by Calculated Risk on 7/31/2025 08:11:00 PM

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

Friday:
• At 8:30 AM ET, Employment Report for July.   The consensus is for 118,000 jobs added, and for the unemployment rate to increase to 4.2%.

• At 10:00 AM, ISM Manufacturing Index for July. The consensus is for the ISM to be at 49.8, up from 49.0 in June. 

• Also at 10:00 AM, Construction Spending for June. The consensus is for a 0.1% increase in construction spending.

• Also at 10:00 AM, University of Michigan's Consumer sentiment index (Final for July). 

• Late, Light vehicle sales for July from the BEA. The consensus is for light vehicle sales to be 16.2 million SAAR in July, up from 15.3 million in June (Seasonally Adjusted Annual Rate).

by Calculated Risk on 7/31/2025 05:00:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for July. The consensus is for 118,000 jobs added, and for the unemployment rate to increase to 4.2%. There were 147,000 jobs added in June, and the unemployment rate was at 4.1%.

Important: As I noted earlier, the large increase in seasonally adjusted education hiring in June was probably a seasonal adjustment issue. There will likely be payback in the July report, and it is possible we will see a seasonally adjusted decline in state and local education of 50 thousand or more for July.

From Goldman Sachs:

We forecast a 100k increase in payrolls in July. Big data indicators point to a rebound in private sector job growth, though to a still soft pace. ... We expect the unemployment rate to rebound to 4.2% based on the signal from other measures of labor market slack such as continuing jobless claims.
emphasis added

From BofA:

July NFP are likely to rise by 60k. State & local gov’t jobs should drop after spiking in June. Meanwhile, we think private payrolls will pick up to +85k because of the ongoing decline in initial claims. It is probably too early to see a big impact from immigration policy. But high continuing claims and unfavorable seasonals could be headwinds. ... The u-rate should rise to a still-benign 4.2%.

• ADP Report: The ADP employment report showed 104,000 private sector jobs were added in July.  This was above consensus forecasts and suggests BLS reported job gains at consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Not available yet for July.

• Unemployment Claims: The weekly claims report showed fewer initial unemployment claims during the reference week at 230,000 in July compared to 246,000 in June.  This suggests fewer layoffs in July compared to June.

• Conclusion: Over the last 6 months, employment gains averaged 130 thousand per month.  The ADP report and unemployment claims suggest a decent month.  However, my guess is we will start to see the impact of policy - a little more hiring hesitancy - and I expect a hit from education hiring (SA), so I'll take the under for July.

by Calculated Risk on 7/31/2025 02:42:00 PM

From STR: U.S. hotel results for week ending 26 July

The U.S. hotel industry reported negative year-over-year comparisons, according to CoStar’s latest data through 26 July. ...

20-26 July 2025 (percentage change from comparable week in 2024):

• Occupancy: 71.5% (-0.7%)
• Average daily rate (ADR): US$164.88 (-0.1%)
• Revenue per available room (RevPAR): US$117.88 (-0.8%)
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 behind 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.

The 4-week average will likely increase over the next week or two.

On a year-to-date basis, the only worse years for occupancy over the last 25 years were pandemic or recession years.

by Calculated Risk on 7/31/2025 11:58:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Declined in June; Up 2.0% Year-over-year

A brief excerpt:

Freddie Mac reported that its “National” Home Price Index (FMHPI) decreased -0.20% month-over-month (MoM) on a seasonally adjusted (SA) basis in June. On a year-over-year (YoY) basis, the National FMHPI was up 2.0% in June, down from up 2.3% YoY in May. The YoY increase peaked at 19.0% in July 2021, and for this cycle, bottomed at up 0.9% YoY in April 2023. ...

As of June, 32 states and D.C. were below their previous peaks, Seasonally Adjusted. The largest seasonally adjusted declines from the recent peaks are in D.C. (-5.4), West Virginia (-3.7%), Colorado (-2.9%), and Florida (-2.7%).

For cities (Core-based Statistical Areas, CBSA), 250 of the 384 CBSAs are below their previous peaks.

Here are the 30 cities with the largest declines from the peak, seasonally adjusted. Punta Gorda has passed Austin as the worst performing city. Note that 5 of the 6 cities with the largest price declines are in Florida. And 12 of the 30 cities are in Florida.

There is much more in the article!

by Calculated Risk on 7/31/2025 09:01:00 AM

Here is a graph of the year-over-year change in shelter from the CPI report and housing from the PCE report this morning, both through June 2025.

CPI Shelter was up 3.8% year-over-year in June, down from 3.9% in May, and down from the cycle peak of 8.2% in March 2023.

Housing (PCE) was up 4.1% YoY in June, unchanged from 4.1% in May and down from the cycle peak of 8.3% in April 2023.

Since asking rents are mostly flat year-over-year, these measures will slowly continue to decline over the next year as rents for existing tenants continue to increase.

The second graph shows PCE prices, Core PCE prices and Core ex-housing over the last 3 months (annualized):

Key measures are above the Fed's target on a 3-month basis. 

3-month annualized change:

PCE Price Index: 2.5%
Core PCE Prices: 2.6%
Core minus Housing: 2.4%

by Calculated Risk on 7/31/2025 08:35:00 AM

From the BEA: Personal Income and Outlays, June 2025

Personal income increased $71.4 billion (0.3 percent at a monthly rate) in June, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)—personal income less personal current taxes—increased $61.0 billion (0.3 percent) and personal consumption expenditures (PCE) increased $69.9 billion (0.3 percent).

Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $69.5 billion in June. Personal saving was $1.01 trillion in June and the personal saving rate—personal saving as a percentage of disposable personal income—was 4.5 percent.

From the preceding month, the PCE price index for June increased 0.3 percent. Excluding food and energy, the PCE price index also increased 0.3 percent.

From the same month one year ago, the PCE price index for June increased 2.6 percent. Excluding food and energy, the PCE price index increased 2.8 percent from one year ago.
emphasis added

The June PCE price index increased 2.6 percent year-over-year (YoY), up from 2.3 percent YoY in May.

The PCE price index, excluding food and energy, increased 2.8 percent YoY, up from 2.7 percent in May.

The following graph shows real Personal Consumption Expenditures (PCE) through June 2025 (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 below expectations.

Inflation was slightly above expectations.

by Calculated Risk on 7/31/2025 08:30:00 AM

The DOL reported:

In the week ending July 26, the advance figure for seasonally adjusted initial claims was 218,000, an increase of 1,000 from the previous week's unrevised level of 217,000. The 4-week moving average was 221,000, a decrease of 3,500 from the previous week's unrevised average of 224,500.
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 221,000.

The previous week was unrevised.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 7/30/2025 08:37:00 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 initial claims to increase to 230 thousand from 221 thousand last week.

• Also at 8:30 AM, Personal Income and Outlays, June 2025. The consensus is for a 0.3% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.3%.  PCE prices are expected to be up 2.5% YoY, and core PCE prices up 2.7% YoY.

• At 9:45 AM, Chicago Purchasing Managers Index for July.

by Calculated Risk on 7/30/2025 03:36:00 PM

From the Las Vegas Visitor Authority: June 2025 Las Vegas Visitor Statistics

Reflecting the broader backdrop of persistent economic uncertainty and weaker consumer confidence, compounded by a slower convention month, the destination saw a ‐11% YoY decline in visitation, hosting approximately 3.1M visitors.

Convention attendance was approx. 375k for the month (down ‐10.7%), reflecting in part out rotations of shows that were held elsewhere this year, including InfoComm (30k attendees) and Cisco Live (18k attendees).

Hotel occupancy of 78.7% (down ‐6.5 pts) and ADR of $164 (‐6.6% YoY) translated to monthly RevPAR below $129 (‐13.8% 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 (orange), 2024 (dark orange) and 2025 (red).

Visitor traffic was down 11.3% compared to last June.  Visitor traffic was down 14.2% compared to June 2019.

Year-to-date (YTD) visitor traffic is down 7.5% compared to the same period in 2019.

The second graph shows convention traffic.

Convention traffic was down 10.7% compared to June 2024 and down 27.1% compared to June 2019.  

YTD convention traffic is down 8.8% compared to 2019.

by Calculated Risk on 7/30/2025 02:00:00 PM

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

FOMC Statement:

Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, 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. Uncertainty about the economic outlook remains elevated. 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; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Jeffrey R. Schmid. Voting against this action were Michelle W. Bowman and Christopher J. Waller, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting. Absent and not voting was Adriana D. Kugler.
emphasis added

by Calculated Risk on 7/30/2025 11:13:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 2.0% Below 2022 Peak

Excerpt:

It has been 19 years since the housing bubble peak, ancient history for many readers!

In the May 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 10.5% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is 1.9% 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 $442,000 today adjusted for inflation (47% 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 2.0% below the recent peak, and the Composite 20 index is 2.2% below the recent peak in 2022.

Both the real National index and the Comp-20 index decreased in May.

It has now been 36 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 7/30/2025 10:00:00 AM

From the NAR: NAR Pending Home Sales Report Shows 0.8% Decrease in June

Pending home sales decreased by 0.8% in June from the prior month and 2.8% year-over-year, according to the National Association of REALTORS® Pending Home Sales report. The Report provides the real estate ecosystem, including agents and homebuyers and sellers, with data on the level of home sales under contract.

Northeast
2.1% increase month-over-month
Unchanged year-over-year

Midwest
0.8% decrease month-over-month
0.9% decrease year-over-year

South
0.7% decrease month-over-month
2.9% decrease year-over-year

West
3.9% decrease month-over-month
7.3% decrease year-over-year
emphasis added

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

by Calculated Risk on 7/30/2025 08:30:00 AM

From the BEA: Gross Domestic Product, 2nd Quarter 2025 (Advance Estimate)

Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2025 (April, May, and June), according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the first quarter, real GDP decreased 0.5 percent.

The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending. These movements were partly offset by decreases in investment and exports. ...

Compared to the first quarter, the upturn in real GDP in the second quarter primarily reflected a downturn in imports and an acceleration in consumer spending that were partly offset by a downturn in investment.

Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased 1.2 percent in the second quarter, compared with an increase of 1.9 percent in the first quarter.

The price index for gross domestic purchases increased 1.9 percent in the second quarter, compared with an increase of 3.4 percent in the first quarter. The personal consumption expenditures (PCE) price index increased 2.1 percent, compared with an increase of 3.7 percent. Excluding food and energy prices, the PCE price index increased 2.5 percent, compared with an increase of 3.5 percent.
emphasis added

PCE increased at a 1.4% annual rate, and residential investment decreased at a 4.6% rate. The advance Q2 GDP report, with 3.0% annualized increase, was above expectations.

I'll have more later ...

by Calculated Risk on 7/30/2025 08:15:00 AM

From ADP: ADP National Employment Report: Private Sector Employment Increased by 104,000 Jobs in July; Annual Pay was Up 4.4%

“Our hiring and pay data are broadly indicative of a healthy economy,” said Dr. Nela Richardson, chief economist, ADP. “Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient.”
emphasis added

This was above the consensus forecast of 75,000 jobs added. The BLS report will be released Friday, and the consensus is for 118,000 non-farm payroll jobs added in July.

by Calculated Risk on 7/30/2025 07:00:00 AM

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

Mortgage applications decreased 3.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 25, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week and was 30 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 17 percent higher than the same week one year ago.

“Mortgage applications fell to their lowest level since May, with both purchase and refinance activity declining over the week. There is still plenty of uncertainty surrounding the economy and job market, which is weighing on prospective homebuyers’ decisions,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate was little changed at 6.83 percent, but high enough that there was not much interest in refinancing, pushing the refinance index lower for the third straight week. Purchase applications decreased by almost 6 percent, as applications for conventional, FHA, and VA purchase loans fell, despite slowing home-price growth and increasing levels of for-sale inventory in many regions.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.83 percent from 6.84 percent, with points decreasing to 0.60 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 up 17% 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 7/29/2025 08:09:00 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 8:15 AM, The ADP Employment Report for June. This report is for private payrolls only (no government). The consensus is for 75,000 payroll jobs added in June, up from -33,000 in May.

• At 8:30 AM, Gross Domestic Product, 2nd quarter (advance estimate), and annual update. The consensus is that real GDP increased 2.5% annualized in Q2, up from -0.5% in Q1.

• At 10:00 AM, Pending Home Sales Index for June. The consensus is for a 0.3% increase in the index.

• At 2:00 PM, FOMC Meeting Announcement. No change to the Fed Funds rate is expected.

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

by Calculated Risk on 7/29/2025 01:41:00 PM

Last month, I noted:

State and local government education hiring was reported at 63.5 thousand in June (seasonally adjusted).  On a Not Seasonally Adjusted (NSA) basis, 542.4 thousand education jobs lost.  This happens every June.   However, this year fewer jobs were lost than expected resulting in the large SA gain.  It is possible this is just a timing issue and more than expected educators will be let go in July.

BofA economists noted this morning: July jobs report: beware the unexpected

Government employment (federal, state and local) surged by 73k in June, compared to an average of 13k over the first five months of the year. The spike in June was driven by what appears to be a seasonal distortion in state & local education employment, which should get paid back in July. We assume a 25k decline in total government payrolls with risks to the upside if the payback instead happens when schools reopen.

Looking back at previous years, it is possible we will see a seasonally adjusted decline in state and local education of 50 thousand or more for July (payback for June). This will be something to watch out for!

by Calculated Risk on 7/29/2025 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 7.4 million in June, the U.S. Bureau of Labor Statistics reported today. Over the month, both hires and total separations were little changed at 5.2 million and 5.1 million, respectively. Within separations, quits (3.1 million) were little changed while layoffs and discharges (1.6 million) were unchanged.
emphasis added

The following graph shows job openings (black line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for June; the employment report this Friday will be for July.

Click on graph for larger image.

Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

The spike in layoffs and discharges in March 2020 is labeled, but off the chart to better show the usual data.

Jobs openings decreased in June to 7.44 million from 7.71 million in May.

The number of job openings (black) were mostly unchanged year-over-year. 

Quits were down 4% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 7/29/2025 09:46:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 2.3% year-over-year in May

Excerpt:

S&P/Case-Shiller released the monthly Home Price Indices forMay ("May" is a 3-month average of March, April and May closing prices). March closing prices include some contracts signed in January, 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 decrease in the seasonally adjusted (SA) Case-Shiller National Index was at -0.29% (a -3.5% annual rate). This was the third consecutive MoM decrease.

On a seasonally adjusted basis, prices increased month-to-month in just 8 of the 20 Case-Shiller cities. San Francisco has fallen 8.2% from the recent peak, Tampa is down 3.3% from the peak, and Denver down 3.3%.

by Calculated Risk on 7/29/2025 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for May ("May" is a 3-month average of March, April and May 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 2.3% Annual Gain in May 2025

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 2.3% annual return for May, down from a 2.7% annual gain in the previous month. The 10-City Composite saw an annual increase of 3.4%, down from a 4.1% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 2.8%, down from a 3.4% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.4% increase in May, followed by Chicago and Detroit with annual increases of 6.1% and 4.9%, respectively. Tampa posted the lowest return, falling 2.4%.
...
The pre-seasonally adjusted U.S. National Index saw slight upward trends in May, posting gains of 0.4%. The 10-City Composite and 20-City Composite Indices both reported gains of 0.4%.

After seasonal adjustment, the U.S. National Index posted a decrease of -0.3%. Both the 10-City Composite and the 20-City Composite Indices saw a -0.3% decrease, as well.

“May’s data continued the year’s slow unwind of price momentum, with annual gains narrowing for a fourth consecutive month,” said Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices. “National home prices were just 2.3% higher than a year ago, the smallest increase since July 2023, and nearly all of that gain occurred in the most recent six months. The spring market lifted prices modestly, but not enough to suggest sustained acceleration."
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 down 0.3% in May (SA).  The Composite 20 index was down 0.3% (SA) in May.

The National index was down 0.3% (SA) in May.

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

The Composite 10 NSA was up 3.4% year-over-year.  The Composite 20 NSA was up 2.8% year-over-year.

The National index NSA was up 2.3% year-over-year.

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