by Calculated Risk on 8/13/2025 09:50:00 AM
Wednesday, August 13, 2025
2nd Look at Local Housing Markets in July
Today, in the Calculated Risk Real Estate Newsletter: 2nd Look at Local Housing Markets in July
A brief excerpt:
Tracking local data gives an early look at what happened the previous month and also reveals regional differences in both sales and inventory.There is much more in the article.
Closed sales in July were mostly for contracts signed in May and June, and mortgage rates, according to the Freddie Mac PMMS, 6.82% in May and 6.82% in June (somewhat higher than for closed sales in June).
In July, sales in these early reporting markets were down 1.4% YoY. Last month, in June, these same markets were up 3.8% year-over-year Not Seasonally Adjusted (NSA).
Important: There were the same number of working days in July 2025 (22) as in July 2024 (22). So, the year-over-year change in the headline SA data will be similar to the NSA data.
...
Many more local markets to come!
MBA: Mortgage Applications Increase in Latest Weekly Survey
by Calculated Risk on 8/13/2025 07:00:00 AM
From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey
Mortgage applications increased 10.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 8, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 10.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week. The Refinance Index increased 23 percent from the previous week and was 8 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 17 percent higher than the same week one year ago.
“The 30-year fixed mortgage rate declined to 6.67 percent last week, which spurred the strongest week for refinance activity since April. Borrowers responded favorably, as refinance applications increased 23 percent, driven mostly by conventional and VA applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinances accounted for 46.5 percent of applications and as seen in other recent refinance bursts, the average loan size grew significantly to $366,400. Borrowers with larger loan sizes continue to be more sensitive to rate movements.”
Added Kan, “Given the relative attractiveness of ARM rates compared to fixed rate loans, ARM applications increased 25 percent to their highest level since 2022, and the ARM share of all applications was almost 10 percent. However, lower rates were not enough to entice more homebuyers back into the market, as purchase applications were only up around one percent over the week, although still stronger than last year’s pace.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.67 percent from 6.77 percent, with points increasing to 0.64 from 0.59 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
The first graph shows the MBA mortgage purchase index.
According to the MBA, purchase activity is up 17% year-over-year unadjusted.
Tuesday, August 12, 2025
Wednesday: MBA Mortgage Applications
by Calculated Risk on 8/12/2025 07:42:00 PM
Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.
Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.
Cleveland Fed: Median CPI increased 0.3% and Trimmed-mean CPI increased 0.2% in July
by Calculated Risk on 8/12/2025 02:13:00 PM
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% in July. The 16% trimmed-mean Consumer Price Index increased 0.2%. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".
This graph shows the year-over-year change for these four key measures of inflation.
Early Look at 2026 Cost-Of-Living Adjustments and Maximum Contribution Base
by Calculated Risk on 8/12/2025 12:03:00 PM
The BLS reported earlier today:
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.5 percent over the last 12 months to an index level of 316.349 (1982-84=100). For the month, the index increased 0.1 percent prior to seasonal adjustment.CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U and is not seasonally adjusted (NSA).
• In 2024, the Q3 average of CPI-W was 308.729.
The 2024 Q3 average was the highest Q3 average, so we only have to compare Q3 this year to last year.
This graph shows CPI-W since January 2000. The red lines are the Q3 average of CPI-W for each year.
Note: The year labeled is for the calculation, and the adjustment is effective for December of that year (received by beneficiaries in January of the following year).
CPI-W was up 2.5% year-over-year in July (down from 2.6% YoY in June), and although this is early - we need the data for July, August and September - my early guess is COLA will probably be close to 3% this year, up from 2.5% in 2025.
Contribution and Benefit Base
The contribution base will be adjusted using the National Average Wage Index. This is based on a one-year lag. The National Average Wage Index is not available for 2024 yet, although we know wages increased solidly in 2024. If wages increased 5% in 2024, then the contribution base next year will increase to around $185,000 in 2026, from the current $176,100.
Remember - this is an early look. What matters is average CPI-W, NSA, for all three months in Q3 (July, August and September).
YoY Measures of Inflation: Services, Goods and Shelter
by Calculated Risk on 8/12/2025 08:51:00 AM
Here are a few measures of inflation:
The first graph is the one Fed Chair Powell had mentioned two years ago as something to watch.
Click on graph for larger image.
This graph shows the YoY price change for Services and Services less rent of shelter through July 2025.
Services less rent of shelter was up 3.8% YoY in July, unchanged from 3.8% YoY the previous month.
Commodities less food and energy commodities were at 1.1% YoY in July, up from 0.6% YoY the previous month.
Shelter was up 3.7% year-over-year in July, down from 3.8% in June. Housing (PCE) was up 4.1% YoY in June, unchanged from 4.1% in May.
Core CPI ex-shelter was up 2.5% YoY in July, up from 2.1% YoY in June.
BLS: CPI Increased 0.2% in July; Core CPI increased 0.3%
by Calculated Risk on 8/12/2025 08:30:00 AM
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis in July, after rising 0.3 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.7 percent before seasonal adjustment.The change in core CPI was above expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.
The index for shelter rose 0.2 percent in July and was the primary factor in the all items monthly increase. The food index was unchanged over the month as the food away from home index rose 0.3 percent while the food at home index fell 0.1 percent. In contrast, the index for energy fell 1.1 percent in July as the index for gasoline decreased 2.2 percent over the month.
The index for all items less food and energy rose 0.3 percent in July, following a 0.2-percent increase in June. Indexes that increased over the month include medical care, airline fares, recreation, household furnishings and operations, and used cars and trucks. The indexes for lodging away from home and communication were among the few major indexes that decreased in July.
The all items index rose 2.7 percent for the 12 months ending July, after rising 2.7 percent over the 12 months ending June. The all items less food and energy index rose 3.1 percent over the last 12 months. The energy index decreased 1.6 percent for the 12 months ending July. The food index increased 2.9 percent over the last year.
emphasis added
Monday, August 11, 2025
Tuesday: CPI
by Calculated Risk on 8/11/2025 07:54:00 PM
From Matthew Graham at Mortgage News Daily: Mortgage Rates Steady Ahead of High Stakes Inflation Report
The average top tier 30yr fixed rate held exceptionally steady last week after moving just a bit lower over the weekend. By comparison, today's rates are much closer to Friday's latest levels and still very close to the lowest we've seen since October, 2024.Tuesday:
If the two key economic considerations for interest rates are jobs and inflation, the two key economic reports are the jobs report seen earlier this month and the Consumer Price Index which comes out tomorrow morning. It's often repeated that the PCE Price Index is a preferable gauge of inflation, but CPI comes out 2 weeks earlier and thus gets most of the market's attention.
Just like last month, market participants are watching to see the extent of tariff-driven inflation in tomorrow's data. If it contributes to a higher-than-expected result, we'll likely see some upward pressure on rates. [30 year fixed 6.58%]
emphasis added
• At 6:00 AM ET, NFIB Small Business Optimism Index for July.
• At 8:30 AM, The Consumer Price Index for July from the BLS. The consensus is for a 0.2% increase in CPI, and a 0.3% increase in core CPI. The consensus is for CPI to be up 2.8% year-over-year and core CPI to be up 3.0% YoY.
The Next Financial Crisis
by Calculated Risk on 8/11/2025 01:50:00 PM
Back in 2005 I was mostly writing about the housing bubble - and the coming housing bust. But I also mentioned the possibility of a financial crisis. In early 2007, I started forecasting a recession, and by the end of 2007 the housing bust causing a financial crisis was becoming obvious.
Here is an article from the WSJ in 2007 quoting a crazy blogger: How High Will Subprime Losses Go?
Back in the U.S., the Calculated Risk blog sidestepped the colorful language and went straight for the big number: “The losses for the lenders and investors might well be over $1 trillion.”Many people thought I was crazy. But losses for lenders and financial institutions ended up over $1 trillion.
The key for the "wizards" was to find a way around the regulatory system, and if they could use leverage, the fool's gold would eventually lead to a crisis.
By 2013 the seeds were planted, not by Wall Street wizards, but by Tech Wizards. Now the seeds have taken root (Of course, I'm talking about cryptocurrency, what Charlie Munger called financial "rat poison").
Last year, researchers at the NY Fed looked at the impact of crypto on the financial system: The Financial Stability Implications of Digital Assets. And they concluded: "that, to date, the contribution of digital assets to systemic risk has been limited, given that the digital ecosystem is relatively small and not a major provider of financing and payment services to the real economy."
The key to preventing a financial crisis is to keep the non-regulated (or poorly regulated) areas of finance out of the financial system. A good example is the Tulip Bubble in the 1600s. Some people got rich, others were wiped out, but it had no impact on the financial system.
Unfortunately the current administration has embraced crypto. They are allowing it to creep into the financial system, and allowing 401K plans to hold crypto (aka future bagholders). There has been some discussion of allowing financial institutions to lend against crypto holdings - like for a mortgage. This is mistake and increases the possibility that crypto will be the source of the next financial crisis.
August ICE Mortgage Monitor: Home Prices Continue to Cool
by Calculated Risk on 8/11/2025 10:49:00 AM
Today, in the Real Estate Newsletter: August ICE Mortgage Monitor: Home Prices Continue to Cool
Brief excerpt:
House Price Growth Continues to Slow
Here is the year-over-year in house prices according to the ICE Home Price Index (HPI). The ICE HPI is a repeat sales index. ICE reports the median price change of the repeat sales. The index was up 1.0% year-over-year in July, down from 1.3% YoY in June.
• Mortgage rates in the high 6% range and improvements in for-sale inventory drove further home price cooling in JulyThere is much more in the newsletter.
• Annual home price growth eased to +1.0% in July, down from +1.3% in June and +3.6% at the start of the year
• That’s the softest growth rate since 2012, outside of the initial market reaction to mortgage rates pushing above 6% in April and May 2023
• Prices dipped by 0.06% in the month on a seasonally adjusted basis, which is equivalent to a seasonally adjusted annualized rate (SAAR) of -0.7% suggesting more slowing may be on the horizon
• Single family prices were up by +1.4% from the same time last year in July, while condo prices are now down -1.8%, marking the softest condo market since early 2012
• More than half of all major markets are seeing condo prices below last year’s levels, with 9 of the 11 softest condo markets located in Florida, led by Cape Coral (-13.4%) and North Port (-11.2%)