In yet another encouraging housing report, foreclosure filings are down by 78% from a peak in 2010, hitting its lowest level since 2005.

According to a new study released by ATTOM Data Solutions, foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 624,753 US properties in 2018, down 8% from 2017 and down 78% from a peak of nearly 2.9 million in 2010.

“Plummeting foreclosure completions combined with consistently falling foreclosure timelines in 2018 provide evidence that most of the distress from the last housing crisis has now been cleaned up,” said Todd Teta, chief product officer at ATTOM. “But there was also some evidence of distress gradually returning to the housing market in 2018, with foreclosure starts increasing from the previous year in more than one-third of all state and local housing markets.”

“Some of that distress was driven by natural disasters, most notably in Houston, where foreclosure starts increased 61%. But natural disasters do not explain the increase in markets such as Detroit, Minneapolis-St. Paul, Milwaukee and Austin — all of which posted double-digit percentage increases in foreclosure starts in 2018.”

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) lost -26 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher compared to the previous week.

Overview:  Overall, the continued Government shutdown and the resounding defeat of the Brexit vote were very bond-friendly and supportive of low rates.  But the heightened optimism of a China/U.S. trade deal pressured bond pricing and pushed global interest rates a little higher last week.

Consumer Sentiment: The Preliminary University of Michigan's Consumer Sentiment Index was much lower than expected with a 90.7 vs 97.0 reading which is the lowest since October 2016. But this is just a preliminary reading and will be revised.

Trade War: Reports hit that at the last meeting between Chinese and U.S. trade representatives in early January, that China offered to erase the trade deficit by upping its purchase of goods from the U.S. by one trillion dollars through 2024. However, it does not appear that they have addressed/agreed to change their rampant intellectual property theft.

Taking it to the House: Weekly Mortgage Applications improved by big numbers for the second consecutive week. This time by 13.5% led by a big jump of 19.0% in Refinance Applications. Purchase Applications improved by 9.0%. The NAHB Home Builders Housing Market Index was stronger than expected with a 58 vs 56 reading.

The Talking Fed: We got the Fed's Beige Book that is prepared specifically for the use of this month's FOMC Interest Rate meeting. 
Overall, it the 12 individual Fed districts showed that the U.S. economy continues to show growth albeit at a slower clip than some recent quarters. Here are some key highlights:
- All districts noted that labor markets were tight and that firms were struggling to find workers at any skill level, the report said adding that wages gained throughout the country and across skill levels, with most districts reporting moderate pay increases.
- Economic activity increased in most of the U.S., with eight of twelve Federal Reserve Districts reporting modest to moderate growth.
- Nonauto retail sales grew modestly, as several Districts reported more holiday traffic compared with last year. Auto sales were flat on balance.
- The word "tariff" was used less times in this report. It was only mentioned 20 times vs December's count of 39 and October's level of 51.

What to Watch Out For This Week: