by Calculated Risk on 12/29/2025 10:00:00 AM

From the NAR: NAR Pending Home Sales Report Shows 3.3% Increase in November

Pending home sales in October increased by 1.9% from the prior month and fell 0.4% year over year, according to the National Association of REALTORS® Pending Home Sales Report. ...

Month-Over-Month
3.3% increase in pending home sales
Gains in all four regions

Year Over Year
2.6% increase in pending home sales
Gains in all four regions
emphasis added

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

by Calculated Risk on 12/29/2025 08:11:00 AM

Altos reports that active single-family inventory was down 2.9% week-over-week.  

Note that Inventory usually bottoms seasonally in January or February.

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 13.1% compared to the same week in 2024 (last week it was up 13.5%), and down 6.0% compared to the same week in 2019 (last week it was down 5.7%). 

Inventory started 2025 down 22% compared to 2019.  Inventory and closed most of that gap, however inventory was still down 6% compared to 2019 at the end of the year.

This second inventory graph is courtesy of Altos Research.

As of December 26th, inventory was at 736 thousand (7-day average), compared to 758 thousand the prior week.  

Mike Simonsen discusses this data and much more regularly on YouTube

by Calculated Risk on 12/28/2025 06:20:00 PM

Weekend:
• Schedule for Week of December 28, 2025

• Question #6 for 2026: What will the Fed Funds rate be in December 2026?

Monday:
• At 10:00 AM ET, Pending Home Sales Index for November. The consensus is for a 1.0% increase in the index.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for December. This is the last of regional manufacturing surveys for December.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 1 and DOW futures are up 28 (fair value).

Oil prices were down over the last week with WTI futures at $57.02 per barrel and Brent at $61.03 per barrel. A year ago, WTI was at $71, and Brent was at $74 - so WTI oil prices are down about 20% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.76 per gallon. A year ago, prices were at $2.98 per gallon, so gasoline prices are down $0.22 year-over-year.

by Calculated Risk on 12/28/2025 08:11:00 AM

Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2026. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I posted thoughts on those in the newsletter (others like GDP and employment will be on this blog).

I'm adding some thoughts and predictions for each question.

Here is a review of the Ten Economic Questions for 2025.

6) Monetary Policy:  The FOMC cut the federal funds rate three times in 2025 from "4-1/4 to 4-1/2 percent" at the beginning of 2025, to "3-1/2 to 3-3/4" at the end of the year. The mid-range on the "dot plot" suggests many FOMC participants expect around one to two 25 bp rate cuts in 2026.  What will the Fed Funds rate be in December 2026?

As of December, looking at the "dot plot", the FOMC participants see the following number of rate moves in 2026:

25 bp Rate Moves	FOMC Members 2026
One Rate Hike	3
No Change	4
One Rate Cut	4
Two Rate Cuts	4
Three Rate Cuts	2
Four Rate Cuts	1
More than Four	1

This is a wide range of views.

Goldman Sachs economists think there will be 2 rate cuts in 2026:

"We expect the FOMC to compromise on two more 25bp cuts to 3-3.25% but see the risks as tilted lower. "

A key question: How accommodative is current policy?  With core PCE inflation at 2.8% year-over-year in September (the data for October and November is delayed due to the government shutdown) and the "neutral rate" at 1.5% would suggest a Fed Funds Rate at around 4.3% (Of course, estimates of the neutral rate vary widely). 

Currently the target Fed Funds rate range is '3-1/2 to 3-3/4' percent.  And the FOMC projections show core PCE inflation only declining to 2.4 to 2.6% by the end of 2026 (Q4-over-Q4).

However, the FOMC believes inflation will come down as the tariff pass-through fades, and also because of a further declines in housing inflation.   Asking rents have been flat for almost three years, and measures of rent (housing / shelter) are steadily declining.

If we look at recent readings over the last 6 months annualized (through September):

PCE Price Index: 2.7% 

Core PCE Prices: 2.7%

Core minus Housing: 2.6%

In Q1 2025, PCE inflation was high.  There might be some residual seasonality in Q1, so it seems likely inflation will be lower in Q1 2026, lowering the YoY measures.

The next FOMC meeting ends on January 28th, and the FOMC will likely hold rates steady at that meeting.  

Due to the ongoing weakness in the labor market, my guess is there will be 2 rate cuts in 2026 with many dissents!  We might even see the 1st ever Fed Chair dissent

As long as the Fed remains independent, FOMC policy will depend on what happens with inflation and employment in 2026.  

Here are the Ten Economic Questions for 2026 and a few predictions:

• Question #7 for 2026: How much will wages increase in 2026?

• Question #8 for 2026: How much will Residential investment change in 2026? How about housing starts and new home sales in 2026?

• Question #9 for 2026: What will happen with house prices in 2026?

• Question #10 for 2026: Will inventory increase further in 2026?

by Calculated Risk on 12/27/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Fannie Mae Multi-Family Delinquency Rate Almost to Housing Bust High

• Question #8 for 2026: How much will Residential investment change in 2026? How about housing starts and new home sales in 2026?

• Question #9 for 2026: What will happen with house prices in 2026?

• Question #10 for 2026: Will inventory increase further in 2026?

• Final Look at Housing Markets in November and a Look Ahead to December Sales

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

by Calculated Risk on 12/27/2025 08:11:00 AM

Happy New Year! Wishing you all the best in 2026.

The key economic report this week is the Case-Shiller House Price Index.

----- Monday, December 29th -----
10:00 AM: Pending Home Sales Index for November. The consensus is for a 1.0% increase in the index.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for December. This is the last of regional manufacturing surveys for December.

----- Tuesday, December 30th -----
9:00 AM: FHFA House Price Index for October. This was originally a GSE only repeat sales, however there is also an expanded index. 

9:00 AM ET: S&P/Case-Shiller House Price Index for October.

This graph shows graph shows the Year over year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The consensus is for an 1.1% year-over-year increase in the Composite 20 index for October.

9:45 AM: Chicago Purchasing Managers Index for December.

2:00 PM: FOMC Minutes, Meeting of December 9-10

----- Wednesday, December 31st -----
8:30 AM: The initial weekly unemployment claims report will be released. 

----- Thursday, January 1st -----
The NYSE and the NASDAQ will be closed in observance of the New Year’s Day holiday

----- Friday, January 2nd -----
No major economic releases scheduled.

by Calculated Risk on 12/26/2025 02:27:00 PM

Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2026. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I posted thoughts on those in the newsletter (others like GDP and employment will be on this blog).

I'm adding some thoughts and predictions for each question.

Here is a review of the Ten Economic Questions for 2025.

7) Wage Growth: Wage growth was decent in 2025, up 3.5% year-over-year as of November. How much will wages increase in 2026?

The most followed wage indicator is the “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report.

Click on graph for larger image.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Real wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.5% YoY in November 2025. Although wage growth was close to expectations in November and is trending down.

There are two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. All three data series are different, and most of the focus recently has been the CES series (used in the graph above).

The second graph is from the Atlanta Fed Wage Tracker.   This measure is the year-over-year change in nominal wages for individuals.

By following wage changes for individuals, this removes the demographic composition effects (older workers who are retiring tend to be higher paid, and younger workers just entering the workforce tend to be lower paid).

The Atlanta Fed Wage tracker showed nominal wage growth increased sharply in 2021 and for most of 2022.   In September 2025, the smoothed 3-month average wage growth was at 4.1% year-over-year, down from a peak of 6.7% in July 2022.

NOTE: Due to the government shutdown, the wage tracker has only been updated through September.   It will likely move lower in October and November based on the CES above.

Clearly wage growth has been slowing.  Immigration policy (deportations) might boost wages for some jobs that have been held by undocumented immigrants, but overall I expect to see some further decreases in both the Average hourly earnings from the CES, and in the Atlanta Fed Wage Tracker.  My sense is nominal wages will increase close to low-to-mid 3% range YoY in 2026 according to the CES. Although it is possible that wage growth will increase with a falling participation rate and slower population growth. 

Here are the Ten Economic Questions for 2026 and a few predictions:

• Question #7 for 2026: How much will wages increase in 2026?

• Question #8 for 2026: How much will Residential investment change in 2026? How about housing starts and new home sales in 2026?

• Question #9 for 2026: What will happen with house prices in 2026?

• Question #10 for 2026: Will inventory increase further in 2026?

by Calculated Risk on 12/26/2025 11:29:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Fannie Mae Multi-Family Delinquency Rate Almost to Housing Bust High

Excerpt:

Fannie and Freddie: Single Family Delinquency Rate Increased in November

Freddie Mac reported that the Single-Family serious delinquency rate in November was 0.58%, up from 0.56% October. Freddie's rate is up year-over-year from 0.56% in November 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 November was 0.58%, up from 0.54% in October. The serious delinquency rate is up year-over-year from 0.53% in November 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 12/26/2025 08:37:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: Question #8 for 2026: How much will Residential investment change in 2026? How about housing starts and new home sales in 2026?

Excerpt:

Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2026. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I’ll post thoughts on those in this newsletter (others like GDP and employment will be on my blog).

I'm adding some thoughts, and maybe some predictions for each question.

Here is a review of the Ten Economic Questions for 2025.

8) Residential Investment: How much will Residential investment (RI) change in 2026? How about housing starts and new home sales in 2026?

First a graph of RI as a percent of Gross Domestic Product (GDP) through Q3 2025:

We don't have the data yet for Q4 2025 yet, but RI as a percent of GDP will likely be down year-over-year.

by Calculated Risk on 12/25/2025 09:47:00 AM

Happy Holidays!

Here is a High Sierra webcam (it is snowing!)

Best Wishes to All!