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Saturday, February 08, 2025

Real Estate Newsletter Articles this Week: Mortgage Delinquencies Increased Slightly in Q4 2024

by Calculated Risk on 2/08/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

MBA National Delinquency SurveyClick on graph for larger image.

MBA: Mortgage Delinquencies Increased Slightly in Q4 2024

Fannie and Freddie: Single Family Serious Delinquency Rates Increased in December

Lawler: Revisions Almost Eliminate Household/Establishment Survey Employment Growth Gap

1st Look at Local Housing Markets in January

Asking Rents Mostly Unchanged Year-over-year

ICE Mortgage Monitor: “Lowest calendar year home price growth of any year since 2011”

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

Schedule for Week of February 9, 2025

by Calculated Risk on 2/08/2025 08:11:00 AM

The key reports this week are January CPI and Retail sales.

For manufacturing, the January Industrial Production report will be released this week.

Fed Chair Powell presents the Semiannual Monetary Policy Report to the Congress on Tuesday and Wednesday.

----- Monday, February 10th -----

No major economic releases scheduled.

----- Tuesday, February 11th -----

6:00 AM: NFIB Small Business Optimism Index for January.

10:00 AM: Testimony, Fed Chair Jerome Powell, Semiannual Monetary Policy Report to Congress, Before the U.S. Senate Committee on Banking, Housing, and Urban Affairs

----- Wednesday, February 12th -----

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.

8:30 AM: The Consumer Price Index for January from the BLS. The consensus is for 0.3% increase in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 2.9% year-over-year and core CPI to be up 3.2% YoY.

10:00 AM: Testimony, Fed Chair Jerome Powell, Semiannual Monetary Policy Report to Congress, Before the U.S. House Financial Services Committee

----- Thursday, February 13th -----

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for an increase to 224 thousand from 219 thousand last week.

8:30 AM ET: The Producer Price Index for January from the BLS. The consensus is for a 0.2% increase in PPI, and a 0.3% increase in core PPI.

11:00 AM: NY Fed: Q4 Quarterly Report on Household Debt and Credit

----- Friday, February 14th -----

Retail Sales8:30 AM: Retail sales for January is scheduled to be released.  The consensus is for a no change in retail sales.

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

Industrial Production9:15 AM: The Fed will release Industrial Production and Capacity Utilization for January.

This graph shows industrial production since 1967.

The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 77.7%.

Friday, February 07, 2025

February 7th COVID Update: COVID in Wastewater Increasing

by Calculated Risk on 2/07/2025 07:20:00 PM

Mortgage RatesNote: 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
 NowWeek
Ago
Goal
Deaths per Week🚩940819≤3501
1my goals to stop weekly posts.
🚩 Increasing number weekly for Deaths.
✅ Goal met.

COVID-19 Deaths per WeekClick 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, I'm continuing to post now that deaths are above the goal again - and at a minimum, I'll continue to post through the Winter.  

Weekly deaths have been increasing, and weekly deaths are triple the low of 313 in early June 2024.

And here is a graph I'm following concerning COVID in wastewater as of February 6th:

COVID-19 WastewaterThis appears to be a leading indicator for COVID hospitalizations and deaths.

Nationally COVID in wastewater is "High" according to the CDC.   

Wholesale Used Car Prices Increased in January; Up 0.8% Year-over-year

by Calculated Risk on 2/07/2025 04:15:00 PM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Increased in January

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) moved 0.4% higher in January compared to December, causing the Manheim Used Vehicle Value Index (MUVVI) to increase to 205.6, a gain of 0.8% from a year ago. The seasonal adjustment to the index muted the movement for the month, as non-seasonally adjusted values rose faster than seasonally adjusted values. The non-adjusted price in January increased by 0.6% compared to December, moving the unadjusted average price up 1.1% year over year.
emphasis added
Manheim Used Vehicle Value Index Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices increased in January (seasonally adjusted) and were up 0.8% YoY.

Lawler: Revisions Almost Eliminate Household/Establishment Survey Employment Growth Gap

by Calculated Risk on 2/07/2025 01:17:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Revisions Almost Eliminate Household/Establishment Survey Employment Growth Gap

A brief excerpt:

From housing economist Tom Lawler: Revisions Almost Eliminate Household/Establishment Survey Employment Growth Gap

Over the last few years there has been a sizable gap between trend growth in the Household Survey estimate of employment and the Establishment Survey estimate of employment, with the Household Survey showing significantly slower growth than the Establishment Survey. I and others noted that much of this “gap” reflected the fact that previous estimates from the Household Survey were “benchmarked” to population estimates that for the last few years were way to low because of an underestimate of net international migration, and that updated population estimates (Vintage 2024) that massively revised up NIM over the last few years would result in a huge upward revision in the household estimate of employment in the January Employment Report.

In today’s employment report the BLS said updated population controls resulted in an huge increase in the Household Survey estimate of employment for December 2024 of 2 million (1.2%).

At the same time, the BLS reported that its annual benchmarking of the Establishment Survey resulted in a decline in the seasonally-adjusted estimate of nonfarm payroll employment for March 2024 of 598,000 (-0.4%).

As a result of these two revisions, the “gap” between the Household Survey of employment and the Establishment Survey estimate of employment – after adjusting for definitional differences – has narrowed substantially.
There is much more in the article.

1st Look at Local Housing Markets in January

by Calculated Risk on 2/07/2025 10:53:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in January

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to January 2019 for each local market (some 2019 data is not available).

This is the first look at several early reporting local markets in January. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in January were mostly for contracts signed in November and December when 30-year mortgage rates averaged 6.81% and 6.72%, respectively (Freddie Mac PMMS). This was an increase from the average rate for homes that closed in November, but down from the average rate of 7.1% in November and December 2023.
...
Closed Existing Home SalesIn January, sales in these markets were up 6.4% YoY. Last month, in December, these same markets were up 17.1% year-over-year Not Seasonally Adjusted (NSA).

Note that most of these early reporting markets have shown stronger year-over-year sales than most other markets for the last several months.

Important: There were the same number of working days in January 2025 (21) as compared to January 2024 (21). So, the year-over-year change in the headline SA data will be similar to the NSA data (there are other seasonal factors).
...
This was just several early reporting markets. Many more local markets to come!
There is much more in the article.

Comments on January Employment Report

by Calculated Risk on 2/07/2025 09:18:00 AM

The headline jobs number in the January employment report was below expectations, however, November and December payrolls were revised up by 100,000 combined.   The participation rate and the employment population ratio increased, and the unemployment rate decreased to 4.0%.



Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate decreased in January at 83.5% from 83.4% in December.

The 25 to 54 employment population ratio increased to 80.7% from 80.5% the previous month.

Both are down from the recent peaks, but still near the highest level this millennium.

Average Hourly Wages

WagesThe graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.1% YoY in January.   

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of people employed part time for economic reasons, at 4.5 million, changed little in January. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons increased in January to 4.48 million from 4.36 million in December.  This is close to the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 7.5% from 7.5% in the previous month. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.44 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.51 million the previous month.

This is down from post-pandemic high of 4.171 million, and up from the recent low of 1.056 million.

This is above pre-pandemic levels.

Job Streak

Through January 2025, the employment report indicated positive job growth for 49 consecutive months, putting the current streak in 2nd place of the longest job streaks in US history (since 1939).  This streak survived the annual benchmark revision.

Headline Jobs, Top 10 Streaks
Year EndedStreak, Months
12020113
2N/A491
3199048
4200746
5197945
6 tie194333
6 tie198633
6 tie200033
9196729
10199525
1Currrent Streak

Summary:

The headline jobs number in the January employment report was below expectations, however, November and December payrolls were revised up by 100,000 combined. The participation rate and the employment population ratio increased, and the unemployment rate decreased to 4.0%.

Another decent employment report.

January Employment Report: 143 thousand Jobs, 4.0% Unemployment Rate

by Calculated Risk on 2/07/2025 08:30:00 AM

From the BLS: Employment Situation

Total nonfarm payroll employment rose by 143,000 in January, and the unemployment rate edged down to 4.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.
...
The change in total nonfarm payroll employment for November was revised up by 49,000, from +212,000 to +261,000, and the change for December was revised up by 51,000, from +256,000 to +307,000. With these revisions, employment in November and December combined is 100,000 higher than previously reported.
emphasis added
Employment per monthClick on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 143 thousand in January.  Private payrolls increased by 111 thousand, and public payrolls increased 32 thousand.

Payrolls for November and December were revised up 100 thousand, combined.

Year-over-year change employment The second graph shows the year-over-year change in total non-farm employment since 1968.

In January, the year-over-year change was 2.02 million jobs.  Employment was up solidly year-over-year.

The third graph shows the employment population ratio and the participation rate.

Employment Pop Ratio and participation rate The Labor Force Participation Rate was increased to 62.6% in January, from 62.5% in December. This is the percentage of the working age population in the labor force.

The Employment-Population ratio increased to 60.1% from 60.0% in December (blue line).

I'll post the 25 to 54 age group employment-population ratio graph later.

unemployment rateThe fourth graph shows the unemployment rate.

The unemployment rate decreased to 4.0% in January from 4.1% in December.

This was below consensus expectations; however, November and December payrolls were revised up by 100,000 combined.  

On the annual benchmark revision:
The seasonally adjusted total nonfarm employment level for March 2024 was revised downward by 589,000. On a not seasonally adjusted basis, the total nonfarm employment level for March 2024 was revised downward by 598,000, or -0.4 percent. Not seasonally adjusted, the absolute average benchmark revision over the past 10 years is 0.1 percent.
I'll have more later ...

Thursday, February 06, 2025

Friday: Employment Report

by Calculated Risk on 2/06/2025 07:48:00 PM

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

Friday:
• At 8:30 AM: Employment Report for December.   The consensus is for 170,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

NOTE: For the household survey, new population controls will be used - and this will boost overall household employment. For the establishment survey, the annual benchmark revision will be included, lowering past job growth.

10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for January).

Predicting the Next Recession

by Calculated Risk on 2/06/2025 05:39:00 PM

Over a decade ago, in 2013, I wrote a post "Predicting the Next Recession. That post was in response to several recession forecasts (that were incorrect).

In that post, I noted that the next recession would likely be caused by one of the following:

• "An exogenous event such as a pandemic, significant military conflict, disruption of energy supplies for any reason, a major natural disaster (meteor strike, super volcano, etc), and a number of other low probability reasons. All of these events are possible, but they are unpredictable, and the probabilities are low that they will happen in the next few years or even decades." emphasis added

Unfortunately, in 2020, one of those low probability events happened (pandemic), and that led to a recession in 2020.  Another exogenous event is possible, but unpredictable.

• Significant executive / fiscal policy error.

During the previous Trump administration, we saw several policy errors, like the failed TCJA (Tax Cut and Jobs Act), but none that were significant enough to take the economy into a recession (I stayed positive on the economy back then).

• Monetary policy error.  As I noted in 2013: "Most of the post-WWII recessions were caused by the Fed tightening monetary policy to slow inflation." 

A monetary policy error was the concern over the last couple of years, and it appears the Fed has mostly achieved a soft landing (as I expected). Earlier I defined a successful "soft landing" as follows: "a soft landing is achieved if growth stays positive, inflation returns to target, and the yield curve flattens or reverts to normal (long yields higher than short yields)."  Growth has stayed positive, the yield curve has reverted to normal, but inflation is still a little above target (two out of three ain't bad).

Now the key concern is significant executive / fiscal policy errors.  Although there have been concerning developments over the last 2+ weeks (for example, scrubbing websites of important information for health issues and climate change, eliminating ethic rules, and on and on), those will have little impact on the economy in the short term.

However, tariffs, immigration policy and wanton fiscal cuts and Federal employee layoffs could negatively impact the economy. 

I'm not currently on recession watch, but there is an increasing concern.