by Calculated Risk on 12/09/2025 07:53:00 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 2:00 PM, FOMC Meeting Announcement. The Fed is expected to cut rates 25bp at this meeting.

• Also 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 12/09/2025 02:07:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: More on the “Neutral” Interest Rate (R*)

A brief excerpt:

From housing economist Tom Lawler:

Executive Summary: Policymakers and financial analysts looking for “models” as a guide for assessing the neutral interest rate are faced with a dilemma: various models produce significantly different results, and it is far from clear which if any model is the “most” accurate. While it is perhaps interesting to note that the average R* estimate from various models available within the Federal Reserve System is currently very close to “market-based” estimates based on TIPS forward rates adjusted for term prema estimates, that may simply be a coincidence.

However, if one takes the approach that the “best guess” estimate of R* is found by looking at the average of various models and the “market’s” assessment of R*, one would come to the conclusion that the current “best guess” estimate of the neutral real rate of interest is very close to 1.5%,

If that is the case, and if, as expected, the FOMC decides to cut its federal funds rate target by 25 bp tomorrow, then the resulting level of the federal funds rate will be very close to the neutral nominal policy rate.

There is much more in the article.

by Calculated Risk on 12/09/2025 11:57:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in November

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.

November sales will be mostly for contracts signed in September and October, and mortgage rates averaged 6.35% in September and 6.25% in October (lower than for closed sales in October).

In November, sales in these early reporting markets were down 10.8% YoY. Last month, in October, these same markets were down 2.3% year-over-year Not Seasonally Adjusted (NSA).

Important: There was one fewer working days in November 2025 (18) as in November 2024 (19). So, the year-over-year change in the headline SA data will be more than the change in NSA data (there are other seasonal factors).
...
This was just several early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 12/09/2025 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was unchanged at 7.7 million in October, the U.S. Bureau of Labor Statistics reported today. Over the month, both hires and total separations were little changed at 5.1 million. Within separations, both quits (2.9 million) and layoffs and discharges (1.9 million) were little changed.
emphasis added

The following graph shows job openings (black line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for October; the employment report to be released this coming Tuesday will be for November.

Click on graph for larger image.

Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

The spike in layoffs and discharges in March 2020 is labeled, but off the chart to better show the usual data.

Jobs openings increased in October to 7.67 million from 7.66 million in September.

The number of job openings (black) were up 1% year-over-year. 

Quits were down 9% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 12/08/2025 07:43:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Week Near 3 Month Highs

Both stocks and bonds lost ground on Monday. This pushed mortgage rates up near their highest levels in just over 3 months (because mortgages are based on bond prices). To put the 3-month highs in perspective, today's rates are right in line with those seen 2 weeks ago. [30 year fixed 6.36%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for November.

• At 10:00 AM, Job Openings and Labor Turnover Survey for October from the BLS.

by Calculated Risk on 12/08/2025 02:46:00 PM

From Dodge Data Analytics: Dodge Momentum Index Decreases 1% in November

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, decreased 1.1% in November to 276.8 (2000=100) from the downwardly revised October reading of 280.0. Over the month, commercial planning ticked down 0.1% and institutional planning declined by 3.4%. Year-to-date, the DMI is up 36% from the average reading over the same period in 2024.

“The influx of high-value data center work, compounded by inflationary cost pressures, continues to support elevated DMI levels,” stated Sarah Martin, Associate Director of Forecasting at Dodge Construction Network. “Overall, nonresidential construction is expected to strengthen in 2027, led primarily by data center and healthcare projects. Other nonresidential sectors are more likely to face softer demand and heightened macroeconomic risks.”

On the commercial side, activity slowed down for warehouses and hotels, while planning momentum was sustained for data centers, traditional office buildings and retail stores. On the institutional side, education, healthcare, public and recreational planning saw weaker momentum, after strong activity in recent months. Planning for religious buildings, however, continued to accelerate. Year-over-year, the DMI was up 50% when compared to November 2024. The commercial segment was up 57% (+36% when data centers are removed) and the institutional segment was up 37% over the same period.
...
The DMI is a monthly measure based on the three-month moving value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year to 18 months.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 276.8 in November, down from 280.0 the previous month.

According to Dodge, this index leads "construction spending for nonresidential buildings a full year to 18 months".  

Commercial construction is typically a lagging economic indicator.

by Calculated Risk on 12/08/2025 10:30:00 AM

Today, in the Real Estate Newsletter: December ICE Mortgage Monitor: Home Prices "Firmed" in November, Up 0.8% Year-over-year

Brief excerpt:

Inventory Impacts Prices

• About one-third of markets are seeing annual home price declines, while two-thirds are posting gains

• The Northeast and Midwest dominate growth, with 24 of the top 25 markets for annual price gains located there, while all 36 markets with annual declines are in the South and Westbr /> ...
• New Haven, Conn., leads with prices up +7.3% year-over-year, followed by Syracuse, N. Y. (+7.2%), and Scranton, Pa. (+6.9%). The largest declines are in parts of Florida, Texas, Colorado and California

• Markets are showing signs of rebalancing, with inventory improving in the Northeast and tightening in the South and West

• The 10 hottest markets saw monthly gains below their 12-month averages, hinting at cooler growth ahead, while 27 of 36 markets with annual declines posted adjusted price increases from October to November, signaling modest firming in late 2025
emphasis added

There is much more in the article.

by Calculated Risk on 12/08/2025 08:11:00 AM

Altos reports that active single-family inventory was down 2.7% week-over-week.  Inventory usually starts to decline in the fall and then declines sharply during the holiday season.

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 15.3% compared to the same week in 2024 (last week it was up 15.6%), and down 4.1% compared to the same week in 2019 (last week it was down 4.3%). 

Inventory started 2025 down 22% compared to 2019.  Inventory has closed most 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 December 5th, inventory was at 795 thousand (7-day average), compared to 817 thousand the prior week.  

Mike Simonsen discusses this data and much more regularly on YouTube

by Calculated Risk on 12/07/2025 06:20:00 PM

Weekend:
• Schedule for Week of December 7, 2025

Monday:
• No major economic releases scheduled.

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

Oil prices were up over the last week with WTI futures at $60.11 per barrel and Brent at $63.76 per barrel. A year ago, WTI was at $69, and Brent was at $74 - so WTI oil prices are down about 15% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.90 per gallon. A year ago, prices were at $2.97 per gallon, so gasoline prices are down $0.07 year-over-year.

by Calculated Risk on 12/07/2025 11:50:00 AM

Most analysts expect the FOMC to reduce the Fed Funds rate by 25bps at the meeting this week to a target range of 3-1/2 to 3-3/4 percent.    Market participants currently expect two additional rate cuts in 2026.

Analysis suggests rates are currently slightly restrictive (Cleveland Fed) or even already accommodative (even before this rate cut).  So, to cut rates in this environment, FOMC members are clearly expecting either inflation to decline quickly or an employment recession, or both.  This outlook should show up in the projections (lower inflation, higher unemployment rate).

From Goldman Sachs:

The FOMC is widely expected to deliver a third consecutive 25bp interest rate cut to 3.5-3.75% at what will likely be a contentious December meeting next week. ... The case for a cut is solid, in our view. Job growth remains too low to keep up with labor supply growth, the unemployment rate has risen for three months in a row to 4.4%, other measures of labor market tightness have weakened more on average, and some alternative data measures of layoffs have begun to rise recently, presenting a new and potentially more serious downside risk.

From BofA:

The Fed has signaled that it will cut rates by 25bp to 3.5-3.75% at its Dec meeting. We look for two or three substantive changes in the FOMC statement. The description of labor market conditions is likely to omit the language that the u-rate “remained low”, to reflect the 32bp uptick over the last three months.
...
The SEP is likely to show upgrades to growth in 2025 and 2026. ... However, as a mark-to-market based on the latest data, we think the u-rate for 4Q 2025 will be taken up by a tenth to 4.6%. ... These changes would provide some cover for cutting rates despite the expected upgrades to the growth outlook.
emphasis added

Projections will be released at this meeting. Here are the September projections.  

The BEA's estimate for first half 2025 GDP showed real growth at 1.6% annualized. Most estimates for Q3 GDP are around 3.5%.  That would put the real growth for the first three quarters at 2.2% annualized - well above the top end of the September projections.   So GDP for 2025 will likely be increased.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2025	2026	2027
Sept 2025	1.4 to 1.7	1.7 to 2.1	1.8 to 2.0
Jun 2025	1.2 to 1.5	1.5 to 1.8	1.7 to 2.0

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 4.4% in September.  The unemployment rate will likely increase further this year. There was no data for October due to the government shutdown, and the November report will be released on December 16th - the week after the FOMC meeting - so the FOMC is flying blind this week on the unemployment rate.  However, they will probably increase the 2025 projection (and possibly 2026) as justification for the rate cut.  An unemployment rate of 4.6% over the next few months might be recessionary (according to the Sahm rule).

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2025	2026	2027
Sept 2025	4.4 to 4.5	4.4 to 4.5	4.2 to 4.4
Jun 2025	4.4 to 4.5	4.3 to 4.6	4.2 to 4.6

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of September 2025, PCE inflation increased 2.8 percent year-over-year (YoY), up from 2.7 percent YoY in August.  Projections for PCE inflation will probably remain unchanged or lowered slightly.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2025	2026	2027
Sept 2025	2.9 to 3.0	2.4-2.7	2.0 to 2.2
Jun 2025	2.8 to 3.2	2.3-2.6	2.0 to 2.2

PCE core inflation increased 2.8 percent YoY, down from 2.9 percent in August.   Projections for 2025 core PCE inflation will likely be decreased.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2025	2026	2027
Sept 2025	3.0 to 3.2	2.5-2.7	2.0 to 2.2
Jun 2025	2.9 to 3.4	2.3-2.6	2.0 to 2.2