by Calculated Risk on 8/13/2025 07:00:00 AM

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

Mortgage applications increased 10.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 8, 2025.

The Market Composite Index, a measure of mortgage loan application volume, increased 10.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week. The Refinance Index increased 23 percent from the previous week and was 8 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 17 percent higher than the same week one year ago.

“The 30-year fixed mortgage rate declined to 6.67 percent last week, which spurred the strongest week for refinance activity since April. Borrowers responded favorably, as refinance applications increased 23 percent, driven mostly by conventional and VA applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinances accounted for 46.5 percent of applications and as seen in other recent refinance bursts, the average loan size grew significantly to $366,400. Borrowers with larger loan sizes continue to be more sensitive to rate movements.”

Added Kan, “Given the relative attractiveness of ARM rates compared to fixed rate loans, ARM applications increased 25 percent to their highest level since 2022, and the ARM share of all applications was almost 10 percent. However, lower rates were not enough to entice more homebuyers back into the market, as purchase applications were only up around one percent over the week, although still stronger than last year’s pace.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.67 percent from 6.77 percent, with points increasing to 0.64 from 0.59 (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 increased and is picking up a little with lower mortgage rates.

by Calculated Risk on 8/12/2025 07:42:00 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 8/12/2025 02:13:00 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 July. The 16% trimmed-mean Consumer Price Index increased 0.2%. "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 3.6% (unchanged from 3.6% YoY in June), the trimmed-mean CPI rose 3.2% (unchanged from 3.2%), and the CPI less food and energy rose 3.1% (up from 2.9%). 

Core PCE is for June was up 2.8% YoY, unchanged from 2.8% in May.  

by Calculated Risk on 8/12/2025 12:03:00 PM

The BLS reported earlier today:

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.5 percent over the last 12 months to an index level of 316.349 (1982-84=100). For the month, the index increased 0.1 percent prior to seasonal adjustment.

CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U and is not seasonally adjusted (NSA).

• In 2024, the Q3 average of CPI-W was 308.729.

The 2024 Q3 average was the highest Q3 average, so we only have to compare Q3 this year to last year.

Click on graph for larger image.

This graph shows CPI-W since January 2000. The red lines are the Q3 average of CPI-W for each year.

Note: The year labeled is for the calculation, and the adjustment is effective for December of that year (received by beneficiaries in January of the following year).

CPI-W was up 2.5% year-over-year in July (down from 2.6% YoY in June), and although this is early - we need the data for July, August and September - my early guess is COLA will probably be close to 3% this year, up from 2.5% in 2025.

Contribution and Benefit Base

The contribution base will be adjusted using the National Average Wage Index. This is based on a one-year lag. The National Average Wage Index is not available for 2024 yet, although we know wages increased solidly in 2024. If wages increased 5% in 2024, then the contribution base next year will increase to around $185,000 in 2026, from the current $176,100.

Remember - this is an early look. What matters is average CPI-W, NSA, for all three months in Q3 (July, August and September).

by Calculated Risk on 8/12/2025 08:51:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned two years ago as something to watch.  

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through July 2025.

Services were up 4.0% YoY as of July 2025, up from 3.8% YoY in June.

Services less rent of shelter was up 3.8% YoY in July, unchanged from 3.8% YoY the previous month.

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 up 1.2% YoY as of July 2025, up from 0.6% YoY the previous month.

Commodities less food and energy commodities were at 1.1% YoY in July, up from 0.6% YoY the previous month.

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

Shelter was up 3.7% year-over-year in July, down from 3.8% in June. Housing (PCE) was up 4.1% YoY in June, unchanged from 4.1% in May.

This is still catching up with private new lease data (this includes renewals whereas private data is mostly for new leases).

Core CPI ex-shelter was up 2.5% YoY in July, up from 2.1% YoY in June.

by Calculated Risk on 8/12/2025 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 in July, after rising 0.3 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.7 percent before seasonal adjustment.

The index for shelter rose 0.2 percent in July and was the primary factor in the all items monthly increase. The food index was unchanged over the month as the food away from home index rose 0.3 percent while the food at home index fell 0.1 percent. In contrast, the index for energy fell 1.1 percent in July as the index for gasoline decreased 2.2 percent over the month.

The index for all items less food and energy rose 0.3 percent in July, following a 0.2-percent increase in June. Indexes that increased over the month include medical care, airline fares, recreation, household furnishings and operations, and used cars and trucks. The indexes for lodging away from home and communication were among the few major indexes that decreased in July.

The all items index rose 2.7 percent for the 12 months ending July, after rising 2.7 percent over the 12 months ending June. The all items less food and energy index rose 3.1 percent over the last 12 months. The energy index decreased 1.6 percent for the 12 months ending July. The food index increased 2.9 percent over the last year.
emphasis added

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

by Calculated Risk on 8/11/2025 07:54:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Steady Ahead of High Stakes Inflation Report

The average top tier 30yr fixed rate held exceptionally steady last week after moving just a bit lower over the weekend. By comparison, today's rates are much closer to Friday's latest levels and still very close to the lowest we've seen since October, 2024.

If the two key economic considerations for interest rates are jobs and inflation, the two key economic reports are the jobs report seen earlier this month and the Consumer Price Index which comes out tomorrow morning. It's often repeated that the PCE Price Index is a preferable gauge of inflation, but CPI comes out 2 weeks earlier and thus gets most of the market's attention.

Just like last month, market participants are watching to see the extent of tariff-driven inflation in tomorrow's data. If it contributes to a higher-than-expected result, we'll likely see some upward pressure on rates. [30 year fixed 6.58%]
emphasis added

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

• At 8:30 AM, The Consumer Price Index for July from the BLS. The consensus is for a 0.2% increase in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 2.8% year-over-year and core CPI to be up 3.0% YoY.

by Calculated Risk on 8/11/2025 01:50:00 PM

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

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

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

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

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

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

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

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

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

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

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

by Calculated Risk on 8/11/2025 10:49:00 AM

Today, in the Real Estate Newsletter: August ICE Mortgage Monitor: Home Prices Continue to Cool

Brief excerpt:

House Price Growth Continues to Slow

Here is the year-over-year in house prices according to the ICE Home Price Index (HPI). The ICE HPI is a repeat sales index. ICE reports the median price change of the repeat sales. The index was up 1.0% year-over-year in July, down from 1.3% YoY in June.

• Mortgage rates in the high 6% range and improvements in for-sale inventory drove further home price cooling in July

• Annual home price growth eased to +1.0% in July, down from +1.3% in June and +3.6% at the start of the year

• That’s the softest growth rate since 2012, outside of the initial market reaction to mortgage rates pushing above 6% in April and May 2023

• Prices dipped by 0.06% in the month on a seasonally adjusted basis, which is equivalent to a seasonally adjusted annualized rate (SAAR) of -0.7% suggesting more slowing may be on the horizon

• Single family prices were up by +1.4% from the same time last year in July, while condo prices are now down -1.8%, marking the softest condo market since early 2012

• More than half of all major markets are seeing condo prices below last year’s levels, with 9 of the 11 softest condo markets located in Florida, led by Cape Coral (-13.4%) and North Port (-11.2%)

There is much more in the newsletter.

by Calculated Risk on 8/11/2025 08:11:00 AM

Altos reports that active single-family inventory was down 0.8% week-over-week.

Inventory is now up 37.6% from the seasonal bottom in January.   Usually, inventory is up about 21% from the seasonal low by this week in the year.   So, 2025 was a larger than normal increase in inventory.

The first graph shows the seasonal pattern for active single-family inventory since 2015.

Click on graph for larger image.

The red line is for 2025.  The black line is for 2019.  

Inventory was up 24.0% compared to the same week in 2024 (last week it was up 26.6%), and down 10.1% compared to the same week in 2019 (last week it was down 10.0%). 

Inventory started 2025 down 22% compared to 2019.  Inventory has closed more than half of that gap, and it appears inventory will be close to 2019 levels at the end of 2025.

This second inventory graph is courtesy of Altos Research.

As of August 8th, inventory was at 859 thousand (7-day average), compared to 866 thousand the prior week. 

Mike Simonsen discusses this data and much more regularly on YouTube

by Calculated Risk on 8/10/2025 06:23:00 PM

Weekend:
• Schedule for Week of August 10, 2025

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 7 and DOW futures are up 54 (fair value).

Oil prices were up over the last week with WTI futures at $63.53 per barrel and Brent at $66.34 per barrel. A year ago, WTI was at $78, and Brent was at $81 - so WTI oil prices are down about 18% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.09 per gallon. A year ago, prices were at $3.42 per gallon, so gasoline prices are down $0.33 year-over-year.

by Calculated Risk on 8/10/2025 08:42:00 AM

The Consumer Price Index for July is scheduled to be released on Tuesday, August 12th. 

The consensus is for a 0.2% increase in CPI, and a 0.3% increase in core CPI. The consensus is for CPI to be up 2.8% year-over-year and core CPI to be up 3.0% YoY.

From Goldman Sachs economists:

We expect a 0.33% increase in July core CPI (vs. +0.3% consensus), corresponding to a year-over-year rate of 3.08% (vs. +3.0% consensus). We expect a 0.27% increase in headline CPI (vs. +0.2% consensus), reflecting higher food prices (+0.3%) but lower energy prices (-0.6%). Our forecast is consistent with a 0.31% increase in core PCE in July.
...
Over the next few months, we expect tariffs to continue to boost monthly inflation and forecast monthly core CPI inflation between 0.3-0.4%. Aside from tariff effects, we expect underlying trend inflation to fall further this year, reflecting shrinking contributions from the housing rental and labor markets.

From BofA:

We forecast headline CPI rose by 0.24% m/m in July, and core CPI increased by 0.31% m/m. If correct, core CPI would increase to 3.1% y/y from 2.9%. Tariffs likely drove an acceleration in goods price hikes despite further declines in vehicle prices. Meanwhile, a rise in airfares should contribute to an uptick in core services ex housing inflation.

Click on graph for larger image.

This graph shows the month-to-month change in both headline and core inflation since January 2024.

The circled area is the change for last July.   CPI was up 0.14% in July 2024, and core CPI was up 0.19%.  So, anything above those readings for July will push up year-over-year inflation.  

Starting this month, the tariff related inflation is expected to kick in.

by Calculated Risk on 8/09/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Q2 NY Fed Report: Mortgage Originations by Credit Score, Foreclosures Decrease

• How Much will the Fannie & Freddie Conforming Loan Limit Change for 2026?

• 1st Look at Local Housing Markets in July

• Asking Rents Mostly Unchanged Year-over-year

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

by Calculated Risk on 8/09/2025 08:11:00 AM

The key reports this week are July CPI and Retail Sales.

For manufacturing, the August NY Fed survey, and the July Industrial Production report will be released.

----- Monday, August 11th -----
No major economic releases scheduled.

----- Tuesday, August 12th -----
6:00 AM ET: NFIB Small Business Optimism Index for July.

8:30 AM: The Consumer Price Index for July from the BLS. The consensus is for a 0.2% increase in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 2.8% year-over-year and core CPI to be up 3.0% YoY.

----- Wednesday, August 13th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, August 14th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for initial claims to increase to 228 thousand from 226 thousand last week.

8:30 AM: The Producer Price Index for July from the BLS. The consensus is for a 0.2% increase in PPI, and a 0.2% increase in core PPI.

----- Friday, August 15th -----
8:30 AM: Retail sales for July is scheduled to be released.  The consensus is for 0.5% 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 New York Fed Empire State manufacturing survey for August. The consensus is for a reading of 0.0, down from 5.5.

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

This graph shows industrial production since 1967.

The consensus is for a 0.2% decrease in Industrial Production, and for Capacity Utilization to be unchanged at 77.6%.

10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for August)

by Calculated Risk on 8/08/2025 04:06:00 PM

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

Rail volumes are holding up, indicating goods movement remains resilient despite the headwinds. Looking ahead, though, sustained pressure on labor markets and consumer demand could eventually weigh on freight activity.
emphasis added

U.S. rail intermodal shipments rebounded in July, rising 2.4% over last year and reversing a 2.9% decline in June (intermodal’s first year-over-year decline in 22 months). In July 2025, intermodal originations averaged 270,175 units per week, the second most ever for July (behind July 2018).

Meanwhile, U.S. total carloads rose 4.6% in July 2025 over July 2024, their fifth straight increase. In July, 15 of the 20 carload categories tracked by the AAR saw gains, the most since December 2023. Total carloads averaged 224,568 per week in July 2025, the most for July since 2019. In 2025 through July, total carloads were up 2.8%, or nearly 186,000 carloads, over last year.

by Calculated Risk on 8/08/2025 12:37:00 PM

This is something to watch again. Here is another update on lumber prices.

SPECIAL NOTE: The CME group discontinued the Random Length Lumber Futures contract on May 16, 2023.  I switched to a physically-delivered Lumber Futures contract that was started in August 2022.  Unfortunately, this impacts long term price comparisons since the new contract was priced about 24% higher than the old random length contract for the period when both contracts were available.

This graph shows CME random length framing futures through August 2022 (blue), and the new physically-delivered Lumber Futures (LBR) contract starting in August 2022 (Red).

On August 8, 2025, LBR was at $652.50 per 1,000 board feet, up 24% from a year ago.

Click on graph for larger image.

There is somewhat of a seasonal demand for lumber, and lumber prices frequently peak in the first half of the year.

The pickup in early 2018 was due to the Trump lumber tariffs in 2017.  There were huge increases during the pandemic due to a combination of supply constraints and a pickup in housing starts.  

by Calculated Risk on 8/08/2025 11:41:00 AM

From BofA:

Next week, we will initiate our 3Q GDP tracker ... [August 8th comment]
emphasis added

From Goldman:

[W]e boosted our Q3 GDP tracking estimate by 0.2pp to +1.2% (quarter-over-quarter annualized). Our Q3 domestic final sales estimate stands at -0.1%. [August 7th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 2.5 percent on August 7, unchanged from August 5 after rounding. After this morning’s wholesale trade report from the US Census Bureau, the nowcast of the contribution of inventory investment to third-quarter real GDP growth increased from 0.76 percentage points to 0.82 percentage points. [August 7th estimate]

by Calculated Risk on 8/08/2025 08:15:00 AM

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

A brief excerpt:

Tracking local data gives an early look at what happened the previous month and also reveals regional differences in both sales and inventory.

Closed sales in July were mostly for contracts signed in May and June, and mortgage rates, according to the Freddie Mac PMMS, 6.82% in May and 6.82% in June (somewhat higher than for closed sales in June).

In July, sales in these early reporting markets were up 0.9% YoY. Last month, in June, these same markets were up 0.9% year-over-year Not Seasonally Adjusted (NSA).

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

There is much more in the article.

by Calculated Risk on 8/07/2025 05:46:00 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 July, Realtor.com reported inventory was up 24.8% YoY, but still down 13.4% compared to the 2017 to 2019 same month levels. 

Here is their weekly report: Weekly Housing Trends: Latest Data as of Aug. 2

• Active inventory climbed 22.8% year over year

The number of homes active on the market climbed 22.8% year over year, slightly lower than the previous week for the seventh consecutive week. Nevertheless, last week was the 91st consecutive week of annual gains in inventory. There were roughly 1.1 million homes for sale last week, marking the 13th week in a row over the million-listing threshold and the highest inventory level since late 2019. Active inventory is growing significantly faster than new listings, an indication that more homes are sitting on the market for longer.

• New listings—a measure of sellers putting homes up for sale—rose 1.5% year over year

New listings rose just 1.5% last week compared with the same period last year. This marks another slowdown compared with the previous week, in which new listings grew by 5% year over year. Homeowners are less eager to get into the market as inventory continues to build and buyers keep to the sidelines.

• The median list price grew 0.8% year over year

The median list price grew slightly (0.8%) compared with the same week in 2024. The median list price per square foot—which adjusts for changes in home size—rose 0.4% year over year, continuing its nearly two-year growth streak. However, with price-per-square-foot growth slightly lagging overall price growth, it seems that the trend toward more small, affordable homes for sale is stabilizing.

With inventory climbing, and sales depressed, months-of-supply is at the highest level since 2016 putting downward pressure on house prices in an increasing number of areas.

by Calculated Risk on 8/07/2025 10:29:00 AM

From STR: U.S. hotel results for week ending 2 August

The U.S. hotel industry reported mostly positive year-over-year comparisons, according to CoStar’s latest data through 2 August. ...

27 July through 2 August 2025 (percentage change from comparable week in 2024):

• Occupancy: 69.5% (-0.1%)
• Average daily rate (ADR): US$161.00 (+0.5%)
• Revenue per available room (RevPAR): US$111.90 (+0.4%)
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 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 start to decrease seasonally.

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