by Calculated Risk on 2/04/2025 02:44:00 PM

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the January 2025 seasonally adjusted annual sales rate (SAAR) of 534 thousand.

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new record high of 570 thousand SAAR in April 2019.

Click on graph for larger image.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 288 thousand SAAR in May 2020.  

Heavy truck sales were at 534 thousand SAAR in January, up from 454 thousand in December, and up 4.6% from 510 thousand SAAR in January 2025.  

Usually, heavy truck sales decline sharply prior to a recession.  Currently heavy truck sales are solid.

As I mentioned yesterday, light vehicle sales decreased in January.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.  

Light vehicle sales were at 15.60 million SAAR in January, down from 16.87 million in November, and up 3.8% from 15.03 million in January 2024.

by Calculated Risk on 2/04/2025 11:27:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Fannie and Freddie: Single Family Serious Delinquency Rates Increased in December

Excerpt:

Freddie Mac reported that the Single-Family serious delinquency rate in December was 0.59%, up from 0.56% November. Freddie's rate is up year-over-year from 0.55% in December 2023, however, this is below the pre-pandemic level of 0.60%.

Freddie's serious delinquency rate peaked in February 2010 at 4.20% following the housing bubble and peaked at 3.17% in August 2020 during the pandemic.

Fannie Mae reported that the Single-Family serious delinquency rate in December was 0.56%, up from 0.53% in November. The serious delinquency rate is up year-over-year from 0.55% in December 2023, however, this is below the pre-pandemic lows of 0.65%.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59% following the housing bubble and peaked at 3.32% in August 2020 during the pandemic.

There is much more in the article.

by Calculated Risk on 2/04/2025 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings decreased to 7.6 million on the last business day of December, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and total separations were little changed at 5.5 million and 5.3 million, respectively. Within separations, quits (3.2 million) and layoffs and discharges (1.8 million) changed little.
emphasis added

The following graph shows job openings (black line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for December; the employment report this Friday will be for January.

Click on graph for larger image.

Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

The spike in layoffs and discharges in March 2020 is labeled, but off the chart to better show the usual data.

Jobs openings decreased in December to 7.60 million from 8.12 million in November.

The number of job openings (black) were down 15% year-over-year. 

Quits were down 7% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 2/03/2025 08:31:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Stay Flat Despite Underlying Market Volatility

We know that mortgage rates are driven by financial markets and we know that financial markets have experienced volatility amid the roll-out of new tariffs over the weekend. But rates are starting the current week right in line with Friday's latest levels (themselves, little-changed from any other day last week). [30 year fixed 7.05%]
emphasis added

Tuesday:
• At 10:00 AM ET, Job Openings and Labor Turnover Survey for December from the BLS.

by Calculated Risk on 2/03/2025 05:00:00 PM

Wards Auto released their estimate of light vehicle sales for January: U.S. Light-Vehicle Sales Start 2025 With 4% Increase in January (pay site).

There did not appear to be an end-of-month boost in demand, either as a rebound from the mid-month weather-related losses or pull-ahead volume in case of still-possible future tariff-related price increases. However, January’s gain marked the fourth straight year-over-year increase in volume and fifth consecutive for the seasonally adjusted annual rate.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and Wards' estimate for January (red).

Sales in January (15.60 million SAAR) were down 7.1% from December, and up 3.8% from January 2024.

Sales in January were at the consensus forecast.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

This was the best January since 2021.

by Calculated Risk on 2/03/2025 02:00:00 PM

From the Federal Reserve: The January 2025 Senior Loan Officer Opinion Survey on Bank Lending Practices

The January 2025 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the fourth quarter of 2024.

Regarding loans to businesses over the fourth quarter, survey respondents reported, on balance, tighter lending standards for commercial and industrial (C&I) loans to firms of all sizes. Meanwhile, banks reported stronger demand for C&I loans to large and middle-market firms, while demand for C&I loans to small firms remained basically unchanged. Furthermore, banks generally reported tighter standards and basically unchanged demand for commercial real estate (CRE) loans.

For loans to households, banks reported, on balance, basically unchanged lending standards and weaker demand across most categories of residential real estate (RRE) loans. In addition, standards reportedly tightened for credit card loans and remained basically unchanged for auto and other consumer loans, while demand weakened for credit card and other consumer loans but remained basically unchanged for auto loans. Further, banks reported basically unchanged lending standards and demand for home equity lines of credit (HELOCs).

The January SLOOS included a set of special questions inquiring about banks’ expectations for changes in lending standards, borrower demand, and loan performance over 2025. Banks reported expecting lending standards to either ease or remain basically unchanged and demand to strengthen across all loan categories. In addition, banks generally reported expecting loan quality to improve for loans to businesses but to either deteriorate or remain basically unchanged for most consumer loan types.
emphasis added

Click on graph for larger image.

This graph on Residential Real Estate demand is from the Senior Loan Officer Survey Charts.

This graph is for demand and shows that demand has been weak since late 2021.

The left graph is from 1990 to 2014.  The right graph is from 2015 to Q4 2024.

by Calculated Risk on 2/03/2025 11:49:00 AM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: “Lowest calendar year home price growth of any year since 2011”

Brief excerpt:

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 3.4% year-over-year in December.

Source: ICE Home Price Index (HPI)

• Annual home price growth edged slightly higher in December, closing out the year at +3.4%

• That marks the lowest calendar year home price growth of any year since 2011 when the housing market was nearing its trough following the Great Financial Crisis

• In fact, 2024’s growth was a full percentage point below the +4.4% growth seen in both 2014 and 2018, which were previously the lowest growth years in the past decade

• The modest uptick in December’s annual home price growth rate was a result of softer price gains in late 2023 rolling out of the backward-looking 12-month window, rather than a strengthening of prices in December

• On a seasonally adjusted basis, prices rose by 0.2% in the month, roughly equivalent November, and slightly below October, following the brief dip in 30-year rates to near 6% in the lead-up to the Fed’s 50 bps rate cut in September

• If current seasonally adjusted monthly gains persist, the annual home price growth rate is poised to begin cooling again in the early months of 2025

There is much more in the mortgage monitor including an extensive analysis of the financial impact of the California wildfires.

There is much more in the newsletter.

by Calculated Risk on 2/03/2025 10:17:00 AM

From the Census Bureau reported that overall construction spending increased:

Construction spending during December 2024 was estimated at a seasonally adjusted annual rate of $2,192.2 billion, 0.5 percent above the revised November estimate of $2,180.3 billion. The December figure is 4.3 percent above the December 2023 estimate of $2,101.3 billion.

The value of construction in 2024 was $2,154.4 billion, 6.5 percent above the $2,023.7 billion spent in 2023.
emphasis added

Private spending increased and public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $1,688.5 billion, 0.9 percent above the revised November estimate of $1,674.1 billion. ...

In December, the estimated seasonally adjusted annual rate of public construction spending was $503.6 billion, 0.5 percent below the revised November estimate of $506.2 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.

Private residential (red) spending is 4.2% below the peak in 2022.

Private non-residential (blue) spending is at a new peak.

Public construction spending is 0.6% below the peak in October 2024.

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

On a year-over-year basis, private residential construction spending is up 6.0%. Private non-residential spending is up 2.3% year-over-year. Public spending is up 4.3% year-over-year.

This was above consensus expectations and spending for the previous two months was revised up.

by Calculated Risk on 2/03/2025 10:00:00 AM

(Posted with permission). The ISM manufacturing index indicated expansion. The PMI® was at 50.9% in January, up from 49.2% in December. The employment index was at 50.3%, up from 45.4% the previous month, and the new orders index was at 55.1%, up from 52.1%.

From ISM: Manufacturing PMI® at 50.9% January 2025 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector expanded in January after 26 consecutive months of contraction, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The Manufacturing PMI® registered 50.9 percent in January, 1.7 percentage points higher compared to the seasonally adjusted 49.2 percent recorded in December. The overall economy continued in expansion for the 57th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index was in expansion territory for the third month after seven months of contraction, strengthening again to a reading of 55.1 percent, 3 percentage points higher than the seasonally adjusted 52.1 percent recorded in December. The January reading of the Production Index (52.5 percent) is 2.6 percentage points higher than December’s seasonally adjusted figure of 49.9 percent. The index returned to expansion after eight months in contraction. The Prices Index continued in expansion (or ‘increasing’) territory, registering 54.9 percent, up 2.4 percentage points compared to the reading of 52.5 percent in December. The Backlog of Orders Index registered 44.9 percent, down 1 percentage point compared to the 45.9 percent recorded in December. The Employment Index registered 50.3 percent, up 4.9 percentage points from December’s seasonally adjusted figure of 45.4 percent.
emphasis added

This suggests manufacturing expanded in January.  This was above the consensus forecast.

by Calculated Risk on 2/03/2025 08:11:00 AM

Altos reports that active single-family inventory was down 0.3% week-over-week.

Inventory always declines seasonally in the Winter and usually bottoms in late January or February. Inventory is now up 1.7% from the bottom three weeks ago. If three 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 27.7% compared to the same week in 2024 (last week it was up 26.5%), and down 22.2% compared to the same week in 2019 (last week it was down 23.0%). 

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 31st, inventory was at 635 thousand (7-day average), compared to 637 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube