by Calculated Risk on 11/08/2024 08:27:00 AM

Today, in the Calculated Risk Real Estate Newsletter: MBA: Mortgage Delinquencies Decreased Slightly in Q3 2024

A brief excerpt:

From the MBA: Mortgage Delinquencies Decrease Slightly in the Third Quarter of 2024, Up on Annual Basis

The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased slightly to a seasonally adjusted rate of 3.92 percent of all loans outstanding at the end of the third quarter of 2024 compared to one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The following graph shows the percent of loans delinquent by days past due. Overall delinquencies increased in Q2. The sharp increase in 2020 in the 90-day bucket was due to loans in forbearance (included as delinquent, but not reported to the credit bureaus).

The percent of loans in the foreclosure process decreased year-over-year from 0.49 percent in Q3 2023 to 0.45 percent in Q3 2024 (red) and remains historically low.
...
We will see an increase in 30-day delinquencies in Q4 due to the hurricanes.

There is much more in the article.

by Calculated Risk on 11/07/2024 08:12:00 PM

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

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

by Calculated Risk on 11/07/2024 04:01:00 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 26.6% 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 Nov. 2, 2024

• Active inventory increased, with for-sale homes 26.6% above year-ago levels.

For the 52nd consecutive week, the number of listings for sale has grown year-over-year. Inventory has climbed annually for a full calendar year, due in part to slowing buyer activity. This week’s growth was lower than last week’s, the sixth week of slowing growth, and the lowest annual change since late March.

• New listings–a measure of sellers putting homes up for sale–climbed 4.6% this week compared to one year ago.

The number of new listings on the market picked up compared to the same week last year. The recent upward trajectory of mortgage rates could largely discourage sellers from listing their homes as roughly 84% of outstanding mortgages have a rate of 6% or lower. However, mortgage rates are expected to ease in the coming months, which could ‘unlock’ some eager buyers.

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

Inventory was up year-over-year for the 52nd consecutive week.  

However, inventory is still historically low.

New listings remain below typical pre-pandemic levels.

by Calculated Risk on 11/07/2024 02:00:00 PM

Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET.

FOMC Statement:

Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Beth M. Hammack; Philip N. Jefferson; Adriana D. Kugler; and Christopher J. Waller.
emphasis added

by Calculated Risk on 11/07/2024 10:45:00 AM

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

A brief excerpt:

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

This is the first look at several early reporting local markets in October. 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 October were mostly for contracts signed in August and September when 30-year mortgage rates averaged 6.50% and 6.18%, respectively (Freddie Mac PMMS). These were the lowest mortgage rate in 2 years!
...
In October, sales in these markets were up 17.3% YoY. Last month, in September, these same markets were down 0.3% year-over-year Not Seasonally Adjusted (NSA).

Important: There was one more working day in October 2024 (22) as in October 2023 (21). So, the year-over-year increase in the headline SA data will be less than the NSA data indicates. Last month there were the same number of working days in September 2024 compared to September 2023 (22 vs 23), so seasonally adjusted sales were down about the same as NSA sales.

Sales in all of these markets are down significantly compared to October 2019.
...
This was just several early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 11/07/2024 09:50:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Declined in October

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were lower in October compared to September. The Manheim Used Vehicle Value Index (MUVVI) fell to 202.8, a decline of 3.2% from a year ago. The seasonal adjustment to the index reduced the change for the month, as non-seasonally adjusted values declined at a higher rate. The non-adjusted price in October decreased by 1.9% compared to September, moving the unadjusted average price down 3.7% year over year.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices decreased in October (seasonally adjusted) and were down 3.2% year-over-year (YoY).

by Calculated Risk on 11/07/2024 08:30:00 AM

The DOL reported:

In the week ending November 2, the advance figure for seasonally adjusted initial claims was 221,000, an increase of 3,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 216,000 to 218,000. The 4-week moving average was 227,250, a decrease of 9,750 from the previous week's revised average. The previous week's average was revised up by 500 from 236,500 to 237,000.
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 decreased to 227,250.

The previous week was revised up.

Weekly claims were close to the consensus forecast.

by Calculated Risk on 11/06/2024 07:36:00 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 230 thousand initial claims, up from 227 thousand last week.

• At 2:00 PM, FOMC Meeting Announcement. The Fed is expected to cut rates 25bp at this meeting.

• At 2:30 PM, Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

by Calculated Risk on 11/06/2024 02:51:00 PM

CR Note: I'll be assessing the impact of Trump's election on the economy, but we have to remember he doesn't do most of what he says. For example, in 2016 he promised to deport 10 million residents, but that never happened. He said he'd repeal and replace the Affordable Care Act; didn't happen. He promised an infrastructure bill. Nope.

But we do know he will increase tariffs and cut taxes on the wealthy.

A few excerpts from a BofA research note:

Tariffs:

We think tariffs on China are likely to increase significantly and in short order after Trump assumes office. The outlook for tariffs against other countries is less clear. In our view, Europe could also see higher tariffs, but Mexico and Canada should continue to enjoy free trade relations with the US.

Immigration and deregulation:

We do not have a strong view on the timing and extent of changes to immigration policy. Roughly speaking, we would expect weaker immigration flows to be a mild, persistent headwind to labor supply and GDP growth. On the flip side, we think broad deregulation, including in energy and financial services, will likely be a tailwind to growth. Increased energy production could marginally offset the increase in headline inflation from tariffs and fiscal easing.

Tariffs could derail the Fed cutting cycle:

We don’t expect the Fed to pre-judge the Trump policy agenda. But we think it will pause the cutting cycle if large tariff increases are announced, assuming the economy is still on solid footing.

by Calculated Risk on 11/06/2024 12:13:00 PM

Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year

Brief excerpt:

Another monthly update on rents.

Tracking rents is important for understanding the dynamics of the housing market. Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure. ...

Welcome to the November 2024 Apartment List National Rent Report. National Rent Report. The national median rent dipped by 0.7% in October, as we get further into the slow season for the rental market. The median monthly rent nationally fell by $10, putting it at $1,394, and we’re likely to see that number continue to dip modestly through the remainder of the year. ...

Realtor.com: 14th Consecutive Month with Year-over-year Decline in Rents

In September 2024, the U.S. median rent continued to decline year-over-year for the fourteenth month in a row, down $8 or -0.5% year-over-year for 0-2 bedroom properties across the top 50 metros, faster than the rate of -0.3% seen in August 2024.

by Calculated Risk on 11/06/2024 07:00:00 AM

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

Mortgage applications decreased 10.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending November 1, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 10.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12 percent compared with the previous week. The Refinance Index decreased 19 percent from the previous week and was 48 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 2 percent higher than the same week one year ago.

“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates. The 30- year fixed rate last week increased to 6.81 percent, the highest level since July,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications decreased for the sixth consecutive week, with purchase activity falling to its lowest level since mid-August and refinance activity declining to the lowest level since May. The average loan size on a refinance application dropped below $300,000, as borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.81 percent from 6.73 percent, with points decreasing to 0.68 from 0.69 (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 2% year-over-year unadjusted. 

Red is a four-week average (blue is weekly).  

Purchase application activity is up about 4% from the lows in late October 2023, but still about 13% below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index increased significantly as mortgage rates declined September but decreased over the last six weeks as rates moved back up.

by Calculated Risk on 11/05/2024 07:23:00 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.

by Calculated Risk on 11/05/2024 02:19:00 PM

Notes: This CoreLogic House Price Index report is for September. The recent Case-Shiller index release was for August. The CoreLogic HPI is a three-month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic: Annual Home Price Slowdown Continues in September

• On an annual basis, home prices rose by 3.4% in September, the slowest growth rate in over a year, and are projected to slow to 2.3% by the same time next year.

• Miami continued to post the highest gain of tracked U.S. metro areas, at 6.8%, followed closely by Chicago at 6.7%.

• Rhode Island reported the highest annual growth rate of all states at 9%.

• Twenty-seven states reached new home price highs in September.
...
U.S. home price growth continued to cool, slowing to a 3.4% year-over-year in September. Compared to with the month prior, home prices rebounded to post a very slight uptick (0.02%) following months of modest monthly declines. Taken together, home price levels have been relatively flat since late summer. Besides the uncertainty regarding the U.S. election and mortgage rate volatility, the mixed signals around the current state of the U.S. economy may be dampening demand and price appreciation. According to the latest numbers from the U.S. Bureau of Labor Statistics, the economy added just 12,000 jobs in October 2024, the fewest in almost four years. On the other hand, the most recent consumer spending data showed solid continued spending and an upbeat consumer outlook.

“Like much of the housing market at the moment, home prices remained relatively flat coming into the fall,” said CoreLogic Chief Economist Selma Hepp. “Despite some improved affordability from lower mortgage rates during August, homebuyers mostly kept on the sidelines and decided to wait out the mortgage rate drop for a potentially better opportunity next year, when the current volatility, uncertainty surrounding the election’s outcome, and the impact on longer-term rates may be slightly clearer. And while the mortgage rate and economic outlook is full of questions, home prices are likely to maintain their leveled path until early next year when buyers return to the housing market.”
emphasis added

This was a smaller YoY increase than reported for August, and down from the 5.8% YoY increase reported at the beginning of 2024.

This map is from the report.

Nationally, home prices increased by 3.4% year over year in September. One state posted an annual home price decline. The states with the highest increases year over year were Rhode Island (9%) and New Jersey (up by 8.6%).

Hawaii was the only state to record a year-over-year home price loss (-0.4%).

by Calculated Risk on 11/05/2024 12:20:00 PM

Today, in the Real Estate Newsletter: In Q2, almost 20% of Units Started Built-for-Rent were Single Family

Brief excerpt:

Along with the monthly housing starts report for September released last month, the Census Bureau also released Housing Units Started by Purpose and Design through Q2 2024.

The first graph shows the number of single family and multi-family units started with the intent to rent. This data is quarterly and Not Seasonally Adjusted (NSA). Although the majority of units built-for-rent’ are still multi-family (blue), there has been a significant pickup in single family units started built-for-rent (red).

In 2020, there were 44,000 single family units started with the intent to rent. In 2023, that number almost doubled to 77,000 units. There were 23,000 single family units started in Q2 2024 built-for-rent, up from 21,000 in Q2 2023.

For multi-family, there were 83,000 units started to rent in Q2 2024, down almost 40% from 136,000 in Q2 2023.

A total of 106,000 units were started built-for-rent in Q2, with 19% single family units.

There is much more in the newsletter.

by Calculated Risk on 11/05/2024 10:00:00 AM

(Posted with permission). The ISM® Services index was at 56.0%, up from 54.9% last month. The employment index increased to 53.0%, from 48.1%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 56% October 2024 Services ISM® Report On Business®

Economic activity in the services sector expanded for the fourth consecutive month in October, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 56 percent, which is the highest reading since July 2022 and indicates sector expansion for the 50th time in 53 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In October, the Services PMI® registered 56 percent, 1.1 percentage points higher than September’s figure of 54.9 percent. The reading in October marked the eighth time the composite index has been in expansion territory this year. The Business Activity Index registered 57.2 percent in October, 2.7 percentage points lower than the 59.9 percent recorded in September, indicating a fourth month of expansion after a contraction in June. The New Orders Index decreased to 57.4 percent in October, 2 percentage points lower than September’s figure of 59.4 percent. The Employment Index landed in expansion territory for its third time in four months; the reading of 53 percent is a 4.9-percentage point increase compared to the 48.1 percent recorded in September.
emphasis added

The PMI was well above expectations.

by Calculated Risk on 11/05/2024 08:30:00 AM

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $84.4 billion in September, up $13.6 billion from $70.8 billion in August, revised.

September exports were $267.9 billion, $3.2 billion less than August exports. September imports were $352.3 billion, $10.3 billion more than August imports
emphasis added

Click on graph for larger image.

Exports decreased and imports increased in September.

Exports are up 2.4% year-over-year; imports are up 8.8% year-over-year.

Both imports and exports decreased sharply due to COVID-19 and then bounced back - imports and exports have generally increased recently.

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China increased to $31.8 billion from $28.4 billion a year ago.

It is possible some importers are trying to beat potential tariffs.

by Calculated Risk on 11/04/2024 06:38:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Week Slightly Lower as Election Volatility Works Both Ways

Love it or hate it, election-related volatility has been having a big impact on the bond market and, thus, mortgage rates.
...
Mortgage rates didn't react in an extreme fashion, but the average lender moved back down toward 7% for a top tier conventional 30yr fixed scenario. The same scenario was closer to 7.125% late last week. [30 year fixed 7.05%]
emphasis added

Tuesday:
• U.S. Election

• At 8:30 AM ET, Trade Balance report for September from the Census Bureau.  The consensus is for the deficit to be $73.5 billion in September, from $70.4 billion in August.

• At 10:00 AM, the ISM Services Index for October.  The consensus is for a decrease to 53.3 from 54.9.

by Calculated Risk on 11/04/2024 02:06:00 PM

This was released on Friday. From the Census Bureau reported that overall construction spending decreased:

Construction spending during September 2024 was estimated at a seasonally adjusted annual rate of $2,148.8 billion, 0.1 percent above the revised August estimate of $2,146.0 billion. The September figure is 4.6 percent above the September 2023 estimate of $2,055.2 billion.
emphasis added

Private spending was unchanged and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,653.6 billion, virtually unchanged from the revised August estimate of $1,653.2 billion. ...

In September, the estimated seasonally adjusted annual rate of public construction spending was $495.2 billion, 0.5 percent above the revised August estimate of $492.9 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential (red) spending is 6.8% below the peak in 2022.

Non-residential (blue) spending is 0.8% below the peak in June 2024.

Public construction spending is at the peak.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 4.1%. Non-residential spending is up 3.5% year-over-year. Public spending is up 7.0% year-over-year.

This was close to consensus expectations of no change in spending. 

by Calculated Risk on 11/04/2024 10:51:00 AM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: "Annual home price growth cooled for the seventh consecutive month"

Brief excerpt:

One of the key metrics to watch for mortgage stress is early-stage delinquencies. These are borrowers that are delinquent within 6 months of origination. This was one of the obvious warning signs during the housing bubble.

There has been a steady increase in early-stage delinquencies for VA loans.

• Early-stage delinquencies – borrowers already past due six months after origination – have been gradually rising as well, most notably among VA originations

• Overall, 1.7% of 2024 vintage originations have been delinquent six months after origination, the highest share for any vintage since 2008 – outside of pandemic-era payment shocks

Note that national mortgage performance is being impacted by the hurricanes.

There is much more in the newsletter.

by Calculated Risk on 11/04/2024 08:11:00 AM

Altos reports that active single-family inventory was unchanged week-over-week.

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 29.8% compared to the same week in 2023 (last week it was up 30.8%), and down 19.4% compared to the same week in 2019 (last week it was down 20.7%). 

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

This second inventory graph is courtesy of Altos Research.

As of Nov 1st, inventory was at 736 thousand (7-day average), compared to 736 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube.