by Calculated Risk on 8/28/2025 04:48:00 PM

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

Excerpt:

Freddie Mac reported that the Single-Family serious delinquency rate in July was 0.55%, unchanged from 0.55% June. Freddie's rate is up year-over-year from 0.51% in July 2024, 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 July was 0.53%, unchanged from 0.53% in June. The serious delinquency rate is up year-over-year from 0.49% in July 2024, 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 8/28/2025 12:20:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 2.5% Below 2022 Peak

Excerpt:

It has been 19 years since the housing bubble peak, ancient history for many readers!

In the June Case-Shiller house price index released Tuesday, the seasonally adjusted National Index (SA), was reported as being 77% above the bubble peak. However, in real terms, the National index (SA) is about 10.0% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is 1.4% above the bubble peak.

People usually graph nominal house prices, but it is also important to look at prices in real terms. As an example, if a house price was $300,000 in January 2010, the price would be $443,000 today adjusted for inflation (48% increase). That is why the second graph below is important - this shows "real" prices.

The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the Case-Shiller National Index.
...
The second graph shows the same two indexes in real terms (adjusted for inflation using CPI).

In real terms (using CPI), the National index is 2.5% below the recent peak, and the Composite 20 index is 2.7% below the recent peak in 2022.

Both the real National index and the Comp-20 index decreased in June.

It has now been 37 months since the real peak in house prices. Typically, after a sharp increase in prices, it takes a number of years for real prices to reach new highs (see House Prices: 7 Years in Purgatory)

There is much more in the article!

by Calculated Risk on 8/28/2025 10:00:00 AM

From the NAR: NAR Pending Home Sales Report Shows 0.4% Decrease in July

Pending home sales decreased by 0.4% in July from the prior month and rose 0.7% year-over-year, according to the National Association of REALTORS® Pending Home Sales report. ...

Month-Over-Month
0.4% decrease in pending home sales
Declines in the Midwest and Northeast; essentially flat in the South; gains in the West

Year-Over-Year
0.7% increase in pending home sales
Increase in Midwest and South; decline in Northeast and West
emphasis added

Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in August and September.

by Calculated Risk on 8/28/2025 08:35:00 AM

From the BEA: Gross Domestic Product, 2nd Quarter 2025 (Second Estimate) and Corporate Profits (Preliminary)

Real gross domestic product (GDP) increased at an annual rate of 3.3 percent in the second quarter of 2025 (April, May, and June), according to the second estimate released by the U.S. Bureau of Economic Analysis. In the first quarter, real GDP decreased 0.5 percent.

The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending. These movements were partly offset by decreases in investment and exports.

Real GDP was revised up 0.3 percentage point from the advance estimate, primarily reflecting upward revisions to investment and consumer spending that were partly offset by a downward revision to government spending and an upward revision to imports.
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was revised up from 1.4% to 1.6%. Residential investment was revised down from -4.6% to -4.7%.

by Calculated Risk on 8/28/2025 08:30:00 AM

The DOL reported:

In the week ending August 23, the advance figure for seasonally adjusted initial claims was 229,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 235,000 to 234,000. The 4-week moving average was 228,500, an increase of 2,500 from the previous week's revised average. The previous week's average was revised down by 250 from 226,250 to 226,000.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 228,500.

The previous week was revised down.

Weekly claims were below the consensus forecast.

by Calculated Risk on 8/27/2025 07:53:00 PM

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

Thursday:
• At 8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for initial claims to increase to 236 thousand from 235 thousand last week.

• Also at 8:30 AM: Gross Domestic Product, 2nd Quarter 2025 (Second Estimate) and Corporate Profits (Preliminary). The consensus is that real GDP increased 3.0% annualized in Q1, unchanged from the advance estimate.

• At 10:00 AM: Pending Home Sales Index for July.  The consensus is for a 0.3% increase in this index.

• At 11:00 AM: the Kansas City Fed manufacturing survey for August. This is the last of the regional Fed manufacturing surveys for August.

by Calculated Risk on 8/27/2025 01:16:00 PM

Two weeks ago I wrote The Next Financial Crisis. I noted:

The key to preventing a financial crisis is to keep the non-regulated (or poorly regulated) areas of finance out of the financial system.

Currently the most obvious non-regulated area of finance is cryptocurrency. And that leaves us with two choices to prevent this "financial rat poison" from leading to another financial crisis:

1. Keep crypto out of the financial system, or

2. Regulate crypto.

Keeping crypto out of the financial system could range from banning it outright, to just prohibiting financial institutions from holding or lending against crypto holdings (including mortgage lending). Unfortunately, the current administration has embraced crypto.

Regulation is the alternative. If crypto is an "asset", then it should be registered with the SEC (with quarterly filings). If it is a currency, the issuer should also be required to register with the SEC and provide quarterly updates on the amount in circulation, the mechanics of the scheme, and list all the backing assets. Then lenders could be allowed to the lend up to a percent of the backing assets.

For example, for Bitcoin, the original issuer should file quarterly with the SEC. If the backing assets amount to $0.01 per coin (just a guess), then lenders could lend up to a percentage of $0.01 for each Bitcoin.

These are the two choices to avoid a financial crisis.  

by Calculated Risk on 8/27/2025 10:00:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Final Look at Local Housing Markets in July and a Comment on July Sales from Tom Lawler

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 July.

There were several key stories for July:

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

• Sales SAAR (seasonally adjusted annual rate) have bounced around 4 million for the last 2 1/2 years.

• Months-of-supply is above pre-pandemic levels (this is the highest level for July since 2016).

• The median price is barely up YoY, and with the increases in inventory, some regional areas will see more price declines - and we might see national price declines later this year (or in 2026)

Sales at 4.01 million on a Seasonally Adjusted Annual Rate (SAAR) basis were slightly above the consensus estimate.

Sales averaged close to 5.40 million SAAR for the month of July in the 2017-2019 period. So, sales are about 26% below pre-pandemic levels.
...
In July, sales in these markets were down 0.6% YoY NSA. Last month, in June, these same markets were also up 4.9% YoY Not Seasonally Adjusted (NSA). The NAR reported sales in July were down 0.5% YoY NSA, so this sample is very close.

Important: There were the same number of working days in July 2025 (22) as in July 2024 (22). So, the year-over-year change in the headline SA data was similar to the NSA data.
...
More local data coming in September for activity in August!

There is much more in the article.

by Calculated Risk on 8/27/2025 07:00:00 AM

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

Mortgage applications decreased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 22, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.5 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 4 percent from the previous week and was 19 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index decreased 0.1 percent compared with the previous week and was 25 percent higher than the same week one year ago.

“Mortgage rates inched higher for the second straight week, with the 30-year fixed-rate up to 6.69 percent. While this was not a significant increase, it was enough to cause a pullback in refinance applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications had their strongest week in over a month, up 2 percent, and the average loan size increased to its highest level in two months at $433,400. Prospective buyers appear to be less sensitive to rates at these levels and are more active, bolstered by more inventory and cooling home-price growth in many parts of the country.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.69 percent from 6.68 percent, with points remaining unchanged at 0.60 (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 25% 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 slightly above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index decreased after picking up a little recently with lower mortgage rates.

by Calculated Risk on 8/26/2025 07:54:00 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.