Reuters poll [ad_2] Source link

[ad_1] We’re excited to have Jim Jumpe, senior vice president and chief marketing officer at Arch MI, as a part of our speaker lineup for the Marketing Leaders Success Summit at HousingWire Annual. Jumpe will be a panelist on the “1+1=3, The Marketing Strategy of M&A” panel, Oct. 3. He will rely on his vast marketing background to discuss the marketing strategies that industry professionals need to know when going through an acquisition. HousingWire: Why are you excited to speak at HousingWire Annual 2022? Jim Jumpe: It’s HousingWire Annual! It has been fantastic watching HousingWire grow over my career to become a key independent news source for the mortgage and housing industry, and I look forward to engaging with marketing leaders in-person to share strategies, new ideas and discuss best practices. HW: What are the biggest benefits to attending in-person conferences and events after two years of remote work and video conferences? Jim Jumpe: Meeting folks in person creates a collaborative environment and organic participation from those in attendance. I find non-verbal communication is valuable when discussing new ideas and content that often does not come through in a virtual call. The opportunity and value to build new relationships and grow existing relationships through face-to-face connections cannot be understated. HW: You’re speaking at the Marketing Leaders Success Summit on the “1+1=3, The Marketing Strategy of M&A” panel. Based on your own experiences, what are the biggest challenges of creating a new marketing strategy during a merger and acquisition? Jim Jumpe: It is natural to feel overwhelmed by the logistics of positioning and branding two companies during the M&A process. A best practice is to think of the transition as an opportunity to re-evaluate what makes your brand valuable to your clients. It’s a chance to then update and teach that message to your employees and make sure everyone is communicating the same message. It’s also a chance to gather input from the intended target audience to align messaging with branding decisions and surface new communication opportunities. This strategic planning supports your employees to focus on the positive potential created by the combined companies’ strengths and reduces negative distractions. After all, chips and salsa are better together! HW: What is the one takeaway that you hope attendees learn about M&A? Jim Jumpe: Your brand is how your company is perceived by those who experience it. Much more than just your logo, your brand is the recognizable feeling these experiences evoke that influence your client’s decision to buy from you, to advocate for you and to trust you. You have a chance to leverage the merger or acquisition as positive growth that only benefits your client through a strategic marketing communication plan that is executed by all employees.  HousingWire Annual Why you should attend HW Annual Oct. 3-5 in Scottsdale Marcia Davies to speak at HW Annual Oct. 3-5 Three can't miss panels for new real estate agents at HW Annual Oct. 3-5 HW Annual will be held in Scottsdale, Arizona this year and feature housing leaders from all corners of the industry, including real estate, mortgage and closings. The Marketing Leader Success Summit is an individually ticketed event that you can add to your HW Annual registration, here. Don’t miss a chance to hear from today’s top leaders and enjoy networking events with like-minded professionals. The post Jim Jumpe to speak at HW Annual Oct. 3 appeared first on HousingWire. [ad_2] Source link

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[ad_1] S&P 500 ends near two-year low as bear market deepens [ad_2] Source link

[ad_1] HousingWire recently spoke with LERETA Chief Operating Officer Jim Micali about tax season and how technology is solving legacy issues servicers have historically had with taxes. HousingWire: We’re about to go into the fourth quarter, which historically has been crunch time for servicers and tax providers. Will this tax season be any different? If so, how? Jim Micali: Every tax season is challenging because nothing, or at least not too much, starts until taxing agencies release their bills, and taxing agencies often change their release and due dates. For example, one of the largest counties in the country with over 1.8 million assessed parcels, historically released its tax bills by 7/1, and they were due 8/1. This year, however, it has yet to announce when its tax bills will be released. Estimates suggest a late fall release of bills with taxes due 30 days later – right in the middle of the busy tax season. And that’s just one taxing agency. There are approximately 24,000 in all. Thanks to home price appreciation, the tax assessments will be higher than normal this year, and that means the agencies will have to calculate those changes, which could cause more delays. From a servicer’s perspective, higher tax assessments mean higher tax bills which in turn their customer care units will be inundated with calls from borrowers saying, “What the heck happened to my taxes?” Finally, selling servicing is a key way that many mortgage companies can raise cash these days. We saw this at the end of last year, and we expect to see more of it this Q4 given the current increase and volatility of interest rates.  Keep in mind, an investor that buys a large portfolio is now responsible for paying the taxes on those loans. Last year, for example, one of our clients closed on a large deal in mid-December, and we had to execute a full-court press to procure the tax bills and pay them by year end. Having said that, this tax season, like every tax season, is all about preparation and communication with customers regarding what to expect. At LERETA, we proactively engage with our clients throughout the year, but especially for Q4. This year, we started preparing for year-end in August. For example, we have put together a series of recommendations that clients can use to enhance their readiness for Q4 volume spikes. We call it call our Q4 Survival Kit. Despite the market dynamics that I’ve mentioned, we’re confident that we’ll be ready, and that our clients and team members will be home for the holidays and not working overtime to meet tax deadlines. HW: What are the biggest challenges servicers face with taxes? Have they changed over time? JM: Data integrity has always been one of the biggest challenges servicers face in the tax space. These data issues drive missed payments, inaccurate escrow analysis, lower automation rates and, ultimately, increase calls and complaints from borrowers.  Over the past few years, we’re seeing more data issues with the portfolios we’re onboarding from other tax servicers and in-house operations. Some of the problems are the result of poor initial tax line setups. For example, an adjacent parcel might be missed or a lower-lien taxing agency – maybe a water company or sewer utility – might be overlooked during tax line setup. Then there are issues that come from assumptions and gaps in the loan closing process, which tend to spike up during high-volume periods. Let me give you an example. When mortgage companies originate a loan or buy loans in bulk through correspondent channels, there’s an assumption that the taxes that are due 30 to 60 days out have been paid at closing. But frequently that doesn’t happen or it happens twice, and now months after the loan closes, there is either a missed payment or an over-payment. In either case, borrowers and servicers are both unhappy. At LERETA, we’re addressing these issues two ways. First, we are providing a range of audit services to detect tax line defects. We’re also moving upstream to identify “assume paid” issues pre-closing. Staffing for tax season is another perennial challenge for servicers, and COVID-19 has only exacerbated it. In good times, servicers often reassign staffers, greenlight overtime and use temps at year-end to get their taxes paid. With originations down dramatically and every cost being scrutinized, throwing bodies at the problem may be less of an option going forward. And as we’ve seen, servicers that are doing their taxes in-house will get their tax bills later, and higher tax assessments will increase in-bound call volume from borrowers. These headwinds, in my opinion, will prompt new interest in tax outsourcing solutions that address the cost-and-demand issues and shift the burden to companies, like ours, that can dedicate the resources and invest in technology. HW: How are tax service providers using technology or new approaches to solve for these issues? JM: Automation is at the top of every servicer’s wish-list. So, tax service providers are using automation to reduce tax procurement times and improve data quality and efficiency. While in the past many tax bills were procured manually, today, at LERETA, that number today is probably less than 5%. This takes time and friction out of the procurement cycle, reduces the possibility of “fat-finger” errors and means that most of the information is delivered to clients through what I like to call, the “happy path,” or system to system. In our case, we’ve also developed proprietary technology to solve for age-old industry concerns such as unidentified contiguous or adjacent secondary parcels and missed taxing agencies These pitfalls often result in repeated missed payments, sometimes for years, and generate significant penalties. As an industry, tax service providers are also expanding their offerings and changing the way we approach different steps in the tax set up and boarding processes to catch defects before they become problems. Our audits improve automation rates, reduce customer calls and tasks and help deliver accurate escrow analysis’ for the consumer. 

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[ad_1] Hurricane Ian rips into Cuba, with Florida in its sights [ad_2] Source link