by Calculated Risk on 10/24/2025 01:03:00 PM

The Cleveland Fed released the median CPI and the trimmed-mean CPI.

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% in August. The 16% trimmed-mean Consumer Price Index increased 0.2%. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. 

On a year-over-year basis, the median CPI rose 3.5% (down from 3.6% YoY in August), the trimmed-mean CPI rose 3.2% (down from 3.3%), and the CPI less food and energy rose 3.0% (down from 3.1%). 

Core PCE is for August was up 2.9% YoY, unchanged from 2.9% in July.  

by Calculated Risk on 10/24/2025 10:36:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: NMHC on Apartments: Market conditions "Soften" in Q3

Excerpt:

From the NMHC: Borrowing Conditions Continue to Improve While Most Respondents Report an Unchanged Market

Market Tightness Index (31) came in well below the breakeven level of 50 this round, indicating lower rent growth and higher vacancies compared to July, while the Sales Volume Index (59), Equity Financing Index (57), and Debt Financing Index (78) signaled improved market conditions.

“A softening labor market combined with high levels of new apartment supply is resulting in slowing rent growth in many parts of the country,” noted NMHC’s Chief Economist, Chris Bruen. “This continues to be most pronounced in sunbelt markets, many of which are currently seeing falling rents.”

“We’ve seen a modest decline in long-term interest rates over the past three months—the 10-Year Treasury Yield is currently down 28 basis points (bps) from July—resulting in improved conditions for debt financing and an uptick in apartment deal flow.”
...
• The Market Tightness Index came in at 31 this quarter, indicating looser market conditions. Only 9% of respondents thought market conditions were tighter compared to three months ago, 47% of respondents thought conditions had become looser, while 43% reported unchanged market conditions relative to July.

There is much more in the article.

by Calculated Risk on 10/24/2025 09:00:00 AM

With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2026.

From Social Security: Social Security Announces 2.8 Percent Benefit Increase for 2026

The Social Security Administration (SSA) announced today that Social Security benefits, including Old-Age, Survivors, and Disability Insurance (OASDI), and Supplemental Security Income (SSI) payments for 75 million Americans will increase 2.8 percent in 2026. On average, Social Security retirement benefits will increase by about $56 per month starting in January.
...
Other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) is slated to increase to $184,500 from $176,100.

Currently CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is a discussion from Social Security on the current calculation (2.8% increase) and a list of previous Cost-of-Living Adjustments.

The contribution and benefit base will be $184,500 in 2026.

The National Average Wage Index increased to $69,846.57 in 2024, up 4.84% from $66,621.80 in 2023 (used to calculate contribution base). 

by Calculated Risk on 10/24/2025 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in September, after rising 0.4 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.0 percent before seasonal adjustment. Note that September CPI data collection was completed before the lapse in appropriations.

The index for gasoline rose 4.1 percent in September and was the largest factor in the all items monthly increase, as the index for energy rose 1.5 percent over the month. The food index increased 0.2 percent over the month as the food at home index rose 0.3 percent and the food away from home index increased 0.1 percent.

The index for all items less food and energy rose 0.2 percent in September, after rising 0.3 percent in each of the 2 preceding months. Indexes that increased over the month include shelter, airline fares, recreation, household furnishings and operations, and apparel. The indexes for motor vehicle insurance, used cars and trucks, and communication were among the few major indexes that decreased in September.

The all items index rose 3.0 percent for the 12 months ending September, after rising 2.9 percent over the 12 months ending August. The all items less food and energy index also rose 3.0 percent over the last 12 months. The energy index increased 2.8 percent for the 12 months ending September. The food index increased 3.1 percent over the last year.
emphasis added

The change in CPI was slightly below expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 10/23/2025 08:17:00 PM

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

Friday:
• At 8:30 AM ET, The Consumer Price Index for September from the BLS. 

The consensus is for a 0.4% increase in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 3.1% year-over-year (up from 2.9% in August) and core CPI to be up 3.1% YoY (unchanged from 3.1% in August).

by Calculated Risk on 10/23/2025 02:49:00 PM

Hotel occupancy was weak over the summer months, due to less international tourism.  The fall months are mostly domestic travel and occupancy is still under pressure!

From STR: U.S. hotel results for week ending 18 October

The U.S. hotel industry reported mixed year-over-year comparisons, according to CoStar’s latest data through 18 October. ...

12-18 October 2025 (percentage change from comparable week in 2024):

• Occupancy: 68.5% (-2.4%)
• Average daily rate (ADR): US$173.14 (+1.7%)
• Revenue per available room (RevPAR): US$118.65 (-0.7%)
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 black is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking behind both last year and 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 decrease seasonally until early next year.

On a year-to-date basis, the only worse years for occupancy over the last 25 years were pandemic or recession years.

Here are some Hotel executive comments from a recent conference: 'Uncertainty is bad for business': Hotel executives express discontent with unpredictability

"What's tough on our industry always is uncertainty," said Joe Berger, president and CEO of BRE Hotels & Resorts. "It's been a tough year to navigate."

Leeny Oberg, chief financial officer and executive vice president of development at Marriott International, said there's frequently a new tariff announcement or comment made toward another country that is affecting the planning process. That process is very sequential, so the timing of some of these announcements can really throw off the execution of hotel projects midway through, she said.

"You've got all these people trying to make plans about their cutbacks and what they're trying to do with their properties, and it's literally every week or every day there's a new announcement. 'Oh, it's furniture today,' or, 'Oh, it's this country today.' From a planning perspective, it makes it extremely difficult," she said.

One of the larger subplots of the year has been the decline in Canadian travel to the U.S., due in large part to comments made from President Donald Trump on America's neighboring country. In August, Tourism Economics projected a 20.2% decline in Canadian travel to the U.S. on the year.

by Calculated Risk on 10/23/2025 11:04:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: NAR: Existing-Home Sales Increased to 4.06 million SAAR in September

Excerpt:

The fourth graph shows existing home sales by month for 2024 and 2025.

Sales were up 4.1% year-over-year compared to September 2024. This was the easiest year-over-year comparison.
...
On an NSA basis for the month of September, this was 11% above the low for housing bust for the month of September that happened in September 2010. Year-to-date, sales are down 0.2% NSA.

There is much more in the article.

by Calculated Risk on 10/23/2025 10:00:00 AM

From the NAR: NAR Existing-Home Sales Report Shows 1.5% Increase in September

Month-over-month

• 1.5% increase in existing-home sales – seasonally adjusted annual rate of 4.06 million in September

• 1.3% increase in unsold inventory – 1.55 million units equal to 4.6 months' supply

Year-over-year

• 4.1% increase in existing-home sales

• 2.1% increase in median existing-home sales price to $415,200
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1994.

Sales in September (4.06 million SAAR) were up 1.5% from the previous month and were up 4.1% compared to the September 2024 sales rate.  

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.55 million in September from 1.53 million the previous month.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 14.0% year-over-year (blue) in September compared to September 2024.

Months of supply (red) was unchanged at 4.6 months in September from 4.6 months the previous month.

I'll have more later. 

by Calculated Risk on 10/22/2025 07:49:00 PM

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

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. (WILL NOT BE RELEASED)

• At 8:30 AM, Chicago Fed National Activity Index for September. This is a composite index of other data.

• At 10:00 AM, Existing Home Sales for September from the National Association of Realtors (NAR). The consensus is for the NAR to report sales of 4.06 million SAAR. Last year, the NAR reported sales in September 2024 at 3.90 million SAAR. 

Housing economist Tom Lawler expects the NAR to report sales of 4.00 million SAAR for September.

• At 11:00 AM, Kansas City Fed Survey of Manufacturing Activity for October.<

by Calculated Risk on 10/22/2025 03:46:00 PM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment including multi-family residential.

From the AIA: ABI September 2025: Weakness persists at architecture firms

The AIA/Deltek Architecture Billings Index (ABI) score of 43.3 for the month is the softest reading since April and represents an increase in the share of firms reporting a decrease from August. In addition, inquiries into new projects remained flat for the second consecutive month, following growth over the summer, and the value of newly signed design contracts decreased for the 19th consecutive month. All of these indicators mean that the soft conditions that many architecture firms have been experiencing since late 2022 are likely to persist for the foreseeable future.

Recent revisions to work in the pipeline continue to erode as well. In the aftermath of the pandemic-induced downturn in 2020, architecture firm backlogs reached the highest levels we have seen since we started collecting that data regularly 15 years ago. Backlogs have gradually declined since the third quarter of 2022 and currently stand at an average of 6.1 months, down from 6.5 months at the beginning of the year. Backlogs are averaging just five months at firms with multifamily residential and commercial/industrial specializations, but stand at an average of eight months at firms with an institutional specialization. But despite the recent decrease in backlogs at firms, they still stand at levels nearly comparable to those before the pandemic.

Billings declined at firms in all regions of the country in September, except for firms located in the Midwest, where billings were essentially flat. Billings were softest at firms located in the West for the fourth consecutive month, where they have weakened the most over the last year. By firm specialization, business conditions were weakest at firms with an institutional specialization this month and continued to soften at firms with a commercial/industrial specialization, which reported conditions approaching growth over the summer.
...
The ABI serves as a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months.
emphasis added

• Northeast (43.8); Midwest (49.8); South (47.9); West (40.6)

• Sector index breakdown: commercial/industrial (46.6); institutional (44.3); multifamily residential (47.2)

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 43.3 in September, down from 47.2 in August.  Anything below 50 indicates a decrease in demand for architects' services.

This index has indicated contraction for 34 of the last 36 months.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment throughout 2025 and into 2026.

Multi-family billings have been below 50 for 38 consecutive months.  This suggests we will some further weakness in multi-family starts.