by Calculated Risk on 10/15/2024 08:49:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Changes in Various Interest Rates Since the FOMC Cut Its Target Fed Funds Rate by 50 Basis Points

A brief excerpt:

From housing economist Tom Lawler:

Below is a table showing changes in various interest rates from the day before the FOMC’s 50 basis point cut in its Fed Funds rate target and last Friday.

CR Notes: After the Fed rate cut, the longer-term rates increased (including mortgage rates). The yield curve has reverted ...

by Calculated Risk on 10/14/2024 11:19:00 AM

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

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to September 2019 for each local market (some 2019 data is not available).

This is the second look at several early reporting local markets in September. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in September were mostly for contracts signed in July and August when 30-year mortgage rates averaged 6.85% and 6.50%, respectively (Freddie Mac PMMS).
...
In September, sales in these markets were down 4.2% YoY. Last month, in August, these same markets were down 5.1% year-over-year Not Seasonally Adjusted (NSA).

Important: There were the same number of working days in September 2024 (20) as in September 2023 (20). So, the year-over-year change in the headline SA data will be similar to the NSA data. Last month there was one fewer working day in August 2024 compared to August 2023 (22 vs 23), so seasonally adjusted sales were down less than NSA sales.
...
This data suggests that the September existing home sales report will show a year-over-year decline.
...
Many more local markets to come!

There is much more in the article.

by Calculated Risk on 10/14/2024 08:17:00 AM

Altos reports that active single-family inventory was down 0.3% week-over-week. Inventory is now up 48.3% from the February seasonal bottom.  

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 2024.  The black line is for 2019.  

Inventory was up 34.0% compared to the same week in 2023 (last week it was up 36.7%), and down 22/6% compared to the same week in 2019 (last week it was down 23.1%). 

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels is closing.

This second inventory graph is courtesy of Altos Research.

As of October 11th, inventory was at 732 thousand (7-day average), compared to 734 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 10/13/2024 09:20:00 AM

From STR: U.S. hotel results for week ending 5 October

Due to Rosh Hashana, the U.S. hotel industry reported negative year-over-year comparisons, according to CoStar’s latest data through 5 October. ...

29 September through 5 October 2024 (percentage change from comparable week in 2023):

• Occupancy: 65.6% (-3.4%)
• Average daily rate (ADR): US$156.25 (-4.4%)
• Revenue per available room (RevPAR): US$102.44 (-7.7%)
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 2024, blue is the median, and dashed light blue is for 2023.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking last year and the median rate for the period 2000 through 2023 (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.

The 4-week average of the occupancy rate is near the peak for the fall business travel season, and then will decline during the holidays.

by Calculated Risk on 10/12/2024 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• ICE Mortgage Monitor: Insurance Costs "Spike", Especially in Florida

• House Prices to Income

• Part 1: Current State of the Housing Market; Overview for mid-October 2024

• 1st Look at Local Housing Markets in September

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

by Calculated Risk on 10/12/2024 08:11:00 AM

The key economic reports this week are September Retail Sales and Housing Starts.

For manufacturing, September Industrial Production, and the October New York and Philly Fed surveys will be released this week.

----- Monday, October 14th -----
Columbus Day Holiday: Banks will be closed in observance of Columbus Day. The stock market will be open.

----- Tuesday, October 15th -----
8:30 AM ET: The New York Fed Empire State manufacturing survey for October. The consensus is for a reading of 2.4, down from 11.5.

----- Wednesday, October 16th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, October 17th -----
8:30 AM ET: Retail sales for September will be released.  The consensus is for a 0.2% increase in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 265 thousand initial claims, up from 258 thousand last week.

8:30 AM: the Philly Fed manufacturing survey for October. The consensus is for a reading of 3.0, up from 1.7.

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for September.

This graph shows industrial production since 1967.

The consensus is for a 0.1% decrease in Industrial Production, and for Capacity Utilization to decrease to 77.9%.

10:00 AM: The October NAHB homebuilder survey. The consensus is for a reading of 42, up from 41 in September. Any number below 50 indicates that more builders view sales conditions as poor than good.

----- Friday, October 18th -----
8:30 AM: Housing Starts for September.

This graph shows single and multi-family housing starts since 1968.

The consensus is for 1.350 million SAAR, down from 1.356 million SAAR.

by Calculated Risk on 10/11/2024 07:11:00 PM

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

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So I'm no longer tracking hospitalizations.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week	1,157	1,159	≤3501
1my goals to stop weekly posts, 🚩 Increasing number weekly for Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported.

Although weekly deaths met the original goal to stop posting, I'm continuing to post now that deaths are above the goal again.  

Weekly deaths are almost quadruple the low of 302 in early June but are now declining and will likely continue to decline based on wastewater sampling.

And here is a graph I'm following concerning COVID in wastewater as of October 10th:

This appears to be a leading indicator for COVID hospitalizations and deaths.

COVID in wastewater is declining - now about double the lows of last May - suggesting weekly deaths will continue to decline.

by Calculated Risk on 10/11/2024 01:50:00 PM

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For September, Realtor.com reported inventory was up 34.0% YoY, but still down 23.2% compared to the 2017 to 2019 same month levels. 

 Now - on a weekly basis - inventory is up 30.5% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending Oct. 5, 2024

• Active inventory increased, with for-sale homes 30.5% above year-ago levels.

For the 48th consecutive week dating back to November 2023, the number of listings for sale has grown year-over-year. This week’s growth was lower than last week’s, the third week of slowing growth, and the lowest annual change since April. Much of the inventory build up is due to more seller activity than buyer activity, but this week’s boost in new listings made for a sizable week-over-week increase in homes for sale.

• New listings–a measure of sellers putting homes up for sale-increased 8.0% this week compared to one year ago.

The number of new listings has continued to increase, the annual increase picked up the pace this week. The pick up in fresh listings may be in response to recent improvements in mortgage rates, but it will likely take further improvement to move the needle in a more significant way.

Here is a graph of the year-over-year change in inventory according to realtor.com. 

Inventory was up year-over-year for the 48th consecutive week.  

However, inventory is still historically low.

New listings remain below typical pre-pandemic levels.

by Calculated Risk on 10/11/2024 10:47:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-October 2024

A brief excerpt:

This 2-part overview for mid-October provides a snapshot of the current housing market.

I always focus first on inventory, since inventory usually tells the tale! And currently inventory is increasing year-over-year but is still well below pre-pandemic levels.
...
Here is a graph of new listing from Realtor.com’s September 2024 Monthly Housing Market Trends Report showing new listings were up 11.6% year-over-year in September. New listings are still well below pre-pandemic levels. From Realtor.com:

Perhaps the biggest news this month is that sellers stormed back this September as newly listed homes were 11.6% above last year’s levels and a significant reversal from August’s 0.9% decrease. We noted last month that the sharp decrease in mortgage rates seen in mid-August could lead to an increase in listings in the coming months as lower rates begin to entice the marginal homeowner to sell, and that’s exactly what happened in September.

Note the seasonality for new listings. December and January are seasonally the weakest months of the year for new listings, followed by February and November. New listings will be up year-over-year in 2024, but still well below normal levels.

There is much more in the article.

by Calculated Risk on 10/11/2024 08:10:00 AM

From BofA:

Since our last weekly publication, our 3Q GDP tracking estimate is unchanged at 2.6% q/q saar. [Oct 11th estimate]
emphasis added

From Goldman:

We left our Q3 GDP tracking estimate unchanged at +3.2% (quarter-over-quarter annualized) and our Q3 domestic final sales forecast unchanged at +2.8%. [Oct 8th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2024 is 3.2 percent on October 9, unchanged from October 8 after rounding. After this morning's wholesale trade release from the US Census Bureau, the nowcast of third-quarter real gross private domestic investment growth decreased from 3.4 percent to 3.3 percent. [Oct 9th estimate]

by Calculated Risk on 10/10/2024 07:42:00 PM

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

Friday:
• At 8:30 AM ET, The Producer Price Index for September from the BLS. The consensus is for a 0.1% increase in PPI, and a 0.2% increase in core PPI.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Preliminary for October).

by Calculated Risk on 10/10/2024 04:11:00 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 0.3% in September. The 16% trimmed-mean Consumer Price Index increased 0.3%. "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 4.1% (down from 4.2% in August), the trimmed-mean CPI rose 3.2% (unchanged from 3.2%), and the CPI less food and energy rose 3.3% (up from 3.2%). 

Core PCE is for August was up 2.7% YoY, up from 2.6% in July.

Note: The Cleveland Fed released the median CPI details. Motor fuel decreased at a 39% annual rate in September.

by Calculated Risk on 10/10/2024 01:24:00 PM

Today, in the Calculated Risk Real Estate Newsletter: House Prices to Income

A brief excerpt:

One of the metrics we'd like to follow is a ratio of house prices to incomes. Unfortunately, most income data is released with a significantly lag, and there are always questions about which income data to use (the average total income is skewed by the income of a few people).

And for key measures of house prices - like Case-Shiller - we have indexes, not actually prices. But we can construct a ratio of the house price indexes to some measures of income.

House Price to National Average Wage Index

For the following graph I decided to look at house prices and the National Average Wage Index released this morning for 2023 from Social Security.

The National Average Wage Index increased to $66,621.80 in 2023, up 4.43% from $63,795.13 in 2022. This was the third consecutive year with strong wage gains, and wages are up almost 20% over the last 3 years.

The last time we saw 3-year wage gains this high was in the late 1970s and early 1980s. Another reason to compare the current housing cycle to the 1978 to 1982 period (not the housing bubble and bust).

There is much more in the article.

by Calculated Risk on 10/10/2024 09:20:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned when services less rent of shelter was up around 8% year-over-year.  This declined and is now up 4.4% YoY.

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through September 2024.

Services were up 4.7% YoY as of September 2024, down from 4.8% YoY in August.

Services less rent of shelter was up 4.4% YoY in September, up from 4.3% YoY in August.

The second graph shows that goods prices started to increase year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Durables were at -2.9% YoY as of September 2024, up from -4.2% YoY in August.

Commodities less food and energy commodities were at -1.2% YoY in September, up from -1.7% YoY in August.

Here is a graph of the year-over-year change in shelter from the CPI report (through September) and housing from the PCE report (through August)

Shelter was up 4.8% year-over-year in September, down from 5.2% in August. Housing (PCE) was up 5.3% YoY in August, up from 5.2% in July.

The BLS noted this morning: "The index for shelter rose 0.2 percent in September, and the index for food increased 0.4 percent. Together, these two indexes contributed over 75 percent of the monthly all items increase."

This is still catching up with private data.

Core CPI ex-shelter was up 2.0% YoY in September.

by Calculated Risk on 10/10/2024 08:56:00 AM

With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2025.

From Social Security: Social Security Announces 2.5 Percent Benefit Increase for 2025

Social Security benefits and Supplemental Security Income (SSI) payments for more than 72.5 million Americans will increase 2.5 percent in 2025, the Social Security Administration announced today. On average, Social Security retirement benefits will increase by about $50 per month starting in January.

Over the last decade the COLA increase has averaged about 2.6 percent. The COLA was 3.2 percent in 2024.
...
Some 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 $176,100 from $168,600.

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 (2.5% increase) and a list of previous Cost-of-Living Adjustments.

The contribution and benefit base will be $168,600 in 2024.

The National Average Wage Index increased to $ 66,621.80 in 2023, up 4.4% from $63,795.13 in 2022 (used to calculate contribution base). 

by Calculated Risk on 10/10/2024 08:41:00 AM

The DOL reported:

In the week ending October 5, the advance figure for seasonally adjusted initial claims was 258,000, an increase of 33,000 from the previous week's unrevised level of 225,000. This is the highest level for initial claims since August 5, 2023 when it was 258,000. The 4-week moving average was 231,000, an increase of 6,750 from the previous week's unrevised average of 224,250.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 231,000.

The previous week was unrevised.

Weekly claims were above the consensus forecast. 

The increase this week is partially hurricane related, for example North Carolina had a sharp increase in initial claims from 2,941 the prior week to 11,475 in the week ending Oct 5th.

by Calculated Risk on 10/10/2024 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis, the same increase as in August and July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.4 percent before seasonal adjustment.

The index for shelter rose 0.2 percent in September, and the index for food increased 0.4 percent. Together, these two indexes contributed over 75 percent of the monthly all items increase. The food at home index increased 0.4 percent in September and the food away from home index rose 0.3 percent over the month. The energy index fell 1.9 percent over the month, after declining 0.8 percent the preceding month.

The index for all items less food and energy rose 0.3 percent in September, as it did the preceding month. Indexes which increased in September include shelter, motor vehicle insurance, medical care, apparel, and airline fares. The indexes for recreation and communication were among those that decreased over the month.

The all items index rose 2.4 percent for the 12 months ending September, the smallest 12-month increase since February 2021. The all items less food and energy index rose 3.3 percent over the last 12 months. The energy index decreased 6.8 percent for the 12 months ending September. The food index increased 2.3 percent over the last year.
emphasis added

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

by Calculated Risk on 10/09/2024 07:43:00 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. The consensus is for 228 thousand initial claims, up from 225 thousand last week.

• Also at 8:30 AM, The Consumer Price Index for September from the BLS. The consensus is for a 0.1% increase in CPI, and a 0.2% increase in core CPI.  The consensus is for CPI to be up 2.3% year-over-year and core CPI to be up 3.2% YoY.

by Calculated Risk on 10/09/2024 03:35:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

Year-to-date total carloads in 2024 through September were down 3.3% (285,871 carloads) from last year and down 3.0% from the first nine months of 2022. So far in 2024, total carloads fell on a year over-year basis every month except August. ... Year-to-date U.S. intermodal in 2024 through September was 10.2 million units, up 9.5% (882,064 units) over last year and the fourth highest January-September total ever.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows the six-week average for carloads for the last 3 years.  Total carloads were down 0.5% in September YoY.

Carloads excluding coal were more promising: they were up 2.9% in Q3 2024 over Q3 2023, suggesting continued appetite for rail transportation. Excluding coal, total carloads were 1.4% (86,782 carloads) higher in the first nine months of 2024 than in the same period in 2023.

And on Intermodal:

U.S. intermodal originations in September 2024 were up 10.7% (108,257 containers and trailers) over September 2023, marking more than a year of consecutive year-over-year gains. In Q3 2024, intermodal was up 11.0% over Q3 2023, the biggest year-over-year percentage gain for a quarter since Q2 2021. Total intermodal originations averaged 274,500 in Q3 2024. Only 2018 had a better third quarter for total intermodal.

Note: rail traffic was weak even before the pandemic. As AAR noted: "Trade tensions and declining mfrg. output lead to lower rail volumes" in 2019.

by Calculated Risk on 10/09/2024 02:00:00 PM

From the Fed: Minutes of the Federal Open Market Committee. Excerpt:

With regard to the outlook for inflation, almost all participants indicated they had gained greater confidence that inflation was moving sustainably toward 2 percent. Participants cited various factors that were likely to put continuing downward pressure on inflation. These included a further modest slowing in real GDP growth, in part due to the Committee's restrictive monetary policy stance; well-anchored inflation expectations; waning pricing power; increases in productivity; and a softening in world commodity prices. Several participants noted that nominal wage growth was continuing to slow, with a few participants citing signs that it was set to decline further. These signs included lower rates of increases in cyclically sensitive wages and data indicating that job switchers were no longer receiving a wage premium over other employees. A couple of participants remarked that, with wages being a relatively large portion of business costs in the services sector, that sector's disinflation process would be particularly assisted by slower nominal wage growth. In addition, several participants observed that, with supply and demand in the labor market roughly in balance, wage increases were unlikely to be a source of general inflation pressures in the near future. With regard to housing services prices, some participants suggested that a more rapid disinflationary trend might emerge fairly soon, reflecting the slower pace of rent increases faced by new tenants. Participants emphasized that inflation remained somewhat elevated and that they were strongly committed to returning inflation to the Committee's 2 percent objective.
...
In their consideration of monetary policy at this meeting, participants noted that inflation had made further progress toward the Committee's objective but remained somewhat elevated. Almost all participants expressed greater confidence that inflation was moving sustainably toward 2 percent. Participants also observed that recent indicators suggested that economic activity had continued to expand at a solid pace, job gains had slowed, and the unemployment rate had moved up but remained low. Almost all participants judged that the risks to achieving the Committee's employment and inflation goals were roughly in balance. In light of the progress on inflation and the balance of risks, all participants agreed that it was appropriate to ease the stance of monetary policy. Given the significant progress made since the Committee first set its target range for the federal funds rate at 5-1/4 to 5-1/2 percent, a substantial majority of participants supported lowering the target range for the federal funds rate by 50 basis points to 4-3/4 to 5 percent. These participants generally observed that such a recalibration of the stance of monetary policy would begin to bring it into better alignment with recent indicators of inflation and the labor market. They also emphasized that such a move would help sustain the strength in the economy and the labor market while continuing to promote progress on inflation, and would reflect the balance of risks. Some participants noted that there had been a plausible case for a 25 basis point rate cut at the previous meeting and that data over the intermeeting period had provided further evidence that inflation was on a sustainable path toward 2 percent while the labor market continued to cool. However, noting that inflation was still somewhat elevated while economic growth remained solid and unemployment remained low, some participants observed that they would have preferred a 25 basis point reduction of the target range at this meeting, and a few others indicated that they could have supported such a decision. Several participants noted that a 25 basis point reduction would be in line with a gradual path of policy normalization that would allow policymakers time to assess the degree of policy restrictiveness as the economy evolved. A few participants also added that a 25 basis point move could signal a more predictable path of policy normalization. A few participants remarked that the overall path of policy normalization, rather than the specific amount of initial easing at this meeting, would be more important in determining the degree of policy restriction. Participants judged that it was appropriate to continue the process of reducing the Federal Reserve's securities holdings.
emphasis added