by Calculated Risk on 9/11/2023 08:14:00 PM

From Matthew Graham at Mortgage News Daily: Will CPI Matter Again?

At times over the past 2 years, the Consumer Price Index (CPI) has been the most important economic report on any given month and has had a bigger impact on bonds than the mighty jobs report. ...

If this week's numbers are far enough from forecasts, there's no reason to doubt CPI's market moving power--especially with the uptick in energy costs and the Fed on deck next week. [30 year fixed 7.30%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for August.

• At 8:00 AM, Corelogic House Price index for July

by Calculated Risk on 9/11/2023 12:33:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Q2 Update: Delinquencies, Foreclosures and REO

A brief excerpt:

In 2021, I pointed out that with the end of the foreclosure moratoriums, combined with the expiration of a large number of forbearance plans, we would see an increase in REOs in late 2022 and into 2023. And there was a slight increase.

However, I argued this would NOT lead to a surge in foreclosures and significantly impact house prices (as happened following the housing bubble) since lending has been solid and most homeowners have substantial equity in their homes.
...
Here is some data from the FHFA’s National Mortgage Database showing the distribution of interest rates on closed-end, fixed-rate 1-4 family mortgages outstanding at the end of each quarter since Q1 2013 through Q1 2023 (Q2 2023 data will be released in a few weeks).

This shows the surge in the percent of loans under 3%, and also under 4%, starting in early 2020 as mortgage rates declined sharply during the pandemic. Currently 23.3% of loans are under 3%, 61.3% are under 4%, and 81.2% are under 5%.

With substantial equity, and low mortgage rates (mostly at a fixed rates), few homeowners will have financial difficulties.

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 9/11/2023 10:19:00 AM

From Dodge Data Analytics: Dodge Momentum Index Drops 6.5% in August

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, declined 6.5% in August to 178.0 (2000=100) from the revised July reading of 190.3. Over the month, the commercial component of the DMI fell 1.6%, while the institutional component fell 14.8%.

“Overall activity remains above historical norms, but weaker market fundamentals continue to undermine planning growth,” said Sarah Martin, associate director of forecasting for Dodge Construction Network. “It’s likely that the full year of tightening lending standards and high interest rates has begun to affect institutional planning, which has otherwise been resistant to these market headwinds. Also, planning in the sector continues to revert from the strong spike in activity back in May. As we move into the final four months of 2023, both commercial and institutional planning will continue to be constrained.”

August saw a deceleration in education, healthcare and amusement planning activity, fueling the sizable decline in the institutional sector. Meanwhile, stronger hotel planning offset weaker office activity, causing a milder regression in the commercial segment over August. Year over year, the DMI remained 4% higher than in August 2022. The commercial and institutional components were up 3% and 7%, respectively.
...
The DMI is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 178.0 in August, down from 190.3 the previous month.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests some slowdown towards the end of 2023 and in 2024.  

Commercial construction is a lagging economic indicator.

by Calculated Risk on 9/11/2023 08:17:00 AM

Altos reports that active single-family inventory was up 0.1% week-over-week.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of September 8th, inventory was at 509.2 thousand (7-day average), compared to 508.8 thousand the prior week.   

Year-to-date, inventory is up 3.7%.  And inventory is up 25.6% from the seasonal bottom 21 weeks ago.

The second graph shows the seasonal pattern for active single-family inventory since 2015.

The red line is for 2023.  The black line is for 2019.  Note that inventory is up from the record low for the same week in 2021, but below last year and still well below normal levels.

Inventory was down 6.9% compared to the same week in 2022 (last week it was down 7.9%), and down 47.0% compared to the same week in 2019 (last week down 46.2%). 

It appears same week inventory will be below 2022 levels for the remainder of the year. It is possible that inventory might be close to 2020 levels (dark blue line) by the end of the year.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 9/10/2023 06:54:00 PM

Weekend:
• Schedule for Week of September 10, 2023

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures and DOW futures are up slightly (fair value).

Oil prices were down over the last week with WTI futures at $87.09 per barrel and Brent at $90.39 per barrel. A year ago, WTI was at $87, and Brent was at $92 - so WTI oil prices are unchanged year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.79 per gallon. A year ago, prices were at $3.68 per gallon, so gasoline prices are up $0.11 year-over-year.

by Calculated Risk on 9/10/2023 08:21:00 AM

From STR: U.S. hotel results for week ending 2 September

Following seasonal patterns, U.S. hotel performance showed mixed results from the previous week but positive comparisons year over year, according to CoStar’s latest data through 2 September. ...

27 August through 2 September 2023 (percentage change from comparable week in 2022):

• Occupancy: 62.7% (+0.2%)
• Average daily rate (ADR): US$150.52 (+1.8%)
• Revenue per available room (RevPAR): US$94.38 (+2.0%)
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 2023, black is 2020, blue is the median, and dashed light blue is for 2022.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking last year, and close to the median rate for the period 2000 through 2022 (Blue).

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

The 4-week average of the occupancy rate has peaked for the year and will pick up a little soon due to Fall business travel.

by Calculated Risk on 9/09/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• Lawler: Single Family Rent Trends at AMH and Invitation Homes

• 1st Look at Local Housing Markets in August

• The "Home ATM" Stays Mostly Closed in Q2

• Black Knight Mortgage Monitor: Purchase Rate Locks "are now running 39% below pre-pandemic levels"

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

You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 9/09/2023 08:11:00 AM

The key economic reports this week are August Consumer Price Index (CPI) and Retail Sales.

For manufacturing, August Industrial Production, and the September New York Fed survey, will be released this week.

----- Monday, September 11th -----
No major economic releases scheduled.

----- Tuesday, September 12th -----
6:00 AM: NFIB Small Business Optimism Index for August.

8:00 AM: Corelogic House Price index for July

----- Wednesday, September 13th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The Consumer Price Index for August from the BLS. The consensus is for a 0.6% increase in CPI, and a 0.2% increase in core CPI.  The consensus is for CPI to be up 3.6% year-over-year and core CPI to be up 4.3% YoY.

----- Thursday, September 14th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 212 thousand initial claims, down from 216 thousand last week.

8:30 AM ET: Retail sales for August will be released.  The consensus is for a 0.1% increase in retail sales.

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

8:30 AM: The Producer Price Index for August from the BLS. The consensus is for a 0.4% decrease in PPI, and a 0.2% increase in core PPI.

----- Friday, September 15th -----
8:30 AM ET: The New York Fed Empire State manufacturing survey for September. The consensus is for a reading of -10.7, up from -19.0.

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

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 79.3%.

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

by Calculated Risk on 9/08/2023 08:19:00 PM

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

Due to changes at the CDC, weekly cases are no longer updated.

After the first few weeks, the pandemic low for weekly deaths had been the week of July 7, 2021, at 1,690 deaths (until recently).  

Recently hospitalizations have more than doubled from a low of 5,150 in June 2023.

COVID Metrics
	Now	Week Ago	Goal
Hospitalized2🚩	12,852	11,196	≤3,0001
Deaths per Week2🚩	722	672	≤3501
1my goals to stop weekly posts, 2Weekly for Currently Hospitalized, and Deaths 🚩 Increasing number weekly for Hospitalized and Deaths ✅ Goal met.

Click on graph for larger image.

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

Weekly deaths have increased from a record low of 469 in early July.

For deaths, I'm currently using 3 weeks ago for "now", since the most recent two weeks will be revised significantly.

by Calculated Risk on 9/08/2023 04:11:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

U.S. railroads originated 1.13 million total carloads in August 2023, down 2.0% from August 2022 and their third straight year-over-year decline. Total carloads averaged 226,675 per week in August 2023, very close to the weekly averages in March through June 2023.

U.S. intermodal originations were down 6.3% in August 2023 from August 2022, their 24th year-over-year decline in the past 25 months. However, originations averaged 247,858 units per week in August 2023, the most in 10 months. Intermodal remains subpar for a number of reasons, including a continuing shift in consumer spending away from goods to services; a related sharp downturn in port activity; and tougher price competition from trucks.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows the six-week average of U.S. Carloads in 2021, 2022 and 2022:

U.S. railroads (not including the U.S. subsidiaries of Canadian and Mexican railroads) originated 1.13 million total carloads in August 2023, down 2.0% (23,323 carloads) from August 2022 and their third straight yearover-year decline. Carloads averaged 226,675 per week in August 2023, very close to the weekly averages in March through June 2023. (July was lower because of the July 4 holiday.)

The second graph shows the six-week average (not monthly) of U.S. intermodal in 2021, 2022 and 2023: (using intermodal or shipping containers):

A number of factors help explain why U.S. intermodal volumes are down. Here are three. First, U.S. consumer spending is shifting back toward services. Goods as a share of total spending fell from a pandemic era peak of 35.8% in March 2021 to 33.2% in July 2023. Second, port activity is down sharply. Total combined loaded imports and exports at major Western U.S. ports were 20.6% lower (in terms of TEUs) in 2023 through July than in 2022 through July. For major Eastern U.S. ports, the decline was 10.6%. That’s important because imports and exports account for somewhere around half of U.S. intermodal volume. Third, truck competition is more intense today. Based on the producer price index for truckload shipments, average truck rates in July 2023 were 22% lower than in July 2022.