RSS Feed by Calculated Risk on 10/26/2020 11:42:00 AM
Monday, October 26, 2020
A few Comments on September New Home Sales
New home sales for September were reported at 959,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised down, combined.
This was below consensus expectations, but was still the third highest sales rate since 2006 (behind July and August). Clearly low mortgages rates, low existing home supply, and low sales in March and April (due to the pandemic) have led to a strong increase in sales. Favorable demographics (something I wrote about many times over the last decade) and a surging stock market have probably helped new home sales too.
Earlier: New Home Sales decreased to 959,000 Annual Rate in September.
Click on graph for larger image.
This graph shows new home sales for 2019 and 2020 by month (Seasonally Adjusted Annual Rate).
New home sales were up 32.1% year-over-year (YoY) in August. Year-to-date (YTD) sales are up 16.9%.
And on inventory: since new home sales are reported when the contract is signed - even if the home hasn't been started - new home sales are not limited by inventory (except if no lots are available). Inventory for new home sales is important in that it means there will be more housing starts if inventory is low (like right now) - and fewer starts if inventory is too high (not now).
Usually New Home Sales is a great leading indicator for the economy, however, currently the course of the economy will be determined by the course of the virus, and New Home Sales tell us nothing about the future of the pandemic. Without the pandemic, I'd obviously be very positive about this report.
New Home Sales decreased to 959,000 Annual Rate in September
by Calculated Risk on 10/26/2020 10:14:00 AM
The Census Bureau reports New Home Sales in September were at a seasonally adjusted annual rate (SAAR) of 959 thousand.
The previous three months were revised down, combined.
Sales of new single-family houses in September 2020 were at a seasonally adjusted annual rate of 959,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.5 percent below the revised August rate of 994,000, but is 32.1 percent above the September 2019 estimate of 726,000.
emphasis added
Click on graph for larger image.The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.
This is the third highest sales rate since 2006 (just below the last two months).
The second graph shows New Home Months of Supply.
The months of supply increased in September to 3.6 months from 3.4 months in August. The all time record high was 12.1 months of supply in January 2009. The all time record low was 3.4 months in August 2020.
This is below the normal range (about 4 to 6 months supply is normal).
"The seasonally-adjusted estimate of new houses for sale at the end of September was 284,000. This represents a supply of 3.6 months at the current sales rate."
On inventory, according to the Census Bureau: "A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.
The third graph shows the three categories of inventory starting in 1973.
The inventory of completed homes for sale is low, and the combined total of completed and under construction is lower than normal.
The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).In September 2020 (red column), 75 thousand new homes were sold (NSA). Last year, 56 thousand homes were sold in September.
The all time high for September was 99 thousand in 2005, and the all time low for September was 24 thousand in 2011.
This was below expectations of 1,025 thousand sales SAAR, and sales in the three previous months were revised down, combined. I'll have more later today.
Eight High Frequency Indicators for the Economy
by Calculated Risk on 10/26/2020 08:08:00 AM
NOTE: I've added another indicator - the occupancy rate for office buildings with security from Kastle Systems (ht Burt). This is near the bottom.
These indicators are mostly for travel and entertainment - some of the sectors that will recover very slowly.
The TSA is providing daily travel numbers.
Click on graph for larger image.This data shows the seven day average of daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red).
The dashed line is the percent of last year for the seven day average.
This data is as of Oct 25th.
The seven day average is down 64% from last year (36% of last year).
There has been a slow increase from the bottom.
The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.
Thanks to OpenTable for providing this restaurant data:This data is updated through October 24, 2020.
This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."
Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.
Note that dining is generally turning down in the northern states - Illinois, Pennsylvania, and New York - but holding up in the southern states.
This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years. Data is from BoxOfficeMojo through October 22nd.Note that the data is usually noisy week-to-week and depends on when blockbusters are released.
Movie ticket sales have picked up slightly over the last couple of months, and were at $15 million last week (compared to usually around $150 million per week in the early Fall).
Some movie theaters have reopened (probably with limited seating).
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels - prior to 2020).
This data is through October 17th.
Hotel occupancy is currently down 30.7% year-over-year.
Notes: Y-axis doesn't start at zero to better show the seasonal change.
So far there has been little business travel pickup that usually happens in the Fall.
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week last year of .At one point, gasoline supplied was off almost 50% YoY.
As of October 16th, gasoline supplied was off about 13.6% YoY (about 86.4% of last year).
Note: I know several people that have driven to vacation spots - or to visit family - and they usually would have flown. So this might have boosted gasoline consumption in the Summer and early Fall at the expense of air travel.
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.
There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.
This data is through October 23rd for the United States and several selected cities.The graph is the running 7 day average to remove the impact of weekends.
IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.
According to the Apple data directions requests, public transit in the 7 day average for the US is still only about 56% of the January level. It is at 46% in Chicago, and 59% in Houston.
Here is some interesting data from Kastle Systems on office occupancy.
This is just a screen shot. Here is the interactive data. This data is through October 21st.Currently Office Occupancy is 27% of normal, with a low of 15% in San Francisco, and a high of 41% in Dallas.
"View the average occupancy rate of commercial properties across 10 major U.S. cities, by each municipality and in aggregate, to show the pace of Americans returning to work based on daily unique access entries in Kastle-secured buildings across the nation."
Here is some interesting data on New York subway usage (HT BR).
This graph is from Todd W Schneider.This data is through Friday, October 23rd.
Schneider has graphs for each borough, and links to all the data sources.
He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".
Sunday, October 25, 2020
Monday: New Home Sales
by Calculated Risk on 10/25/2020 08:35:00 PM
Weekend:
• Schedule for Week of October 25, 2020
Monday:
• At 8:30 AM ET, Chicago Fed National Activity Index for September. This is a composite index of other data.
• At 10:00 AM, New Home Sales for September from the Census Bureau. The consensus is for 1,025 thousand SAAR, up from 1,011 thousand in August.
• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for October.
From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 18 and DOW futures are down 135 (fair value).
Oil prices were down over the last week with WTI futures at $39.23 per barrel and Brent at $41.20 barrel. A year ago, WTI was at $57, and Brent was at $62 - so WTI oil prices are down about 30% year-over-year.
Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.14 per gallon. A year ago prices were at $2.60 per gallon, so gasoline prices are down $0.46 per gallon year-over-year.
October 25 COVID-19 Test Results; New US Record 7-Day Average Cases
by Calculated Risk on 10/25/2020 06:20:00 PM
The US is now mostly reporting 700 thousand to 1 million tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections (probably close to 1%), so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).
There were 964,672 test results reported over the last 24 hours.
There were 65,413 positive tests.
Over 18,000 Americans deaths from COVID have been reported in October. See the graph on US Daily Deaths here.
Click on graph for larger image.
This data is from the COVID Tracking Project.
The percent positive over the last 24 hours was 6.8% (red line is 7 day average).
For the status of contact tracing by state, check out testandtrace.com.
And check out COVID Exit Strategy to see how each state is doing.
The second graph shows the 7 day average of positive tests reported.
The dashed line is the July high.
Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.
This is a new record 7-day average for the USA.
Hotels: Occupancy Rate Declined 30.7% Year-over-year
by Calculated Risk on 10/25/2020 08:11:00 AM
From HotelNewsNow.com: STR: US hotel results for week ending 17 October
U.S. hotel occupancy was virtually flat from the previous week at 50.1%, according to the latest data from STR through 17 October.The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.
11-17 October 2020 (percentage change from comparable week in 2019):
• Occupancy: 50.1% (-30.7%)
• Average daily rate (ADR): US$97.69 (-28.3%)
• Revenue per available room (RevPAR): US$48.91 (-50.3%)
emphasis added
Click on graph for larger image.The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels - before 2020).
So far there has been little business travel pickup that usually happens in the Fall.
Note: Y-axis doesn't start at zero to better show the seasonal change.
Saturday, October 24, 2020
October 24 COVID-19 Test Results
by Calculated Risk on 10/24/2020 06:20:00 PM
The US is now mostly reporting 700 thousand to 1 million tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections (probably close to 1%), so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).
There were 1,044,804 test results reported over the last 24 hours.
There were 82,668 positive tests.
Over 17,700 Americans deaths from COVID have been reported in October. See the graph on US Daily Deaths here.
Click on graph for larger image.
This data is from the COVID Tracking Project.
The percent positive over the last 24 hours was 7.9% (red line is 7 day average).
For the status of contact tracing by state, check out testandtrace.com.
And check out COVID Exit Strategy to see how each state is doing.
The second graph shows the 7 day average of positive tests reported.
The dashed line is the July high.
Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.
We will probably see a new record 7-day average tomorrow.
Schedule for Week of October 25, 2020
by Calculated Risk on 10/24/2020 08:11:00 AM
The key reports this week are the advance estimate of Q3 GDP and September New Home sales.
Other key indicators include Personal Income and Outlays for September and Case-Shiller house prices for August.
For manufacturing, the Dallas and Richmond Fed manufacturing surveys will be released this week.
8:30 AM ET: Chicago Fed National Activity Index for September. This is a composite index of other data.
10:00 AM: New Home Sales for September from the Census Bureau. This graph shows New Home Sales since 1963. The dashed line is the sales rate for last month.
The consensus is for 1,025 thousand SAAR, up from 1,011 thousand in August.
10:30 AM: Dallas Fed Survey of Manufacturing Activity for October.
8:30 AM ET: Durable Goods Orders for September from the Census Bureau. The consensus is for a 0.5% increase in durable goods orders.
9:00 AM ET: S&P/Case-Shiller House Price Index for August. The consensus is for the Composite 20 index to be up 4.2% year-over-year.This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).
9:00 AM: FHFA House Price Index for August. This was originally a GSE only repeat sales, however there is also an expanded index.
10:00 AM: Richmond Fed Survey of Manufacturing Activity for October. This is the last of the regional surveys for October.
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.
8:30 AM: Gross Domestic Product, 3rd quarter 2020 (advance estimate). The consensus is that real GDP increased 31.9% annualized in Q3, up from negative 31.4% in Q2.
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is initial claims increased to 800 thousand from 787 thousand last week.
10:00 AM: Pending Home Sales Index for September. The consensus is 4.5% increase in the index.
8:30 AM ET: Personal Income and Outlays for September. The consensus is for a 0.5% increase in personal income, and for a 1.0% increase in personal spending. And for the Core PCE price index to increase 0.2%.
9:45 AM: Chicago Purchasing Managers Index for October. The consensus is for a reading of 59.3, down from 62.4 in September.
10:00 AM: University of Michigan's Consumer sentiment index (Final for October). The consensus is for a reading of 81.2.
Friday, October 23, 2020
October 23 COVID-19 Test Results
by Calculated Risk on 10/23/2020 07:04:00 PM
The US is now mostly reporting 700 thousand to 1 million tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections (probably close to 1%), so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).
There were 1,123,341 test results reported over the last 24 hours.
There were 83,010 positive tests (new record).
Over 16,800 Americans deaths from COVID have been reported in October. See the graph on US Daily Deaths here.
Click on graph for larger image.
This data is from the COVID Tracking Project.
The percent positive over the last 24 hours was 7.4% (red line is 7 day average).
For the status of contact tracing by state, check out testandtrace.com.
And check out COVID Exit Strategy to see how each state is doing.
The second graph shows the 7 day average of positive tests reported.
The dashed line is the July high.
Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.
Everyone needs to be vigilant or we might see record high 7-day average cases before the end of October.
Q3 GDP Forecasts
by Calculated Risk on 10/23/2020 11:42:00 AM
From Merrill Lynch:
The advance 3Q GDP report should reveal a historic 33% qoq saar rebound in real activity, driven largely by recoveries in consumption, residential and equipment investment. This forecast will recoup half of the decline in GDP during from the COVID shock. [Oct 23 estimate]From Nomura:
emphasis added
Base effects will drive Q3 2020 real GDP higher but monthly data suggest the recovery has entered a slower phase. We think real GDP rose 34.7% q-o-q saar (7.7% q- o-q unannualized) in Q3, highlighting the swifter-than-expected pandemic recovery thus far. As COVID-19 weighs on activity, we expect a more gradual recovery through H1 2021 before an acceleration in H2. [Oct 23 estimate]From the NY Fed Nowcasting Report
The New York Fed Staff Nowcast stands at 13.7% for 2020:Q3 and 3.5% for 2020:Q4. [Oct 23 estimate]And from the Altanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2020 is 35.3 percent on October 20, up from 35.2 percent on October 16. [Oct 20 estimate]It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR). A 35% annualized increase in Q3 GDP, is about 7.8% QoQ, and would leave real GDP down about 3.3% from Q4 2019.
The following graph illustrates this decline.
Click on graph for larger image.This graph shows the percent decline in real GDP from the previous peak (currently the previous peak was in Q4 2019).
This graph is through Q2 2020, and real GDP is currently off 10.2% from the previous peak. For comparison, at the depth of the Great Recession, real GDP was down 4.0% from the previous peak.
The black arrow shows what a 35% annualized increase in real GDP would look like in Q3.
Even with a 35% annualized increase (about 7.8% QoQ), real GDP will be down about 3.3% from Q4 2019; a slightly smaller decline in real GDP than at the depth of the Great Recession.
