by Calculated Risk on 5/28/2025 10:00:00 AM

The FDIC released the Quarterly Banking Profile for Q1 2025:

Net Income Increased from the Prior Quarter, Led by Higher Noninterest Income
Quarterly net income for the 4,462 FDIC-insured commercial banks and savings institutions totaled $70.6 billion, up $3.8 billion (5.8 percent) from the prior quarter. The banking industry reported an aggregate return on assets of 1.16 percent in first quarter 2025, up from 1.11 percent in fourth quarter 2024 and up from 1.09 percent in the year-ago quarter. The quarterly increase in net income was led by higher noninterest income (up $5.4 billion, or 7 percent). Gains in noninterest income were due to market movements and volatility as several large firms reported mark-to-market gains on certain financial instruments in the quarter. Industry noninterest income also benefited from other one-time items, such as gains on loan sales. Lower losses on the sale of securities also contributed to the increase in net income.
...
Asset Quality Metrics Remained Generally Favorable, Though Weakness in Certain Portfolios Persisted
Past-due and nonaccrual (PDNA) loans, or loans that are 30 or more days past due or in nonaccrual status, fell 1 basis point from the prior quarter to 1.59 percent of total loans. The industry’s PDNA ratio is still below the pre-pandemic average of 1.94 percent. While banks reported quarterly decreases in PDNA credit card loans (down $2.7 billion, or 9 basis points to 3.22 percent) and auto loans (down $2.6 billion, or 48 basis points to 2.84 percent), weaknesses persisted in certain portfolios. The PDNA rate for commercial real estate (CRE) loan portfolios is the highest it has been since fourth quarter 2014 at 1.49 percent. Multifamily CRE PDNAs have grown the most in the past year, up 88 basis points to 1.47 percent.

The industry’s net charge-off rate decreased 3 basis points to 0.67 percent from the prior quarter and is 1 basis point higher than the year-ago quarter and 19 basis points above the pre-pandemic average. Most portfolios have net charge-off rates above their pre-pandemic averages including credit card loans, which are 123 basis points above the pre-pandemic average at 4.71 percent.
emphasis added

Click on graph for larger image.

From the FDIC:

The Number of Problem Banks Decreased in the First Quarter
The number of banks on the FDIC’s “Problem Bank List” decreased by a net of three in the first quarter to 63 banks. The number of problem banks represented 1.4 percent of total banks in the first quarter, which is in the middle of the normal range for non-crisis periods of 1 to 2 percent of all banks.

This graph from the FDIC shows the number of problem banks.

by Calculated Risk on 5/28/2025 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 23, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 37 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 18 percent higher than the same week one year ago.

“Mortgage rates reached its highest level since January, following higher Treasury yields. Additional market volatility has added to the increase, keeping the mortgage-Treasury spread wider than it was earlier this year. The 30-year fixed rate increased to 6.98 percent, its third consecutive weekly increase,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result of these higher rates, applications activity decreased, driven by a 7 percent decline in refinance applications. Conventional refinances were down 6 percent, and VA refinances dropped 16 percent. Purchase applications were up over the week and continue to run ahead of last year's pace as increased housing inventory in many markets has been supporting some transaction volume, despite the economic uncertainty.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.98 percent from 6.92 percent, with points decreasing to 0.67 from 0.69 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 18% year-over-year unadjusted. 

Red is a four-week average (blue is weekly).  

Purchase application activity is still depressed, but above the lows of October 2023 and is 7% above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index decreased and remained very low.

by Calculated Risk on 5/27/2025 07:17:00 PM

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

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

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for May.

2:00 PM, FOMC Minutes, Minutes Meeting of May 6-7, 2025

by Calculated Risk on 5/27/2025 01:10:00 PM

Another update ... a few key points:
1) There is a clear seasonal pattern for house prices.
2) The surge in distressed sales during the housing bust distorted the seasonal pattern.  This was because distressed sales (at lower price points) happened at a steady rate all year, while regular sales followed the normal seasonal pattern.  This made for larger swings in the seasonal factor during the housing bust.

3) The seasonal swings have increased recently without a surge in distressed sales.

Click on graph for larger image.

This graph shows the month-to-month change in the NSA Case-Shiller National index since 1987 (through March 2025). The seasonal pattern was smaller back in the '90s and early '00s and increased once the bubble burst.

The seasonal swings declined following the bust, however the pandemic price surge changed the month-over-month pattern.

The second graph shows the seasonal factors for the Case-Shiller National index since 1987. The factors started to change near the peak of the bubble, and really increased during the bust since normal sales followed the regular seasonal pattern - and distressed sales happened all year.   

The swings in the seasonal factors were decreasing following the bust but have increased again recently - this time without a surge in distressed sales.

by Calculated Risk on 5/27/2025 09:52:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 3.4% year-over-year in March

Excerpt:

S&P/Case-Shiller released the monthly Home Price Indices for March ("March" is a 3-month average of January, February and March closing prices). January closing prices include some contracts signed in November, so there is a significant lag to this data. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The MoM decrease in the seasonally adjusted (SA) Case-Shiller National Index was at -0.30% (a -3.5% annual rate), This was the first MoM decrease since January 2023.

On a seasonally adjusted basis, prices increased month-to-month in just 6 of the 20 Case-Shiller cities. San Francisco has fallen 6.3% from the recent peak, Tampa is down 2.6% from the peak, and Denver down 1.9%.

by Calculated Risk on 5/27/2025 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for March ("March" is a 3-month average of January, February and March closing prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

From S&P S&P CoreLogic Case-Shiller Index Records 3.4% Annual Gain in March 2025

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.4% annual return for March, down from a 4% annual gain in the previous month. The 10-City Composite saw an annual increase of 4.8%, down from a 5.2% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.1%, down from a 4.5% increase in the previous month. New York again reported the highest annual gain among the 20 cities with an 8% increase in March, followed by Chicago and Cleveland with annual increases of 6.5% and 5.9%, respectively. Tampa posted the lowest return, falling 2.2%.
...
The pre-seasonally adjusted U.S. National, 10-City Composite, and 20-City Composite Indices saw slight upward trends in March, posting gains of 0.8%, 1.2%, and 1.1%, respectively.

After seasonal adjustment, the U.S. National Index posted a decrease of -0.3%. The 10-City Composite Index recorded a 0.01% increase and the 20-City Composite Index presented a -0.1% decrease.

“Home price growth continued to decelerate on an annual basis in March, even as the market experienced its strongest monthly gains so far in 2025,” said Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices. “This divergence between slowing year-over-year appreciation and renewed spring momentum highlighted how the housing market shifted from mere resilience to a broader seasonal recovery. Limited supply and steady demand drove prices higher across most metropolitan areas, despite affordability challenges remaining firmly in place."
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index was up 0.01% in March (SA).  The Composite 20 index was down 0.1% (SA) in March.

The National index was down 0.3% (SA) in March.

The second graph shows the year-over-year change in all three indices.

The Composite 10 NSA was up 4.8% year-over-year.  The Composite 20 NSA was up 4.1% year-over-year.

The National index NSA was up 3.4% year-over-year.

Annual price changes were lower than expectations.  I'll have more later.

by Calculated Risk on 5/26/2025 06:48:00 PM

Weekend:
• Schedule for Week of May 25, 2025

Tuesday:
• At 8:30 AM ET, Durable Goods Orders for April from the Census Bureau. The consensus is for a 7.8% decrease in durable goods orders.

• At 9:00 AM, S&P/Case-Shiller House Price Index for March.  The consensus is for the Case-Shiller 20-City Composite Index to increase 4.5% YoY, unchanged from 4.5% YoY in February.

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

• At 10:00 AM, Dallas Fed Survey of Manufacturing Activity for May.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 63 and DOW futures are up 402 (fair value).

Oil prices were down over the last week with WTI futures at $61.46 per barrel and Brent at $64.72 per barrel. A year ago, WTI was at $78, and Brent was at $79 - so WTI oil prices are down about 21% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.13 per gallon. A year ago, prices were at $3.56 per gallon, so gasoline prices are down $0.43 year-over-year.

by Calculated Risk on 5/26/2025 12:44:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Final Look at Local Housing Markets in April and a Look Ahead to May Sales

A brief excerpt:

After the National Association of Realtors® (NAR) releases the monthly existing home sales report, I pick up additional local market data that is reported after the NAR. This is the final look at local markets in April.

There were several key stories for April:

• Sales NSA are down YoY through April, and sales last year were the lowest since 1995! Ouch.

• Sales SA were down YoY for the 3rd consecutive month and 40 of the last 44 months.

• Months-of-supply is at the highest level since 2016 (excluding one month near the start of the pandemic).

• The median price is barely up YoY, and with the increases in inventory, some regional areas will see more price declines.

Sales at 4.00 million on a Seasonally Adjusted Annual Rate (SAAR) basis were below the consensus estimate; however, housing economist Tom Lawler’s estimate was very close (as usual).

Sales averaged close to 5.4 million SAAR for the month of April in the 2017-2019 period. So, sales are about 26% below pre-pandemic levels.

Also, months-of-supply for April was above pre-pandemic levels for the period 2017-2019 and the highest for April since 2016.
...
Here is a look at months-of-supply using NSA sales. Since this is NSA data, it is likely months-of-supply will increase over the next few months.

Months in red are areas that are seeing 5+ months of supply now and might see price pressures later this summer.
...
More local data coming in June for activity in May!

There is much more in the article.

by Calculated Risk on 5/26/2025 10:29:00 AM

Memorial Day is about remembering those that in the words of Abraham Lincoln, “gave the last full measure of devotion” in defending our nation so “that this government of the people, by the people, for the people, shall not perish from the earth”.

Today I’m thinking of my distant relative, James Hoey (Jan 14, 1842 – Aug 13, 1864) who fought for the Union during the Civil War and gave the ultimate sacrifice at the age of 22. Thank you, James!

My family has fought in every major American war. For example, my 4th Great Grandfather, William Marks (1749 – 1824) fought in the revolutionary war. His son, my 3rd Great Grandfather, William Marks, Jr. was a Brigadier General during the war of 1812 – and went on the serve as a U.S. Senator from the State of Pennsylvania.

We must also remember what they all fought for: America’s core value is the rule of law rooted in the U.S. Constitution. We are a Nation of Laws, not of men.  

by Calculated Risk on 5/26/2025 08:11:00 AM

Altos reports that active single-family inventory was up 2.6% week-over-week.

Inventory is now up 26.0% from the seasonal bottom in January and is increasing.  

Usually, inventory is up about 15% from the seasonal low by this week in the year.   So, 2025 is seeing a larger than normal pickup in inventory.

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 2025.  The black line is for 2019.  

Inventory was up 32.4% compared to the same week in 2024 (last week it was up 32.7%), and down 15.6% compared to the same week in 2019 (last week it was down 15.6%). 

This is the highest level since 2019.

It now appears inventory will be close to 2019 levels towards the end of 2025.

This second inventory graph is courtesy of Altos Research.

As of May 23rd, inventory was at 787 thousand (7-day average), compared to 767 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube