by Calculated Risk on 9/17/2025 07:00:00 AM

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

Mortgage applications increased 29.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 12, 2025. Last week’s results included an adjustment for the Labor Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 29.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 43 percent compared with the previous week. The Refinance Index increased 58 percent from the previous week and was 70 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 12 percent compared with the previous week and was 20 percent higher than the same week one year ago.

“Indicative of the weakening job market, and in anticipation of a rate cut from the Federal Reserve, mortgage rates last week dropped to their lowest level since last October, with the 30-year fixed rate declining to 6.39 percent. Homeowners responded swiftly, with refinance application volume jumping almost 60 percent compared to the prior week,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Homeowners with larger loans jumped first, as the average loan size on refinances reached its highest level in the 35-year history of our survey. Almost 60 percent of applications were for refinances, but there was also a pickup in purchase applications.”

Added Fratantoni, “Even as 30-year fixed rates reached their lowest level in almost a year, more borrowers, and particularly more refinance borrowers, opted for adjustable-rate loans, with the ARM share reaching its highest level since 2008. Notably, ARMs typically have initial fixed terms of five, seven, or ten years, so those loans do not pose the risk of early payment shock that pre-2008 ARMs did. Borrowers who do opt for an ARM are seeing rates about 75 basis points lower than for 30-year fixed rate loans.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.39 percent from 6.49 percent, with points decreasing to 0.54 from 0.56 (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 20% 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 has increased significantly from the bottom as mortgage rates declined.

by Calculated Risk on 9/16/2025 07:50:00 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 8:30 AM, Housing Starts for August. The consensus is for 1.375 million SAAR, down from 1.428 million SAAR.

• At 2:00 PM: FOMC Meeting Announcement. The Fed is expected to cut rates 25bp at this meeting.

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

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

by Calculated Risk on 9/16/2025 10:00:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 32, unchanged from 32 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Steady but Future Sales Expectations Hit Six-Month High

Builder sentiment levels remained unchanged in September but lower mortgage rates and expectations that the Federal Reserve will soon cut the federal funds rate led to higher future sale expectations in the coming months.

Builder confidence in the market for newly built single-family homes was 32 in September, unchanged from the August reading, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. While builder sentiment has hovered at a relatively low reading between 32 and 34 since May, builders expressed optimism that a more favorable interest rate climate could bring hesitant buyers off the sidelines in the final quarter of 2025.

“While builders continue to contend with rising construction costs, a recent drop in mortgage interest rates over the past month should help spur housing demand,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C.

“NAHB expects the Fed to cut the federal funds rate at their meeting this week, which will help lower interest rates for builder and developer loans,” said NAHB Chief Economist Robert Dietz. “Moreover, the 30-year fixed rate mortgage average is down 23 basis points over the past four weeks to 6.35%, per Freddie Mac. This is the lowest level since mid-October of last year and a positive sign for future housing demand.”

In a sign that the housing market remains soft, the latest HMI survey also revealed that 39% of builders reported cutting prices in September, up from 37% in August and the highest percentage in the post-Covid period. Meanwhile, the average price reduction was 5% in September, the same as it’s been every month since last November. The use of sales incentives was 65% in September, essentially unchanged from 66% in August.
...
The HMI index gauging future sales expectations in September rose two points to 45, the highest reading since March of this year. The component measuring current sales conditions held steady at 34 while the gauge charting traffic of prospective buyers posted a one-point decline to 21.

Looking at the three-month moving averages for regional HMI scores, the Northeast was unchanged at 44, the Midwest gained one point to 42, the South held steady at 29 and the West increased one point to 26.
emphasis added

Click on graph for larger image.

This graph shows the NAHB index since Jan 1985.

This was below the consensus forecast.

by Calculated Risk on 9/16/2025 09:15:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production (IP) ticked up 0.1 percent in August after decreasing 0.4 percent in July. Manufacturing output rose 0.2 percent in August after edging down 0.1 percent in July. Within manufacturing, the production of motor vehicles and parts increased 2.6 percent in August, while factory output elsewhere edged up 0.1 percent. The index for mining moved up 0.9 percent, and the index for utilities decreased 2.0 percent. At 103.9 percent of its 2017 average, total IP in August was 0.9 percent above its year-earlier level. Capacity utilization maintained the same rate of 77.4 percent in August, a rate that is 2.2 percentage points below its long-run (1972–2024) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and close to the level in February 2020 (pre-pandemic).

Capacity utilization at 77.4% is 2.2% below the average from 1972 to 2023.  This was at consensus expectations.

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

The second graph shows industrial production since 1967.

Industrial production increased to 103.9. This is above the pre-pandemic level.

Industrial production was slightly below consensus expectations (with revisions).

by Calculated Risk on 9/16/2025 08:30:00 AM

On a monthly basis, retail sales increased 0.6% from July to August (seasonally adjusted), and sales were up 5.0 percent from August 2024.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for August 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $732.0 billion, up 0.6 percent from the previous month, and up 5.0 percent from August 2024. ... The June 2025 to July 2025 percent change was revised from up 0.5 percent to up 0.6 percent.
emphasis added

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline was up 0.6% in August.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by 5.4% on a YoY basis.

The change in sales in August were above expectations and the previous two months were revised up.

by Calculated Risk on 9/15/2025 07:53:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Week at Another Long-Term Low

Mortgage rates have done almost nothing but move lower over the past 4 months. The first Fridays in August and September account for about half of the total drop thanks to weaker results in the jobs report.

Since the September 5th jobs report, rates have held a sideways-to-slightly lower range that's resulted in several additional "lowest since" headlines. There's nothing special about today in that regard. Bonds (which dictate rates) happened to improve, so rates inched to another 11+ month low.

Today's levels aren't appreciably different than last Friday's. Volatility is a bigger risk over the next two days thanks to economic data tomorrow morning and the Fed announcement on Wednesday. [30 year fixed 6.25%]
emphasis added

Tuesday:
• At 8:30 AM ET, Retail sales for August will be released.  The consensus is for a 0.3% increase in retail sales.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for August. The consensus is for no change in Industrial Production, and for Capacity Utilization to decrease to 77.4%.

• At 10:00 AM, The September NAHB homebuilder survey. The consensus is for a reading of 33, up from 32 in August. Any number below 50 indicates that more builders view sales conditions as poor than good.

by Calculated Risk on 9/15/2025 02:41:00 PM

With unemployment increasing, but not quite recessionary, I'm reminded of a post I wrote in May 2011: Employment: A dirty little secret

[I]t really isn't much of a secret that Wall Street and corporate America like the unemployment rate to be a little high. But it is "dirty" in the sense that it is unspoken. Higher unemployment keeps wage growth down, and helps with margins and earnings - and higher unemployment also keeps the Fed on the sidelines. Yes, corporations like to see job growth, so people have enough confidence to spend (and they can have a few more customers). And they definitely don't want to see Depression era unemployment - but a slowly declining unemployment rate (even at 9%) with some job growth is considered OK.

And from others, like Kash Mansori, also in 2011: Why a Bad Job Market is Good News for Some

[T]his opens up an interesting line of reasoning, one that is certainly not new but which this data reminds us of. If a bad labor market means that workers get a smaller share of the productivity they bring to their employers, then the owners of companies will have a strong preference for a weak labor market. Firms don't like recessions, of course -- it's hard to make money when your sales are falling. But companies do enjoy the way that a very slow recovery in the job market can allow them to keep wages down, and thus keep a larger share of the output of their workers for themselves.

And from Paul Krugman in 2013: The Plight of the Employed

And may I suggest that employers, although they’ll never say so in public, like this situation? That is, there’s a significant upside to them from the still-weak economy. I don’t think I’d go so far as to say that there’s a deliberate effort to keep the economy weak; but corporate America certainly isn’t feeling much pain, and the plight of workers is actually a plus from their point of view.

Back then we had high, but a slowly declining unemployment rate. Now we have a low but slowly increasing unemployment rate. This is bad news for those losing their jobs, or those looking for jobs, or on the cusp of becoming unemployed. But this is a positive for corporate America (as long as we avoid a recession).

by Calculated Risk on 9/15/2025 10:43:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 2nd Look at Local Housing Markets in August

A brief excerpt:

Tracking local data gives an early look at what happened the previous month and also reveals regional differences in both sales and inventory.

August sales will be mostly for contracts signed in June and July, and mortgage rates averaged 6.82% in June and 6.72% in July (somewhat lower than for closed sales in July).

In August, sales in these early reporting markets were down 5.0% YoY. Last month, in July, these same markets were up 0.5% year-over-year Not Seasonally Adjusted (NSA).

Important: There were one fewer working days in August 2025 (21) as in August 2024 (22). So, the year-over-year change in the headline SA data will be more than the NSA data (there are other seasonal factors).
...
Many more local markets to come!

There is much more in the article.

by Calculated Risk on 9/15/2025 08:11:00 AM

Altos reports that active single-family inventory was up 1.6% week-over-week.  Inventory usually starts to decline in the fall and then declines sharply during the holiday season.

Inventory is now up 37.8% from the seasonal bottom in January.   Usually, inventory is up about 20.5% from the seasonal low by this week in the year.   So, 2025 saw a larger than normal increase 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 20.5% compared to the same week in 2024 (last week it was up 20.4%), and down 9.8% compared to the same week in 2019 (last week it was down 10.6%). 

Inventory started 2025 down 22% compared to 2019.  Inventory has closed some of that gap, but it appears inventory will still be below 2019 levels at the end of 2025.

This second inventory graph is courtesy of Altos Research.

As of September 12th, inventory was at 860 thousand (7-day average), compared to 847 thousand the prior week. 

Mike Simonsen discusses this data and much more regularly on YouTube

by Calculated Risk on 9/14/2025 09:29:00 PM

Weekend:
• Schedule for Week of September 14, 2025

• FOMC Preview: 25bps Rate Cut Expected

Monday:
• At 8:30 AM ET, The New York Fed Empire State manufacturing survey for September. The consensus is for a reading of 4.0, down from 11.9.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 9 and DOW futures are up 82 (fair value).

Oil prices were up over the last week with WTI futures at $62.93 per barrel and Brent at $67.21 per barrel. A year ago, WTI was at $70, and Brent was at $74 - so WTI oil prices are down about 10% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.12 per gallon. A year ago, prices were at $3.15 per gallon, so gasoline prices are down $0.03 year-over-year.