Mortgage delinquencies rise, as landlords’ confidence rises in the U.S.

Mortgage rise, as landlords’ confidence rises in the U.S.

U.S. homebuilder meeting jumped for the third month in a row in August to meet its largest level ever as record-low interest rates arouse buyer traffic. Data revealed on Monday showed in the latest forecast the housing market is a unique bright spot in the economic crisis caused by the global coronavirus pandemic.

However, a growing number of homeowners being late on their mortgages, with tens of millions still unemployed and rapidly growing signs that the labor market recovery is becoming flaccid.

“Housing has been a bright spot during the pandemic. The stable recovery in builder confidence over the summer has led NAHB to advance its forecast for single-family starts, which now projected to show only a slight decline for 2020,” said NAHB Chief Economist Robert Dietz.

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

The struggles of millions of landlords during the pandemics

As reported by the Mortgage Bankers Association, the delinquency rate for residential mortgages rose to 8.2% in the second quarter, up nearly four percentage points from the first quarter and the largest quarterly increase on record.

The numbers display the struggles of millions of landlords during the pandemics, including many taking a turn in a forbearance program that provides people facing financial difficulties due to the pandemic to postpone their mortgage payments for up to one year. According to the MBA, an estimated 4.2 million homeowners had loans in forbearance as of the end of June.

That fortitude program, combined with higher home values and other loan adjustment options, can provide relief to struggling landlords, said Marina Walsh, vice president of industry analysis for the MBA.

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

That suggests a smaller number of landlords fell recently behind on payments as the unemployment rate fell in May and June, Walsh said. “The flood of new delinquencies is diminishing,” Walsh explained, adding that the mortgage delinquency rate lean-to rise when the unemployment rate broadens and vice versa.

New York Federal Reserve Bank’s report

The U.S. Census Bureau will announce July’s Housing begins data on Tuesday, and economists questioned by Reuters are searching for an increase to 1.24 million units on an annualized basis from 1.186 million in June.

Housing starts going down this spring during widespread lockdown directives issued to try to restrain the virus, but have reorganized quickly from a six-year drop hit in April. The economy walked into recession in February as a result of the COVID-19 pandemic.

On Monday, a separate report from the New York Federal Reserve Bank reported the pace of growth in manufacturing activity getting slower much more than predicted in August from a 14-month high in July.

The New York Fed’s Empire State Manufacturing Survey index fell to 3.7 from 17.2. Economists questioned by Reuters had expected a reading of 15, with a reading above zero revealing expansion.

The survey’s measures of new orders and shipments both held back after three straight months of increases.

 

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