by Calculated Risk on 6/02/2020 03:40:00 PM

Note: Back in early 2016, I noted that energy expenditures as a percentage of PCE had hit an all time low. Here is an update through the recently released April PCE report.

Below is a graph of expenditures on energy goods and services as a percent of total personal consumption expenditures through April 2020.

This is one of the measures that Professor Hamilton at Econbrowser looks at to evaluate any drag on GDP from energy prices.


Click on graph for larger image.

Data source: BEA.

The huge spikes in energy prices during the oil crisis of 1973 and 1979 are obvious. As is the increase in energy prices during the 2001 through 2008 period.

In April 2020, energy expenditures as a percentage of PCE was at a record low of 3.54% of PCE.  This was below the previous low of 3.66% in February 2016.

This new record happened even with a 13.6% annual rate decrease in overall PCE in April (energy expenditures declined more in April than overall PCE).

by Calculated Risk on 6/02/2020 01:15:00 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).

The number of salesperson's licenses is off 26% from the peak, and is increasing again (up 11% from low). The number of salesperson's licenses has increased to December 2004 levels.

Brokers' licenses are off 14.7% from the peak and have fallen to November 2005 levels, and are still slowly declining.

Click on graph for larger image.

We are seeing a pickup in Real Estate licensees in California, although the number of Brokers is still slowly declining.

COVID-19 could lead to more people studying to get their license - and also more people quitting.  It is unclear.

by Calculated Risk on 6/02/2020 11:38:00 AM

On June 9th, at 11:15 AM Pacific Time, UCI Finance Professor Christopher Schwarz and I will be discussing the June 2020 economic outlook.

This is a free event, and you can register at Registration Link for June 2020 Market & Economic Update.    The presentation will be about 30 minutes, followed by a Q&A period.

Click on banner for a larger image.

by Calculated Risk on 6/02/2020 09:38:00 AM

Here is another monthly update on framing lumber prices.   Lumber prices declined sharply from the record highs in early 2018, and then increased until the COVID-19 crisis.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through May 22, 2020 (via NAHB), and 2) CME framing futures.

Click on graph for larger image in graph gallery.

Right now Random Lengths prices are up 27% from a year ago, and CME futures are up 14% year-over-year.

There is a seasonal pattern for lumber prices, and usually prices will increase in the Spring, and peak around May, and then bottom around October or November - although there is quite a bit of seasonal variability.

Prices fell sharply due to COVID-19, however prices have bounced back (Note: Construction is considered an essential activity is ongoing in many areas)

by Calculated Risk on 6/02/2020 08:35:00 AM

Notes: This CoreLogic House Price Index report is for April. The recent Case-Shiller index release was for March. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic Reports April Home Prices Increased by 5.4% Year Over Year

Home prices nationwide, including distressed sales, increased year over year by 5.4% in April 2020 compared with April 2019 and increased month over month by 1.4% in April 2020 compared with March 2020 (revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results).

The CoreLogic HPI Forecast indicates that home prices will increase on a month-over-month basis by 0.3% from April 2020 to May 2020, and decline 1.3% on a year-over-year basic from April 2020 to April 2021. 2021 will mark the first year home prices are expected to decline in more than nine years.

“The very low inventory of homes for sale, coupled with homebuyers’ spur of record-low mortgage rates, will likely continue to support home price growth during the spring. If unemployment remains elevated in early 2021, then we can expect home prices to soften. Our forecast has home prices down in 12 months across 41 states.” - Dr. Frank Nothaft, Chief Economist for CoreLogic

“Tight supply and pent-up demand, particularly among millennials, provides optimism for a bounce-back in the housing market purchase activity and home prices over the medium term. The next 12 to 18 months are going to be very tough times for the broader economy. As employment and economic activity begin to pick up, as it will surely do, we expect housing to be a driver in a national recovery.” -Frank Martell, President and CEO of CoreLogic
emphasis added

CR Note: The overall impact on house prices will depend on the duration of the crisis.

by Calculated Risk on 6/01/2020 09:15:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Higher But Finish Lower

Mortgage rates pulled off a repeat performance of last Friday's intraday drama. The average lender began the day in higher territory as bond markets were weaker in the morning. Bonds recovered nicely and mortgage lenders were more than willing to adjust rate sheets accordingly. After being in slightly weaker shape compared to Friday's latest levels, the average lender was noticeably better than Friday by the end of the day. [30YR FIXED - 3.04%]
emphasis added

Tuesday:
• All day, Light vehicle sales for May. The consensus is for light vehicle sales to be 10.8 million SAAR in May, up from 8.6 million in April (Seasonally Adjusted Annual Rate).

• 10:00 AM, Corelogic House Price index for April.

by Calculated Risk on 6/01/2020 06:08:00 PM

The US is now conducting around 400,000 tests per day, and that might be enough to allow test-and-trace in some areas. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US might need to double the number of tests per day again.

According to Dr. Jha of Harvard's Global Health Institute, the US might need more than 900,000 tests per day .

There were 403,791 test results reported over the last 24 hours.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 4.0% (red line).

For the status of contact tracing by state, check out testandtrace.com.

by Calculated Risk on 6/01/2020 04:00:00 PM

Note: To put these numbers in perspective, the MBA notes "For the week of March 2, only 0.25% of all loans were in forbearance."

From the MBA: Share of Mortgage Loans in Forbearance Increases to 8.46%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 8.36% of servicers’ portfolio volume in the prior week to 8.46% as of May 24, 2020. According to MBA’s estimate, just over 4.2 million homeowners are now in forbearance plans.
...
“MBA’s survey continues to indicate that fewer homeowners are seeking forbearance as more states across the country reopen their economies and prospects begin to improve. The share of loans in forbearance increased by only 10 basis points over the week of May 24th,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Policy support for households, including expanded unemployment insurance benefits and other transfers, have helped many stay on their feet during this crisis. With 11.82 percent of Ginnie Mae loans currently in forbearance, FHA and VA borrowers are struggling the most.”

Added Fratantoni, “Forbearance requests and call volume declined relative to the prior week and led to further declines in wait times and abandonment rates.”
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April.

The MBA notes: "Forbearance requests as a percent of servicing portfolio volume (#) dropped across all investor types for the sixth consecutive week relative to the prior week: from 0.28% to 0.20%."

by Calculated Risk on 6/01/2020 01:05:00 PM

The Case-Shiller house price indexes for March were released last week. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Matthew Speakman at Zillow: March Case-Shiller Results and April Forecast: Housing Maintains its Strength

The strong buyer demand heading into this crisis has held fairly steady in the months since the outbreak, as record-low mortgage rates and inventory levels have maintained competition in the markets and placed upward pressure on home prices. So much remains uncertain – including the longer-term path for home prices – but for now, competition for homes is holding strong and keeping prices afloat.

Annual growth in April as reported by Case-Shiller is expected to accelerate in the 10- and 20-city indices, and stay steady in the national index. S&P Dow Jones Indices is expected to release data for the April S&P CoreLogic Case-Shiller Indices on Tuesday, June 30.
emphasis added

The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be at 4.4% in April, the same as 4.4% in March.

The Zillow forecast is for the 20-City index to be up 4.2% YoY in April from 3.9% in March, and for the 10-City index to increase to 3.7% YoY compared to 3.4% YoY in March.

by Calculated Risk on 6/01/2020 10:30:00 AM

From the Census Bureau reported that overall construction spending decreased in April:

Construction spending during April 2020 was estimated at a seasonally adjusted annual rate of $1,346.2 billion, 2.9 percent below the revised March estimate of $1,386.6 billion. The April figure is 3.0 percent above the April 2019 estimate of $1,307.1 billion.
emphasis added

Both private and public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $1,004.1 billion, 3.0 percent below the revised March estimate of $1,035.6 billion. ...

n April, the estimated seasonally adjusted annual rate of public construction spending was $342.1 billion, 2.5 percent below the revised March estimate of $351.0 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential spending is 21% below the previous peak.

Non-residential spending is 13% above the previous peak in January 2008 (nominal dollars).

Public construction spending is 5% above the previous peak in March 2009, and 30% above the austerity low in February 2014.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 6.2%. Non-residential spending is up 1.1% year-over-year. Public spending is up  0.8% year-over-year.

This was above consensus expectations of a 6% decrease in spending, and construction spending for February and March were revised up.

Construction was considered an essential service in most areas and hasn't declined sharply like many other sectors.