by Calculated Risk on 6/15/2025 09:31:00 AM

Most analysts expect no change to FOMC policy at the meeting this week, keeping the target range at 4 1/4 to 4 1/2 percent.    Market participants currently expect the FOMC to also be on hold at the July meeting, with the next rate cut in September, and a second rate cut in December.

From BofA:

The Fed has made it clear that the policy rate will remain unchanged at its June meeting. We expect the FOMC to make some changes to the language around uncertainty in the statement. The May statement said that “Uncertainty about the economic outlook has increased further”. Given the 115pp reduction in bilateral US-China tariffs on May 12, we think a more appropriate characterization could be: “Uncertainty about the economic outlook remains elevated”.

Per the usual, markets will be focused on the Summary of Economic Projections (SEP). The March SEP was pre-“Liberation Day”. Therefore, meaningful revisions to the 2025 forecasts are likely. However, we think there is too much uncertainty around policy along multiple dimensions (most notably trade and fiscal) for the Fed to do a wholesale reassessment of its views. So we think the forecasts for 2026 and beyond will remain largely unchanged.
emphasis added

From Goldman:

We are not making any changes to our Fed forecast and continue to expect the first of three normalization cuts in December, followed by two more in 2026 to a terminal rate of 3.5-3.75%. An earlier cut is possible if the economy deteriorates more than we expect or if inflation continues to surprise to the downside, but we think that the peak summer tariff effects on the monthly inflation prints will most likely be too fresh for the FOMC to cut before December.

Projections will be released at this meeting. For review, here are the March projections.  

The FOMC participants’ midpoint of the target level for the federal funds rate is now at 4.0% at the end of 2025 (3.9%-4.4%) and the long run range is 2.6% to 3.6%.   This is fewer rate cuts than market participants expect.

Since the last projections were released, economic growth has been below expectations (but distorted), the unemployment rate was close to expectations, and inflation at expectations.

The BEA's advance estimate for Q1 GDP showed real growth at -0.2% annualized. There is a wide range of estimates for Q2 GDP, but it is forecast to be over 3.0% (as Q1 distortions reverse).  That would put real growth on pace to be in the range of the March FOMC projections for Q4 over Q4.  

However, Q2, Q3 and Q4 all saw solid growth last year - and we haven't seen the impact of policy changes on hard data yet - so there is still significant uncertainty about the economy this year.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2025	2026	2027
Mar 2025	1.5 to 1.9	1.6 to 1.9	1.6 to 2.0
Dec 2024	1.8 to 2.2	1.9 to 2.1	1.8 to 2.0

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 4.2% in May after averaging 4.1% for Q1.  The forecast for the Q4 unemployment rate is likely low.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2025	2026	2027
Mar 2025	4.3 to 4.4	4.2 to 4.5	4.1 to 4.4
Dec 2024	4.2 to 4.5	4.1 to 4.4	4.0 to 4.4

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of April 2025, PCE inflation increased 2.1 percent year-over-year (YoY). There will likely be some increase in PCE inflation from policy, but this appears to in the forecast range.

Without policy changes (tariffs) it appears inflation would be well below the FOMC forecast!

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2025	2026	2027
Mar 2025	2.6 to 2.9	2.1 to 2.3	2.0 to 2.1
Dec 2024	2.3 to 2.6	2.0-2.2	2.0

PCE core inflation increased 2.5 percent YoY in April.  This is in the range of FOMC projections for Q4.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2025	2026	2027
Mar 2025	2.7 to 3.0	2.1 to 2.4	2.0 to 2.1
Dec 2024	2.5 to 2.7	2.0-2.3	2.0

by Calculated Risk on 6/14/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Lawler: Early Read on Existing Home Sales in May

• Part 1: Current State of the Housing Market; Overview for mid-June 2025

• Part 2: Current State of the Housing Market; Overview for mid-June 2025

• The "Home ATM" Mostly Closed in Q1

• 2nd Look at Local Housing Markets in May

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

by Calculated Risk on 6/14/2025 08:11:00 AM

The key reports this week are May Retail Sales and Housing Starts.

For manufacturing, Industrial Production, and the NY and Philly Fed manufacturing surveys, will be released this week.

The FOMC meets on Tuesday and Wednesday, and rates are expected to be unchanged.

----- Monday, June 16th -----
8:30 AM: The New York Fed Empire State manufacturing survey for June. The consensus is for a reading of -6.0, up from -9.2.

----- Tuesday, June 17th -----
8:30 AM: Retail sales for May is scheduled to be released.  The consensus is for a 0.5% decrease in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). 

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for May.

This graph shows industrial production since 1967.

The consensus is for a 0.1% increase in Industrial Production, and for Capacity Utilization to be unchanged at 77.7%.

10:00 AM: The June NAHB homebuilder survey. The consensus is for a reading of 36, up from 34 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

----- Wednesday, June 18th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for initial claims of 250 thousand, up from 248 thousand last week.

8:30 AM ET: Housing Starts for May.

This graph shows single and total housing starts since 1968.

The consensus is for 1.370 million SAAR, up from 1.361 million SAAR in April.

During the day: The AIA's Architecture Billings Index for April (a leading indicator for commercial real estate).

2:00 PM: FOMC Statement. The FOMC is expected to leave the Fed Funds rate unchanged at this meeting.

2:00 PM: FOMC Projections This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

----- Thursday, June 19th -----
All US markets will be closed in observance of Juneteenth National Independence Day

----- Friday, June 20th -----
8:30 AM: the Philly Fed manufacturing survey for June. The consensus is for a reading of 0.0, up from -4.0 last month.

by Calculated Risk on 6/13/2025 07:11:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So, I'm no longer tracking hospitalizations.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week	208✅	255	≤3501
1my goals to stop weekly posts. 🚩 Increasing number weekly for Deaths. ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported since Jan 2023.

Although weekly deaths met the original goal to stop posting in June 2024 (previous pandemic low of 314 deaths), I continued to post since deaths moved above the goal again - and I'll continue to post until weekly deaths are below the goal for a couple more weeks.

And here is a graph I'm following concerning COVID in wastewater as of June 12th:

This appears to be a leading indicator for COVID hospitalizations and deaths.  This is below the lows of May 2024.

Nationally COVID in wastewater is "Very Low".

by Calculated Risk on 6/13/2025 02:33:00 PM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.03 million in May, up 0.75% from April’s preliminary pace and down 0.74%% from last May’s seasonally adjusted pace. Unadjusted sales should show a somewhat larger YOY % decline, reflecting this May’s lower business day count relative to last May’s.

Local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by just 1.0% from a year earlier. By region SF median sales prices should be virtually flat from a year ago in the West, down by about 1% in the South, up about 4% in the Midwest, and up about 5% in the Northeast.

CR Note: The NAR is scheduled to release May Existing Home sales on Monday, June 23rd at 10:00 AM. Last year, the NAR reported sales in May 2024 at 4.06 million SAAR.

by Calculated Risk on 6/13/2025 02:09:00 PM

Way back in 2005, I posted a graph of the Real Estate Agent Boom. Here is another update to the graph.

The graph shows the number of real estate licensees in California.

The number of agents peaked at the end of 2007 (housing activity peaked in 2005, and prices in 2006).

Click on graph for larger image.

The number of salesperson's licenses started increasing again in 2014 (after house prices bottomed), and peaked again in early 2024 (ignoring weird pandemic distortion).

The number of salesperson's licenses is down 1.4% year-over-year. 

Brokers' licenses are off 21% from the peak and are still slowly declining (down 2.3% year-over-year).

by Calculated Risk on 6/13/2025 11:11:00 AM

From BofA:

Since our last weekly publication, our 2Q GDP tracking is unchanged at 2.7% q/q saar and 1Q GDP is down one-tenth to -0.1% q/q saar. [June 13th estimate]
emphasis added

From Goldman:

The details of the trade balance report indicated that April exports were stronger than our previous GDP tracking assumptions. We boosted our Q2 GDP tracking estimate by 0.4pp to +3.7% (quarter-over-quarter annualized) and left our Q2 domestic final sales estimate unchanged at -0.5%. [June 5th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.8 percent on June 9, unchanged from June 5 after rounding. [June 9th estimate]

by Calculated Risk on 6/13/2025 08:17:00 AM

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For May, Realtor.com reported inventory was up 31.5% YoY, but still down 14.4% compared to the 2017 to 2019 same month levels. 

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending June 7, 2025

• Active inventory climbed 27.7% year over year

The number of homes actively for sale remains on a strong upward trajectory, now 27.7% higher than this time last year. This represents the 83rd consecutive week of annual gains in inventory. There were more than 1 million homes for sale again last week, marking the sixth week in a row over the threshold and the highest inventory level since December 2019.

• New listings—a measure of sellers putting homes up for sale—rose 5.2% year over year

New listings rose again last week on an annual basis, up 5.2% compared with the same period last year, a slightly faster growth compared with the previous week. The momentum that began earlier this spring remains strong ...

• The median list price was up 0.5% year over year

The median list price increased 0.5% year over year this week as elevated prices persist into the summer. The median list price per square foot—which adjusts for changes in home size—rose 0.8% year over year.

With inventory climbing, and sales depressed, months-of-supply is at the highest level since 2016 (excluding start of pandemic) putting downward pressure on house prices in certain areas.

by Calculated Risk on 6/12/2025 08:37:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• At 10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for June).

by Calculated Risk on 6/12/2025 04:00:00 PM

From STR: U.S. hotel results for week ending 7 June

The U.S. hotel industry reported mostly negative year-over-year comparisons, according to CoStar’s latest data through 7 June. ...

1-7 June 2025 (percentage change from comparable week in 2024):

• Occupancy: 67.0% (-3.2%)
• Average daily rate (ADR): US$161.57 (0.0%)
• Revenue per available room (RevPAR): US$108.23 (-3.2%)
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2025, blue is the median, and dashed light blue is for 2024.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking behind both last year and the median rate for the period 2000 through 2024 (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.

The 4-week average will increase with the summer travel season.  We will likely see a hit to occupancy during the summer months due to less international tourism.