by Calculated Risk on 3/16/2025 06:29:00 PM

Weekend:
• Schedule for Week of March 16, 2025

• FOMC Preview

Monday:
• At 8:30 AM ET, Retail sales for February is scheduled to be released.  The consensus is for a 0.7% increase in retail sales.

• Also at 8:30 AM, The New York Fed Empire State manufacturing survey for March. The consensus is for a reading of -2.0, down from 5.7.

• At 10:00 AM, The March NAHB homebuilder survey. The consensus is for a reading of 43, up from 42.  Any number below 50 indicates that more builders view sales conditions as poor than good.

• Also at 10:00 AM, State Employment and Unemployment (Monthly) for January 2025

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 20 and DOW futures are down 123 (fair value).

Oil prices were unchanged over the last week with WTI futures at $67.18 per barrel and Brent at $70.58 per barrel. A year ago, WTI was at $82, and Brent was at $85 - so WTI oil prices are down about 18% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.02 per gallon. A year ago, prices were at $3.45 per gallon, so gasoline prices are down $0.43 year-over-year.

by Calculated Risk on 3/16/2025 09:56:00 AM

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 March and May meetings, with the next rate cut in June, and another cut later in the year.

From BofA:

The March FOMC meeting will likely be all about policy uncertainty. The Fed will almost certainly stay on hold, emphasizing patience over panic. QT will likely be paused. Markets could interpret the Fed’s message as hawkish because they are focused on downside risks to activity. But in our view, the “Powell put” is not forthcoming. The SEP forecasts and distribution of risks are both likely to reflect stagflation: weaker growth and higher inflation. The dot plot should still show two cuts in ’25 and ’26.
emphasis added

Projections will be released at this meeting. For review, here are the December projections.  

Since the last projections were released, economic growth was at expectations, the unemployment rate was close to expectations, and inflation was at expectations.  However, most forecasters are revising down 2025 GDP growth projections and revising up 2025 inflation projections. 

The BEA's second estimate for Q4 GDP showed real growth at 2.3% annualized.  That put real growth in 2024, Q4 over Q4, at 2.5% - at the top end of the December FOMC projections.   It appears growth will slow in Q1 2025, and it seems likely 2025 GDP will be revised down. 

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 February.  

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 January 2025, PCE inflation increased 2.5 percent year-over-year (YoY).  The projections for Q4 2025 PCE inflation might be revised up.

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 2.6 percent YoY in January and is expected to be up 2.7 percent YoY in February.  The projections for core PCE inflation Q4 2025 might be revised up.

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 3/15/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• The "Home ATM" Mostly Closed in Q4

• Q4 Update: Delinquencies, Foreclosures and REO

• Part 1: Current State of the Housing Market; Overview for mid-March 2025

• Part 2: Current State of the Housing Market; Overview for mid-March 2025

• 2nd Look at Local Housing Markets in February

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

by Calculated Risk on 3/15/2025 08:11:00 AM

The key reports this week are February Retail sales, Housing Starts and Existing Home Sales.

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

For manufacturing, the February Industrial Production report and the March NY and Philly Fed manufacturing surveys will be released.

----- Monday, March 17th -----
8:30 AM: Retail sales for February is scheduled to be released.  The consensus is for a 0.7% 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 New York Fed Empire State manufacturing survey for March. The consensus is for a reading of -2.0, down from 5.7.

10:00 AM: The March NAHB homebuilder survey. The consensus is for a reading of 43, up from 42.  Any number below 50 indicates that more builders view sales conditions as poor than good.

10:00 AM: State Employment and Unemployment (Monthly) for January 2025

----- Tuesday, March 18th -----
8:30 AM: Housing Starts for February.

This graph shows single and multi-family housing starts since 1968.

The consensus is for 1.383 million SAAR, up from 1.366 million SAAR.

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

This graph shows industrial production since 1967.

The consensus is a 0.3% increase in Industrial Production, and for Capacity Utilization to be unchanged at 77.8%.

----- Wednesday, March 19th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

During the day: The AIA's Architecture Billings Index for February (a leading indicator for commercial real estate).

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

2:00 PM: FOMC Projections. This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with updated economic projections.

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

----- Thursday, March 20th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 224 initial claims up from 220 thousand last week.

8:30 AM: the Philly Fed manufacturing survey for March. The consensus is for a reading of 12.0, down from 18.0.

10:00 AM: Existing Home Sales for February from the National Association of Realtors (NAR). The consensus is for 3.92 million SAAR, down from 4.08 million.

The graph shows existing home sales from 1994 through the report last month.

----- Friday, March 21st -----
No major economic releases scheduled.

by Calculated Risk on 3/14/2025 07:15:00 PM

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

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	673	765	≤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 2023.

Although weekly deaths met the original goal to stop posting in June 2023 (low of 314 deaths), I've continued to post since deaths are above the goal again - and I'll continue to post until weekly deaths are once again below the goal.

Weekly deaths are now decreasing following the winter pickup and only double the low last year.

And here is a graph I'm following concerning COVID in wastewater as of March 13th:

This appears to be a leading indicator for COVID hospitalizations and deaths.  This has moving down recently, but still double the low of last May.

Nationally COVID in wastewater is "Low", down from "High" four weeks ago, according to the CDC.   

by Calculated Risk on 3/14/2025 11:36:00 AM

From BofA:

Our 1Q GDP tracking remains unchanged at 1.9% q/q saar and our 4Q GDP tracking is down two tenths to 2.3% q/q saar since our last weekly publication. [Mar 14th]
emphasis added

From Goldman:

We lowered our Q1 GDP tracking estimate by 0.3pp to +1.3% last week. [Mar 10th estimate]

Atlanta Fed Economist Patrick Higgins put out a special note For GDP Forecasters, Some Gold Doesn't Glitter

We generally take a hands-off approach in updating and distributing our GDPNow model forecasts. With one exception, once a forecast quarter begins, the code of the model does not change. Any tweaks to the model are made at the beginning of the subsequent quarter.

The one exception was in spring 2020, when changes were made so that some monthly indicators showing steep declines early in the COVID-19 pandemic wouldn’t be treated as outliers and ignored as they normally would.

While not on that level, the unusual widening of the January trade deficit that led to much of GDPNow’s sharp decline on February 28, and the circumstances surrounding that decline, was also unprecedented in one respect. That is, as we now know from the March 6 full international trade report—but could only strongly suspect based on anecdotal and non-US government data until then—much of the widening of the trade deficit in January was due to an increase in nonmonetary gold imports from $13.2 billion in December to $32.6 billion in January. This accounted for nearly 60 percent of the widening of the goods trade deficit.

Although GDPNow does not distinguish gold from other imports, the Bureau of Economic Analysis does, in tallying up the total of the net exports, subaggregate within GDP. Removing gold from imports and exports leads to an increase in both GDPNow’s topline growth forecast and the contribution of net exports to that forecast, of about 2 percentage points. The topline growth forecasts also increased today—standard model -2.4 percent to -1.6 percent, “gold adjusted” model -0.4 percent to 0.4 percent—as data from today’s labor market report came in stronger than the model was expecting based on the limited February data the model received prior to that release.

The attached forecast tables include both the standard GDPNow forecast and the gold adjusted forecast. We will continue to update the standard GDPNow model through at least the end of the quarter but will add at least some occasional updates from the gold adjusted version as well.

The next update for GDPNow will be on March 17th. Currently the gold adjusted GDP tracking is 0.4% for Q1.

by Calculated Risk on 3/14/2025 08:28:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Q4 Update: Delinquencies, Foreclosures and REO

A brief excerpt:

This entire housing cycle I’ve argued that we would NOT see a surge in foreclosures that would significantly impact house prices (as happened following the housing bubble) for two key reasons: 1) mortgage lending has been solid, and 2) most homeowners have substantial equity in their homes.
...
This graph shows the nominal dollar value of Residential REO for FDIC insured institutions based on the Q4 FDIC Quarterly Banking Profile released this week. Note: The FDIC reports the dollar value and not the total number of REOs.

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) was increased 6% YOY from $747 million in Q4 2023 to $790 million in Q4 2024. This is still historically extremely low.

There is much more in the article.

by Calculated Risk on 3/13/2025 07:41:00 PM

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For February, Realtor.com reported inventory was up 27.5% YoY, but still down 22.9% compared to the 2017 to 2019 same month levels. 

 Now - on a weekly basis - inventory is up 27.8% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending March 8, 2025

• Active inventory increased, with for-sale homes 27.8% above year-ago levels

The number of homes for sale has now been higher than the previous year for 70 consecutive weeks. This continued rise in active inventory is in part due to less active buyers. With more choices available, buyers can afford to be more selective, putting pressure on sellers to price competitively.

• New listings—a measure of sellers putting homes up for sale—increased 8.3%

Newly listed inventory grew for the ninth consecutive week, signaling that sellers are gaining confidence in listing their homes despite persistently high mortgage rates. This week’s annual growth picked up compared to last week’s rather tepid measure.

Here is a graph of the year-over-year change in inventory according to realtor.com. 

Inventory was up year-over-year for the 70th consecutive week.  

New listings have increased recently but remain below typical pre-pandemic levels.

by Calculated Risk on 3/13/2025 03:55:00 PM

This will be something to watch. The Top 3 countries for tourist visits to the US in 2023 were:
1) Canada 31% in 2023
2) Mexico 22% in 2023
3) UK 6% in 2023

And it appears there has been a sharp decline in Canadians traveling to the U.S.   United Airlines CEO noted that their weaker outlook is due to a drop in traffic:

“We've already started the process of where that capacity is coming out.  A lot of it transborder, big drop in Canadian traffic to go into the U.S.”.

This could impact hotel occupancy in the U.S.

From STR: U.S. hotel results for week ending 8 March

The U.S. hotel industry reported mixed year-over-year comparisons, according to CoStar’s latest data through 8 March. ...

2-8 March 2025 (percentage change from comparable week in 2024):

• Occupancy: 62.4% (-1.4%)
• Average daily rate (ADR): US$160.53 (+2.1%)
• Revenue per available room (RevPAR): US$100.11 (+0.6%)
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 last year and is lower than the median rate for the period 2000 through 2024 (Blue).

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

The 4-week average will increase seasonally for the next several weeks.

by Calculated Risk on 3/13/2025 12:55:00 PM

Today, in the Calculated Risk Real Estate Newsletter: The "Home ATM" Mostly Closed in Q4

A brief excerpt:

During the housing bubble, many homeowners borrowed heavily against their perceived home equity - jokingly calling it the “Home ATM” - and this contributed to the subsequent housing bust, since so many homeowners had negative equity in their homes when house prices declined.
...
Here is the quarterly increase in mortgage debt from the Federal Reserve’s Financial Accounts of the United States - Z.1 (sometimes called the Flow of Funds report) released today. In the mid ‘00s, there was a large increase in mortgage debt associated with the housing bubble.

In Q4 2024, mortgage debt increased $100 billion, down from $105 billion in Q3, and down from the cycle peak of $459 billion in Q2 2021. Note the almost 7 years of declining mortgage debt as distressed sales (foreclosures and short sales) wiped out a significant amount of debt.

However, some of this debt is being used to increase the housing stock (purchase new homes), so this isn’t all Mortgage Equity Withdrawal (MEW).