by Calculated Risk on 1/31/2025 02:09:00 PM

From Goldman:

We launched our Q1 GDP tracking estimate at +2.6% (quarter-over-quarter annualized) and our Q1 domestic final sales estimate at +2.3%. We launched our past-quarter GDP tracking estimate at +2.3%, in line with the advance reading. [Jan 31st estimate]
emphasis added

And from the Atlanta Fed: GDPNow

The initial GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is 2.9 percent on January 31. The initial estimate of last quarter's real GDP growth rate released by the US Bureau of Economic Analysis on January 30 was 2.3 percent, the same as the final GDPNow model nowcast after rounding. [Jan 31st estimate]

by Calculated Risk on 1/31/2025 10:42:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Increased in December; Up 4.0% Year-over-year

A brief excerpt:

Freddie Mac reported that its “National” Home Price Index (FMHPI) increased 0.54% month-over-month on a seasonally adjusted (SA) basis in December. On a year-over-year basis, the National FMHPI was up 4.0% in December, up from up 3.9% YoY in November. The YoY increase peaked at 19.0% in July 2021, and for this cycle, bottomed at up 0.9% YoY in May 2023. ...

For cities (Core-based Statistical Areas, CBSA), here are the 30 cities with the largest declines from the peak, seasonally adjusted. Austin continues to be the worst performing city. However, 6 of the 7 cities with the largest price declines are in Florida (and Florida has 14 of the 30 cities with the largest price declines).

There is much more in the article!

by Calculated Risk on 1/31/2025 08:30:00 AM

The BEA released the Personal Income and Outlays report for December:

Personal income increased $92.0 billion (0.4 percent at a monthly rate) in December, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)—personal income less personal current taxes—increased $79.7 billion (0.4 percent) and personal consumption expenditures (PCE) increased $133.6 billion (0.7 percent).

Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $129.5 billion in December. Personal saving was $843.2 billion in December and the personal saving rate—personal saving as a percentage of disposable personal income—was 3.8 percent.
emphasis added

The December PCE price index increased 2.6 percent year-over-year (YoY), up from 2.4 percent YoY in November, and down from the recent peak of 7.0 percent in June 2022.

The PCE price index, excluding food and energy, increased 2.8 percent YoY, unchanged from 2.8 percent in November, and down from the recent peak of 5.4 percent in February 2022.

The following graph shows real Personal Consumption Expenditures (PCE) through December 2024 (2017 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was at expectations, and PCE was slightly above expectations.

Inflation was slightly above expectations.

by Calculated Risk on 1/30/2025 07:30:00 PM

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

Friday:
• At 8:30 AM ET, 8:30 AM ET: Personal Income and Outlays for December. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the Core PCE price index to increase 0.2%.  PCE prices are expected to be up 2.5% YoY, and core PCE prices up 2.8% YoY.

• At 9:45 AM, Chicago Purchasing Managers Index for January. The consensus is for a reading of 39.7, up from 36.9 in December.

by Calculated Risk on 1/30/2025 03:59:00 PM

From the Las Vegas Visitor Authority: December 2024 Las Vegas Visitor Statistics

Closing out the year with Dec visitation of 3.4M visitors (+0.2% YoY), Las Vegas hosted approx. 41.7M visitors for the year, up 2.1% from last year’s 40.8M visitors.

With a strong December to end the year, Las Vegas convention attendance reached roughly 6.0M for the year, matching last year's tally.

December occupancy reached 81.9%, up 2.0 pts with ADR and RevPAR seeing YoY increases of +3.7% and +6.3% respectively. For the year, Hotel occupancy landed at 83.6%, just ahead of last year (up 0.1 pts) with annual Weekend occupancy of 90.8% (up 0.1 pts) and annual Midweek occupancy of 80.4%, also up 0.1 pts. Annual ADR reached $193 (+1.0% YoY) with annual RevPAR of $161 (+1.1% YoY).
emphasis added

Click on graph for larger image.

The first graph shows visitor traffic for 2019 (Black), 2020 (dark blue), 2021 (light blue), 2022 (light orange), 2023 (dark orange) and 2024 (red).

Visitor traffic was up 0.2% compared to last December.  Visitor traffic was down 3.2% compared to December 2019.

Annual visitor traffic was down 2.0% compared to 2019.

The second graph shows convention traffic.

Convention traffic was up 42.7% compared to December 2023, and down 9.1% compared to December 2019.  

Annual convention traffic was down 9.8% compared to 2019.

by Calculated Risk on 1/30/2025 12:55:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Final Look at Local Housing Markets in December and a Look Ahead to January Sales

A brief excerpt:

After the National Association of Realtors® (NAR) releases the monthly existing home sales report, I pick up additional local market data that is reported after the NAR. This is the final look at local markets in December.

The big story for December was that existing home sales increased year-over-year (YoY) for the third consecutive month following year-over-year declines every month since July 2021. However, sales in December, at 4.24 million on a seasonally adjusted annual rate basis (SAAR) were still historically low. Sales averaged almost 5.4 million SAAR in December 2017, 2018, and 2019. So, sales were still about 21% below pre-pandemic levels.
...
Here is a look at months-of-supply using NSA sales. Since this is NSA data, it is likely this will be the seasonal low for months-of-supply.

Miami is off the charts!
...
More local data coming in February for activity in January!

There is much more in the article.

by Calculated Risk on 1/30/2025 10:00:00 AM

From the NAR: Pending Home Sales Fell 5.5% in December

Pending home sales retracted 5.5% in December – following four consecutive months of increases – according to the National Association of REALTORS®. All four U.S. regions experienced month-over-month losses in transactions, with the most significant fall in the West. Year-over-year, contract signings reduced in all four U.S. regions, with the Midwest seeing the largest decrease.

The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – slid 5.5% to 74.2 in December. Year-over-year, pending transactions declined 5.0%. Last year’s cyclical low point occurred in July 2024 at 70.2. An index of 100 is equal to the level of contract activity in 2001.

“After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising,” said NAR Chief Economist Lawrence Yun. “Economic data never moves in a straight line. High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions.”
...
The Northeast PHSI fell 8.1% from last month to 62.3, down 1.3% from December 2023. The Midwest index shrunk 4.9% to 74.3 in December, down 6.9% from the previous year.

The South PHSI slipped 2.7% to 90.6 in December, down 5.1% from a year ago. The West index tumbled by 10.3% from the prior month to 57.7, down 5.1% from December 2023.
emphasis added

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

by Calculated Risk on 1/30/2025 08:37:00 AM

From the BEA: Gross Domestic Product, 4th Quarter and Year 2024 (Advance Estimate)

Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the fourth quarter of 2024 (October, November, and December), according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.

The increase in real GDP in the fourth quarter primarily reflected increases in consumer spending and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased.

Compared to the third quarter, the deceleration in real GDP in the fourth quarter primarily reflected downturns in investment and exports. Imports turned down.

The price index for gross domestic purchases increased 2.2 percent in the fourth quarter, compared with an increase of 1.9 percent in the third quarter. The personal consumption expenditures (PCE) price index increased 2.3 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 2.5 percent, compared with an increase of 2.2 percent.
...
Real GDP increased 2.8 percent in 2024 (from the 2023 annual level to the 2024 annual level), compared with an increase of 2.9 percent in 2023. The increase in real GDP in 2024 reflected increases in consumer spending, investment, government spending, and exports. Imports increased.

The price index for gross domestic purchases increased 2.3 percent in 2024, compared with an increase of 3.3 percent in 2023. The PCE price index increased 2.5 percent, compared with an increase of 3.8 percent. Excluding food and energy prices, the PCE price index increased 2.8 percent, compared with an increase of 4.1 percent. emphasis added

PCE increased at a 4.2% annual rate, and residential investment increased at a 5.3% rate. The advance Q4 GDP report, with 2.3% annualized increase, was below expectations.

I'll have more later ...

by Calculated Risk on 1/30/2025 08:30:00 AM

The DOL reported:

In the week ending January 25, the advance figure for seasonally adjusted initial claims was 207,000, a decrease of 16,000 from the previous week's unrevised level of 223,000. The 4-week moving average was 212,500, a decrease of 1,000 from the previous week's unrevised average of 213,500.
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 212,500.

The previous week was unrevised.

Weekly claims were below the consensus forecast.

by Calculated Risk on 1/29/2025 08:08:00 PM

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

Thursday:
• At 8:30 AM ET, Gross Domestic Product, 4th quarter and Year 2024 (Advance estimate). The consensus is that real GDP increased 2.6% annualized in Q4.

• Also at 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for a increase to 228 thousand from 223 thousand last week.

• At 10:00 AM, Pending Home Sales Index for December. The consensus is for a 1.0% decrease in the index.

by Calculated Risk on 1/29/2025 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. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation 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 maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of 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; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Adriana D. Kugler; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller.
emphasis added

by Calculated Risk on 1/29/2025 10:17:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 1.1% Below 2022 Peak

Excerpt:

It has been over 18 years since the housing bubble peak. In the November Case-Shiller house price index released yesterday, the seasonally adjusted National Index (SA), was reported as being 77% above the bubble peak in 2006. However, in real terms, the National index (SA) is about 12% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is 3% above the bubble peak.

People usually graph nominal house prices, but it is also important to look at prices in real terms. As an example, if a house price was $300,000 in January 2010, the price would be $436,000 today adjusted for inflation (45% increase). That is why the second graph below is important - this shows "real" prices.

The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the Case-Shiller National Index.
...
The second graph shows the same two indexes in real terms (adjusted for inflation using CPI).

In real terms (using CPI), the National index is 1.1% below the recent peak, and the Composite 20 index is 1.3% below the recent peak in 2022. The real National index and the Composite 20 index increased slightly in real terms in November.

It has now been 30 months since the real peak in house prices. Typically, after a sharp increase in prices, it takes a number of years for real prices to reach new highs (see House Prices: 7 Years in Purgatory)

There is much more in the article!

by Calculated Risk on 1/29/2025 07:00:00 AM

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

Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 24, 2025. This week’s results include an adjustment for the Martin Luther King holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 5 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.4 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 7 percent lower than the same week one year ago.

“Mortgage rates were mixed last week, and the 30-year fixed rate remained unchanged at 7.02 percent. Application activity was slightly weaker, primarily because of a 7 percent decline in refinancing across both conventional and government loans,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase activity decreased slightly, but applications for FHA purchase loans were a bright spot, increasing by 2 percent. New and existing-home sales ended 2024 on a strong note, and if mortgage rates continue to stabilize and for-sale inventory loosens, we expect a gradual pick up in purchase activity in the coming months.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) remained unchanged at 7.02 percent, with points increasing to 0.63 from 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 down 7% year-over-year unadjusted. 

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

Purchase application activity is up about 30% from the lows in late October 2023 and is now 8% above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index is very low.

by Calculated Risk on 1/28/2025 07:59:00 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 mortgage purchase applications index.

• At 2:00 PM, FOMC Meeting Announcement. No change to policy is expected.

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

by Calculated Risk on 1/28/2025 01:31:00 PM

From the MBA: Delinquency Rates for Commercial Properties Increased in Fourth-Quarter 2024

Delinquency rates for mortgages backed by commercial properties increased during the fourth quarter of 2024, according to the Mortgage Bankers Association's (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.

"The delinquency rate for commercial mortgages increased during the final three months of 2024, with increases across most capital sources and property types,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “The challenges facing different sectors vary – with office properties perhaps facing the most challenging combination of weaker fundamentals and stubbornly high interest rates. However, despite the current conditions, other property types continue to benefit from a relatively strong economy.”

Click on graph for larger image.

The balance of commercial mortgages that are not current increased slightly in the fourth quarter of 2024.

• The share of loans that were delinquent increased for some property types, particularly office, lodging, retail, and multifamily. Delinquencies decreased for industrial properties.

• Among capital sources, CMBS loan delinquency rates saw the highest levels but were flat during the quarter.

• 5.3% of CMBS loan balances were 30 days or more delinquent, up from 4.8% at the end of last quarter.

• Non-current rates for other capital sources remained more moderate.

• 1.0% of FHA multifamily and health care loan balances were 30 days or more delinquent, up from 0.87% at the end of last quarter.

• 0.86% of life company loan balances were delinquent, down from 0.94%.

• 0.6% of GSE loan balances were delinquent, up from 0.5% the previous quarter.

by Calculated Risk on 1/28/2025 10:03:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 3.8% year-over-year in November

Excerpt:

S&P/Case-Shiller released the monthly Home Price Indices for November ("November" is a 3-month average of September, October and November closing prices). November closing prices include some contracts signed in July, so there is a significant lag to this data. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The MoM increase in the seasonally adjusted (SA) Case-Shiller National Index was at 0.44% (a 5.3% annual rate), This was the 22nd consecutive MoM increase in the seasonally adjusted index.

On a seasonally adjusted basis, prices increased month-to-month in 18 of the 20 Case-Shiller cities (prices declined in Seattle and Tampa seasonally adjusted). San Francisco has fallen 6.42% from the recent peak, Phoenix is down 2.1% from the peak, and Denver down 1.7%.

There is much more in the article.

by Calculated Risk on 1/28/2025 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for November ("November" is a 3-month average of September, October and November closing prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

From S&P S&P CoreLogic Case-Shiller Index Records 3.8% Annual Gain in November 2024

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.8% annual return for November, up from a 3.6% annual gain in the previous month. The 10-City Composite saw an annual increase of 4.9%, recording the same annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.3%, up from a 4.2% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.3% increase in November, followed by Chicago and Washington with annual increases of 6.2% and 5.9%, respectively. Tampa posted the lowest return, falling 0.4%.
...
The pre-seasonally adjusted U.S. National, 20-City, and 10-City Composite Indices’ upward trends continued to reverse in November, with a -0.1% drop for the national index, while the 20-City Composite saw a -0.1% decline and the 10-City Composite was unchanged.

After seasonal adjustment, the U.S. National, 20-City, and 10-City Composite Indices all posted a month-over-month increase of 0.4%.

“With the exception of pockets of above-trend performance, national home prices are trending below historical averages,” says Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets. “Markets in New York, Washington, D.C., and Chicago are well above norms, with New York leading the way. Unsurprisingly, the Northeast was the fastest growing region, averaging a 6.1% annual gain. However, markets out west and in once red-hot Florida are trending well below average growth. Tampa’s decline is the first annual drop for any market in over a year. Returns for the Tampa market and entire Southern region rank in the bottom quartile of historical annual gains, with data going back to 1988.

“Despite below-trend growth, our National Index hit its 18th consecutive all-time high on a seasonally adjusted basis,” Luke continued. “Again, with the exception of Tampa, all markets rose monthly with seasonal adjustment. With New York leading the nation for the seventh consecutive month and U.S. banks reporting strong Q4 earnings, this could set the Big Apple up as we close out the year.”
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index was up 0.4% in November (SA).  The Composite 20 index was up 0.4% (SA) in November.

The National index was up 0.4% (SA) in November.

The second graph shows the year-over-year change in all three indices.

The Composite 10 SA was up 4.9% year-over-year.  The Composite 20 SA was up 4.3% year-over-year.

The National index SA was up 3.8% year-over-year.

Annual price changes were close to expectations.  I'll have more later.

by Calculated Risk on 1/27/2025 07:17:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Only Moderately Lower After Tech Rout

Even though there is some uncertainty about the near-term Fed rate outlook and even though we have a Fed meeting coming up on Wednesday, today was all about conventional wisdom for interest rates. Tech stocks plummeted on news of a cheap, competent, Chinese AI competitor. ...

Whether investors were simply looking for places to park the proceeds from that stock selling or legitimately betting on economic fallout, bond buying ramped up in a major way. The average mortgage lender is now back in line with the lowest levels since late December, but just barely. [30 year fixed 7.07%]
emphasis added

Tuesday:
• At 8:30 AM ET, Durable Goods Orders for December. The consensus is for a 0.8% increase in durable goods.

• Also at 9:00 AM, FHFA House Price Index for November. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 9:00 AM, S&P/Case-Shiller House Price Index for November. The National Index was up 3.6% YoY in October and is expected to be up about the same in November.

• Also at 10:00 AM, Richmond Fed Survey of Manufacturing Activity for January. This is the last of the regional Fed manufacturing surveys for January.

• At 10:00 AM, State Employment and Unemployment (Monthly) for December 2024

by Calculated Risk on 1/27/2025 02:23:00 PM

From STR: U.S. hotel results for week ending 18 January

On the positive side of the MLK Day calendar shift, the U.S. hotel industry reported positive year-over-year comparisons, according to CoStar’s latest data through 18 January. ...

12-18 January 2025 (percentage change from comparable week in 2024):

• Occupancy: 55.8% (+6.7%)
• Average daily rate (ADR): US$155.81 (+10.0%)
• Revenue per available room (RevPAR): US$86.93 (+17.4%)
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 2025, blue is the median, and dashed light blue is for 2024.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking both last year and the median rate for the period 2000 through 2024 (Blue).

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

This is the weakest period of the year for hotel occupancy and the 4-week average will increase seasonally for the next several months.

by Calculated Risk on 1/27/2025 10:48:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Increase to 698,000 Annual Rate in December

Brief excerpt:

The Census Bureau reported New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 698 thousand. The previous three months were revised down slightly, combined.
...
The next graph shows new home sales for 2023 and 2024 by month (Seasonally Adjusted Annual Rate). Sales in December 2024 were up 6.7% from December 2023.

New home sales, seasonally adjusted, have increased year-over-year in 19 of the last 21 months. This is essentially the opposite of what happened with existing home sales that had been down year-over-year every month for 3+ years (existing home sales have been up year-over-year for the last 3 months).

There is much more in the article.