by Calculated Risk on 7/23/2025 03:01:00 PM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for June 2025. Over the past three months, the indexes increased in 40 states, decreased in seven states, and remained stable in three, for a three-month diffusion index of 66. Additionally, in the past month, the indexes increased in 41 states, decreased in four states, and remained stable in five, for a one-month diffusion index of 74. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 0.7 percent over the past three months and 0.3 percent in June.
emphasis added

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on map for larger image.

Here is a map of the three-month change in the Philly Fed state coincident indicators. This map was all red during the worst of the Pandemic and also at the worst of the Great Recession.

The map is mostly positive on a three-month basis.

Source: Philly Fed.

And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. 

This graph includes states with minor increases (the Philly Fed lists as unchanged).

In June, 44 states had increasing activity including minor increases.

by Calculated Risk on 7/23/2025 10:53:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: NAR: Existing-Home Sales Decreased to 3.93 million SAAR in June; Unchanged YoY

Excerpt:

Sales in June (3.93 million SAAR) were down 2.7% from the previous month and were unchanged compared to the June 2024 sales rate. This was the 5th consecutive month with sales unchanged or down year-over-year. ... The sales rate was below the consensus forecast (but right at housing economist Tom Lawler’s estimate).
...
Sales Year-over-Year and Not Seasonally Adjusted (NSA)

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

Sales were unchanged year-over-year compared to June 2024. This was the 5th consecutive month with sales unchanged or down year-over-year. The next three months will also have the easy year-over-year comparisons.
...
On an NSA basis for the month of June, this was 7% below the low for housing bust for the month of June that happened in June 2008. Year-to-date, sales are down 1.5% NSA.

There is much more in the article.

by Calculated Risk on 7/23/2025 10:00:00 AM

From the NAR: NAR Existing-Home Sales Report Shows 2.7% Decrease in June

Existing-home sales decreased by 2.7% in June, according to the National Association of REALTORS® Existing-Home Sales Report. ...

Month-over-month sales declined in the Northeast, Midwest and South and rose modestly in the West. Year-over-year, sales fell in the Northeast and West, while rising in the Midwest and South. ...

• 2.7% decrease in existing-home sales -- seasonally adjusted annual rate of 3.93 million in June.

• Year-over-year: No change in existing-home sales.

• 0.6% decline in unsold inventory -- 1.53 million units equal to 4.7 months' supply.
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 June (3.93 million SAAR) were down 2.7% from the previous month and were unchanged compared to the June 2024 sales rate.  This was the 5th consecutive month with sales unchanged or down year-over-year.  

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.53 million in June from 1.54 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 15.9% year-over-year (blue) in June compared to June 2024.

Months of supply (red) increased to 4.7 months in June from 4.6 months the previous month.

As expected, the sales rate was below the consensus forecast.  I'll have more later. 

by Calculated Risk on 7/23/2025 07:00:00 AM

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

Mortgage applications increased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 18, 2025.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week and was 22 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 4 percent compared with the previous week and was 22 percent higher than the same week one year ago.

“The 30-year fixed mortgage rate edged higher last week to its highest level in four weeks at 6.84 percent, while rates for other loan types were mixed. Purchase applications finished the week higher, driven by conventional purchase loans, and continue to run ahead of last year’s pace,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “After reaching $460,000 in March 2025, the purchase loan amount has fallen to its lowest level since January 2025 to $426,700. With the 30-year fixed rate still too high to benefit many borrowers, refinance applications were down almost three percent for the week.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.84 percent from 6.82 percent, with points remaining unchanged at 0.62 (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 22% 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 and remains very low.

by Calculated Risk on 7/22/2025 07:28:00 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 10:00 AM: Existing Home Sales for June from the National Association of Realtors (NAR). The consensus is for 4.00 million SAAR, down from 4.03 million last month.

• During the day: The AIA's Architecture Billings Index for June (a leading indicator for commercial and multi-family real estate).

by Calculated Risk on 7/22/2025 03:11:00 PM

This is something to watch again. Here is another update on lumber prices.

SPECIAL NOTE: The CME group discontinued the Random Length Lumber Futures contract on May 16, 2023.  I switched to a physically-delivered Lumber Futures contract that was started in August 2022.  Unfortunately, this impacts long term price comparisons since the new contract was priced about 24% higher than the old random length contract for the period when both contracts were available.

This graph shows CME random length framing futures through August 2022 (blue), and the new physically-delivered Lumber Futures (LBR) contract starting in August 2022 (Red).

On July 22, 2025, LBR was at $669.50 per 1,000 board feet, up 30% from a year ago.

Click on graph for larger image.

There is somewhat of a seasonal demand for lumber, and lumber prices frequently peak in the first half of the year.

The pickup in early 2018 was due to the Trump lumber tariffs in 2017.  There were huge increases during the pandemic due to a combination of supply constraints and a pickup in housing starts.  

by Calculated Risk on 7/22/2025 11:33:00 AM

There are four remaining FOMC meetings this year: July, September, October and December.  It is very unlikely that the FOMC will cut rates next week, but there are very different views on the rest of 2025.

First, from BofA:

With the u-rate rising more gradually in our new forecast and core PCE inflation likely to reach 3% over the summer, we don't think the Fed will be able to cut rates this year.

And from Goldman Sachs:

Starting in September, we expect the FOMC to deliver three consecutive 25bp cuts, provided inflation expectations remain in check amidst worries about Fed independence.

Currently, market participants expect rate cuts in September and December.

by Calculated Risk on 7/22/2025 08:43:00 AM

Today, in the Calculated Risk Real Estate Newsletter: California Home Sales Down Slightly YoY in June

A brief excerpt:

The NAR is scheduled to release June existing home sales on Wednesday, July 23rd at 10:00 AM ET. The consensus is for 4.00 million SAAR, down from 4.03 million last month.

Housing economist Tom Lawler expects the NAR to report sales at a seasonally adjusted annual rate (SAAR) of 3.92 million for June, down from May and down slightly year-over-year.

California reports Seasonally Adjusted (SA) sales and some measures of inventory whereas most of the local is Not Seasonally Adjusted (NSA).

From the California Association of Realtors® (C.A.R.): California home sales rebound in June, reversing three straight months of declines

June home sales activity rose 4.0 percent from the 254,190 homes sold in May and was down 0.3 percent from a year ago, when 264,960 homes were sold on an annualized basis. June’s rebound reversed three consecutive months of sales declines and was only one of two months of sales increases for the first half of 2025. The year-over-year decline marked the third straight decrease and was the first time since late 2023 that annual sales fell for three consecutive months.

There is much more in the article.

by Calculated Risk on 7/21/2025 07:44:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Move Slightly Lower to Start New Week

Mortgage rates didn't move much on Monday, but they moved in the right direction with the average lender 0.03% lower for a top tier 30yr fixed scenario versus last Friday. That makes this the 4th straight business day with a modest gain and it gets us back in line with the lowest rates since July 3rd.​ [30 year fixed 6.78%]
emphasis added

Tuesday:
• At 8:30 AM ET, Speech Fed Chair Jerome Powell, Opening Remarks, At the Integrated Review of the Capital Framework for Large Banks Conference, Washington, D.C.

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for July.

by Calculated Risk on 7/21/2025 01:57:00 PM

Today, in the CalculatedRisk Real Estate Newsletter: NMHC on Apartments: Market conditions Tightened in Q2

Excerpt:

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

The Market Tightness Index (54), Sales Volume Index (55) and Debt Financing Index (69) all came in above the breakeven level of 50, indicating improved conditions, while the Equity Financing Index remained just below 50 (48). Still, a majority of respondents for each of the four indexes reported unchanged conditions compared to April.

“Rent growth remains low in the South and West amidst a historic overhang of new supply, even though strong demand has kept absorptions high and occupancy stable,” noted NMHC’s Chief Economist and Senior Director of Research, Chris Bruen. “Meanwhile, tighter apartment conditions persist in the more supply-constrained Northeast and Midwest.”

“While high levels of political and economic uncertainty have kept some equity capital on the sidelines, survey respondents did report an uptick in transaction volume for the second consecutive quarter.”
...
• The Market Tightness Index came in at 54 this quarter – above the breakeven level of 50 – indicating tighter market conditions. Twenty-seven percent of respondents thought market conditions were tighter relative to three months ago, while 18% thought conditions had become looser. Slightly over half (54%) of respondents thought conditions were unchanged from April.

There is much more in the article.