by Calculated Risk on 1/27/2025 07:17:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Only Moderately Lower After Tech Rout

Even though there is some uncertainty about the near-term Fed rate outlook and even though we have a Fed meeting coming up on Wednesday, today was all about conventional wisdom for interest rates. Tech stocks plummeted on news of a cheap, competent, Chinese AI competitor. ...

Whether investors were simply looking for places to park the proceeds from that stock selling or legitimately betting on economic fallout, bond buying ramped up in a major way. The average mortgage lender is now back in line with the lowest levels since late December, but just barely. [30 year fixed 7.07%]
emphasis added

Tuesday:
• At 8:30 AM ET, Durable Goods Orders for December. The consensus is for a 0.8% increase in durable goods.

• Also at 9:00 AM, FHFA House Price Index for November. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 9:00 AM, S&P/Case-Shiller House Price Index for November. The National Index was up 3.6% YoY in October and is expected to be up about the same in November.

• Also at 10:00 AM, Richmond Fed Survey of Manufacturing Activity for January. This is the last of the regional Fed manufacturing surveys for January.

• At 10:00 AM, State Employment and Unemployment (Monthly) for December 2024

by Calculated Risk on 1/27/2025 02:23:00 PM

From STR: U.S. hotel results for week ending 18 January

On the positive side of the MLK Day calendar shift, the U.S. hotel industry reported positive year-over-year comparisons, according to CoStar’s latest data through 18 January. ...

12-18 January 2025 (percentage change from comparable week in 2024):

• Occupancy: 55.8% (+6.7%)
• Average daily rate (ADR): US$155.81 (+10.0%)
• Revenue per available room (RevPAR): US$86.93 (+17.4%)
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 2025, blue is the median, and dashed light blue is for 2024.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking both last year and the median rate for the period 2000 through 2024 (Blue).

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

This is the weakest period of the year for hotel occupancy and the 4-week average will increase seasonally for the next several months.

by Calculated Risk on 1/27/2025 10:48:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Increase to 698,000 Annual Rate in December

Brief excerpt:

The Census Bureau reported New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 698 thousand. The previous three months were revised down slightly, combined.
...
The next graph shows new home sales for 2023 and 2024 by month (Seasonally Adjusted Annual Rate). Sales in December 2024 were up 6.7% from December 2023.

New home sales, seasonally adjusted, have increased year-over-year in 19 of the last 21 months. This is essentially the opposite of what happened with existing home sales that had been down year-over-year every month for 3+ years (existing home sales have been up year-over-year for the last 3 months).

There is much more in the article.

by Calculated Risk on 1/27/2025 10:00:00 AM

The Census Bureau reports New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 698 thousand.

The previous three months were revised down slightly, combined.

Sales of new single-family houses in December 2024 were at a seasonally adjusted annual rate of 698,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.6 percent above the revised November rate of 674,000 and is 6.7 percent above the December 2023 estimate of 654,000.

An estimated 683,000 new homes were sold in 2024. This is 2.5 percent above the 2023 figure of 666,000.
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.

New home sales were at pre-pandemic levels.

The second graph shows New Home Months of Supply.

The months of supply decreased in December to 8.5 months from 8.7 months in November.

The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 2020.

This is well above the top of the normal range (about 4 to 6 months of supply is normal).

"The seasonally-adjusted estimate of new houses for sale at the end of December was 494,000. This represents a supply of 8.5 months at the current sales rate. "

Sales were above expectations of 670 thousand SAAR, however sales for the three previous months were revised down, combined. I'll have more later today.

by Calculated Risk on 1/27/2025 08:11:00 AM

Altos reports that active single-family inventory was up 1.2% week-over-week.

Inventory always declines seasonally in the Winter and usually bottoms in late January or February. If two weeks ago was the seasonal bottom, that would be very early in the year, but that has happened before.

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

Click on graph for larger image.

The red line is for 2024.  The black line is for 2019.  

Inventory was up 26.5% compared to the same week in 2024 (last week it was up 24.8%), and down 23.0% compared to the same week in 2019 (last week it was down 23.4%). 

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels has closed significantly!

This second inventory graph is courtesy of Altos Research.

As of Jan 24th, inventory was at 637 thousand (7-day average), compared to 632 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube

by Calculated Risk on 1/26/2025 07:27:00 PM

Weekend:
• Schedule for Week of January 26, 2025

Monday:
• At 8:30 AM ET, Chicago Fed National Activity Index for December. This is a composite index of other data.

• At 10:00 AM, New Home Sales for December from the Census Bureau. The consensus is for 670 thousand SAAR, up from 664 thousand in November.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for January.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 35 and DOW futures are down 115 (fair value).

Oil prices were up over the last week with WTI futures at $74.66 per barrel and Brent at $78.50 per barrel. A year ago, WTI was at $78, and Brent was at $83 - so WTI oil prices are down about 5% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.11 per gallon. A year ago, prices were at $3.11 per gallon, so gasoline prices are unchanged year-over-year.

by Calculated Risk on 1/26/2025 12:01:00 PM

Most analysts expect no change to FOMC policy at the meeting this week, keeping the target range at 4 1/4 to 4 1/2 percent.    Market participants currently expect the FOMC to be on hold at the January, March and May meetings, with the next rate cut in May.

From BofA:

We expect the Fed to stay on hold at its January meeting. The focus will be on the March decision and the Trump agenda. Powell is likely to retain maximal optionality by continuing to stress data dependence and insist that the Fed will not pre-judge or preempt policy.
emphasis added

From Goldman:

The January FOMC meeting is unlikely to offer much new information. The statement might note that the labor market appears to have stabilized but is unlikely to provide strong guidance about the March meeting or the timeline for further cuts. ... Our baseline forecast calls for two 25bp cuts this year in June and December and one more in 2026 because we expect inflation to keep falling and do not expect tariffs to restrain the FOMC indefinitely.

Projections will not be released at this meeting. For review, here are the December projections.  

Since the last projections were released, economic growth has been above expectations, the unemployment rate was slightly below expectations, and inflation at expectations.  

The BEA's third estimate for Q3 GDP showed real growth at 3.1% annualized, following 3.0% annualized real growth in Q2, and 1.6% in Q1.  Current estimates for Q4 GDP are around 2.6%.  That would put real growth in 2024, Q4 over Q4, at 2.6% - above the top end of the December FOMC projections.  

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2024	2025	2026	2027
Dec 2024	2.4 to 2.5	1.8 to 2.2	1.9 to 2.1	1.8 to 2.0
Sept 2024	1.9 to 2.1	1.8 to 2.2	1.9 to 2.3	1.8 to 2.1

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 4.1% in December and average 4.15% for Q4.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2024	2025	2026	2027
Dec 2024	4.2	4.2 to 4.5	4.1 to 4.4	4.0 to 4.4
Sept 2024	4.3 to 4.4	4.2 to 4.5	4.0 to 4.4	4.0 to 4.4

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of November 2024, PCE inflation increased 2.4 percent year-over-year (YoY). PCE inflation is expected to increase to 2.5% YoY in the December report.  This is in the December projection range.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2024	2025	2026	2027
Dec 2024	2.4 to 2.5	2.3 to 2.6	2.0-2.2	2.0
Sept 2024	2.2 to 2.4	2.1 to 2.2	2.0	2.0

PCE core inflation increased 2.8 percent YoY in November.  Core PCE inflation is expected to increase 2.8% YoY in the December report.  This is in the range of FOMC projections for Q4.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2024	2025	2026	2027
Dec 2024	2.8 to 2.9	2.5 to 2.7	2.0-2.3	2.0
Sept 2024	2.6 to 2.7	2.1 to 2.3	2.0	2.0

by Calculated Risk on 1/25/2025 11:31:00 PM

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

SPECIAL NOTE: The CDC has stopped releasing health data (hopefully temporarily).

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
	Now	Week Ago	Goal
Deaths per Week	518	524	≤3501
1my goals to stop weekly posts. 🚩 Increasing number weekly for Deaths. ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported since Jan 2020.

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 mostly been declining, however weekly deaths are still above the low of 313 in early June 2024.

And here is a graph I'm following concerning COVID in wastewater as of January 23rd:

This appears to be a leading indicator for COVID hospitalizations and deaths.

Nationally COVID in wastewater is "Moderate" according to the CDC but is now declining.   

by Calculated Risk on 1/25/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• NAR: Existing-Home Sales Increased to 4.24 million SAAR in December

• NMHC on Apartments: "Looser market conditions for the tenth consecutive quarter

• 1.73 million Total Housing Completions in 2024 including Manufactured Homes; Most Since 2006

• 4th Look at Local Housing Markets in December

• 3rd Look at Local Housing Markets in December

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

by Calculated Risk on 1/25/2025 08:11:00 AM

The key reports scheduled for this week are the advance estimate of Q4 GDP, December New Home sales, December Personal Income and Outlays and November Case-Shiller house prices.

The FOMC meets this week, and no change to policy is expected.

----- Monday, January 27th -----
8:30 AM: Chicago Fed National Activity Index for December. This is a composite index of other data.

10:00 AM: New Home Sales for December 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 670 thousand SAAR, up from 664 thousand in November.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for January.

----- Tuesday, January 28th -----
8:30 AM: Durable Goods Orders for December. The consensus is for a 0.8% increase in durable goods.

9:00 AM: FHFA House Price Index for November. This was originally a GSE only repeat sales, however there is also an expanded index.

9:00 AM ET: S&P/Case-Shiller House Price Index for November.

This graph shows the Year over year change in 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).

The National Index was up 3.6% YoY in October and is expected to be up about the same in November.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for January. This is the last of the regional Fed manufacturing surveys for January.

10:00 AM: State Employment and Unemployment (Monthly) for December 2024

----- Wednesday, January 29th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.

2:00 PM: FOMC Meeting Announcement. No change to policy is expected.

2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

----- Thursday, January 30th -----
8:30 AM: Gross Domestic Product, 4th quarter and Year 2024 (Advance estimate). The consensus is that real GDP increased 2.6% annualized in Q4.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a increase to 228 thousand from 223 thousand last week.

10:00 AM: Pending Home Sales Index for December. The consensus is for a 1.0% decrease in the index.

----- Friday, January 31st -----
8:30 AM ET: Personal Income and Outlays for December. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the Core PCE price index to increase 0.2%.  PCE prices are expected to be up 2.5% YoY, and core PCE prices up 2.8% YoY.

9:45 AM: Chicago Purchasing Managers Index for January. The consensus is for a reading of 39.7, up from 36.9 in December.