by Calculated Risk on 11/11/2025 12:49:00 PM

This is worth repeating ...

Back in 2005 I was mostly writing about the housing bubble - and the coming housing bust. But I also mentioned the possibility of a financial crisis. In early 2007, I started forecasting a recession, and by the end of 2007 the housing bust causing a financial crisis was becoming obvious.

Here is an article from the WSJ in 2007 quoting a crazy blogger: How High Will Subprime Losses Go?

Back in the U.S., the Calculated Risk blog sidestepped the colorful language and went straight for the big number: “The losses for the lenders and investors might well be over $1 trillion.”

Many people thought I was crazy. But losses for lenders and financial institutions ended up over $1 trillion.

Then in 2013 I wrote that there will be another crisis someday: "Each new generation of Wall Street wizards figures out a new way to turn lead into gold, and to become wealthy while damaging the financial system. Some of these wizards are probably perfecting their financial alchemy right now."

The key for the "wizards" was to find a way around the regulatory system, and if they could use leverage, the fool's gold would eventually lead to a crisis.

By 2013 the seeds were planted, not by Wall Street wizards, but by Tech Wizards. Now the seeds have taken root (Of course, I'm talking about cryptocurrency, what Charlie Munger called financial "rat poison").

Last year, researchers at the NY Fed looked at the impact of crypto on the financial system: The Financial Stability Implications of Digital Assets. And they concluded: "that, to date, the contribution of digital assets to systemic risk has been limited, given that the digital ecosystem is relatively small and not a major provider of financing and payment services to the real economy."

The key to preventing a financial crisis is to keep the non-regulated (or poorly regulated) areas of finance out of the financial system. A good example is the Tulip Bubble in the 1600s. Some people got rich, others were wiped out, but it had no impact on the financial system.

Unfortunately the current administration has embraced crypto. They are allowing it to creep into the financial system, and allowing 401K plans to hold crypto (aka future bagholders). There has been some discussion of allowing financial institutions to lend against crypto holdings - like for a mortgage.  This is mistake and increases the possibility that crypto will be the source of the next financial crisis.

A final note: CNBC should be embarrassed to have crypto prices on their website. 

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

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

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.

October sales will be mostly for contracts signed in August and September, and mortgage rates averaged 6.59% in August and 6.35% in September (lower than for closed sales in September).

In October, sales in these early reporting markets were up 0.4% YoY. Last month, in September, these same markets were up 7.6% year-over-year Not Seasonally Adjusted (NSA).

Important: There were the same number of working days in October 2025 (22) as in October 2024 (22). So, the year-over-year change in the headline SA data will be similar to the change in NSA data (there are other seasonal factors).
...
This was just several more early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 11/10/2025 07:56:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Edge Higher But Remain in November Range

Bond markets are closed tomorrow for Veterans Day. When markets reopen on Wednesday, the prospects for ending the government shutdown may be coming into clearer view and that could cause enough market volatility to spill over into rates. If today's trading was any clue, a "reopening" event is more likely to put upward pressure on rates, but today's rate increase could already be reflecting those expectations. [30 year fixed 6.34%]
emphasis added

Tuesday:
• Veterans Day Holiday: Most banks will be closed in observance of Veterans Day. The stock market will be open.

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

by Calculated Risk on 11/10/2025 02:38:00 PM

From Dodge Data Analytics: Dodge Momentum Index Falls Back 7% in October

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, decreased 7.1% in October to 283.3 (2000=100) from the upwardly revised reading of 304.8. Over the month, commercial planning declined 2.9% and institutional planning slowed by 15.2%. Year-to-date, the DMI is up 35% from the average reading over the same period in 2024.

“After several months of record-breaking levels, planning momentum slowed in October,” stated Sarah Martin, Associate Director of Forecasting at Dodge Construction Network. “Activity remains solid across the board, especially for data centers and hospitals. However, recent growth should not solely be attributed to gains in real activity. Anticipated increases in labor and material costs are also driving up project expenses and are inflating the overall trend in the DMI. In the coming months, Dodge anticipates activity to continue to decelerate on average, especially as macroeconomic risks continue to mount.”

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 and healthcare planning have slowed down, after strong activity in recent months. Meanwhile, recreational and public planning continued to grow. Year-over-year, the DMI was up 52% when compared to October 2024. The commercial segment was up 54% (+43% when data centers are removed) and the institutional segment was up 49% over the same period.
...
The DMI is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 283.3 in October, down from 304.8 the previous month.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests a pickup in mid-2025, however, uncertainty might impact these projects.  

Commercial construction is typically a lagging economic indicator.

by Calculated Risk on 11/10/2025 11:13:00 AM

Today, in the Real Estate Newsletter: November ICE Mortgage Monitor: Home Prices "Firmed" in October, Up 0.9% Year-over-year

Brief excerpt:

Negative Equity Rates Have Increased

• Negative equity rates, after years at record lows, have risen slightly toward more typical levels

• As of Q4, 875K mortgage holders (1.6%) owe more on their homes than they are worth, the highest rate in three years but comparable to pre-COVID levels and long-term averages outside the Great Financial Crisis

• The share of borrowers with limited equity has also increased, reaching 6.9% in September ‒ the highest since mid-2020 but still below long-term averages
...
• While overall negative equity rates remain low, certain markets are showing signs of concern, particularly in the Gulf Coast of Florida and Austin, Texas

• In Cape Coral, Fla., where home prices have dropped 15% from their peak, 11% of mortgages are underwater, including over one-third of those originated in 2023 and 2024

• In Austin, with prices down 21% from their highs, nearly 7% of mortgages are underwater, including about 25% of loans from 2022 and over 15% from 2023 and 2024

• Borrowers with low down payment FHA/VA loans in these areas face even higher negative equity rates, exceeding 60% in some cases

• In contrast, markets like Bridgeport, Hartford, New Haven (Conn.), San Jose, Los Angeles, Boston, and New York City, which have resilient home prices and larger down payments, have virtually no negative equity
emphasis added

There is much more in the article.

by Calculated Risk on 11/10/2025 08:11:00 AM

Altos reports that active single-family inventory was down 1.7% 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 16.7% compared to the same week in 2024 (last week it was up 16.5%), and down 5.6% compared to the same week in 2019 (last week it was down 6.2%). 

Inventory started 2025 down 22% compared to 2019.  Inventory has closed three-fourths 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 November 7th, inventory was at 842 thousand (7-day average), compared to 857 thousand the prior week.  

Mike Simonsen discusses this data and much more regularly on YouTube

by Calculated Risk on 11/09/2025 06:19:00 PM

Weekend:
• Schedule for Week of November 9, 2025

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 33 and DOW futures are up 163 (fair value).

Oil prices were down over the last week with WTI futures at $59.75 per barrel and Brent at $63.63 per barrel. A year ago, WTI was at $71, 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 $3.05 per gallon. A year ago, prices were at $3.06 per gallon, so gasoline prices are down $0.01 year-over-year.

by Calculated Risk on 11/09/2025 08:21:00 AM

From the Association of American Railroads (AAR) AAR Data Center. Graph and excerpts reprinted with permission.

In October 2025, total U.S. rail carloads were down a fraction (-0.03%) from October 2024, and 11 of the 20 major rail carload categories posted year-over- year declines. ...

U.S. rail intermodal shipments fell 3.0% in October 2025 from October 2024—the third year-over-year decline in the past five months for intermodal and the steepest percentage drop since August 2023. Historically, October is one of the strongest months for intermodal traffic: in the 25 years from 2000 to 2024, it was among the top three months for average weekly intermodal volume in 20 of those years. It won’t be this year: October’s weekly average of 273,747 units has already been surpassed by four other months.
emphasis added

The AAR Freight Rail Index (FRI) measures seasonally adjusted month-to-month rail intermodal shipments plus carloads excluding coal and grain. As such, it is a useful gauge of underlying freight demand tied to industrial production and consumer goods flows. The index fell 1.4% in October 2025 from September 2025, its sixth decline in the past seven months. The index is 1.5% below its level from a year earlier.

by Calculated Risk on 11/08/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

TClick on graph for larger image.

• Q3 NY Fed Report: Mortgage Originations by Credit Score, Foreclosures Increase Slightly

• 1st Look at Local Housing Markets in October

• Lawler: Single-Family Rent Trends at INVH and AMH

• Asking Rents Mostly Unchanged Year-over-year

• House Prices to Income

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

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

The key (missing) reports this week are October CPI and Retail Sales.

Items in Red will not be released due to the government shutdown.

----- Monday, November 10th -----
No major economic releases scheduled.

----- Tuesday, November 11th -----
Veterans Day Holiday: Most banks will be closed in observance of Veterans Day. The stock market will be open.

6:00 AM: NFIB Small Business Optimism Index for October.

----- Wednesday, November 12th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, November 13th -----
8:30 AM: The initial weekly unemployment claims report will be released.

8:30 AM: The Consumer Price Index for October from the BLS.

----- Friday, November 14th -----
8:30 AM ET: Retail sales for October.

8:30 AM: The Producer Price Index for October from the BLS.