by Calculated Risk on 9/03/2025 11:53:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Q2 Update: Delinquencies, Foreclosures and REO

A brief excerpt:

Even with the recent weakness in house prices, it is important to note that there will NOT be a surge in foreclosures that could lead to cascading house price declines (as happened following the housing bubble) for two key reasons: 1) mortgage lending has been solid, and 2) most homeowners have substantial equity in their homes.

With substantial equity, and low mortgage rates (mostly at a fixed rates), few homeowners will have financial difficulties.

But it is still important to track delinquencies and foreclosures.
...
This graph shows the nominal dollar value of Residential REO for FDIC insured institutions based on the Q2 FDIC Quarterly Banking Profile released last week. Note: The FDIC reports the dollar value and not the total number of REOs.

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) was up 15% YOY from $766 million in Q2 2024 to $852 million in Q2 2025. This is still historically extremely low.

There is much more in the article.

by Calculated Risk on 9/03/2025 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 7.2 million in July, the U.S. Bureau of Labor Statistics reported today. Over the month, both hires and total separations were unchanged at 5.3 million. Within separations, both quits (3.2 million) and layoffs and discharges (1.8 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 July; the employment report this Friday will be for August.

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 July to 7.18 million from 7.36 million in June.

The number of job openings (black) were down 4% year-over-year. 

Quits were down 5% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 9/03/2025 07:00:00 AM

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

Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 29, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week and was 20 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 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 rates declined last week, with the 30-year fixed rate decreasing to its lowest level since April to 6.64 percent. However, that was not enough to spark more application activity,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications saw a small increase from the previous week, driven by FHA and VA refinance applications, but conventional refinances declined. The FHA rate is averaging about 30 basis points lower than the conventional rate in 2025, which has made those loans relatively more appealing to eligible borrowers. Purchase activity pulled back, after a four week run of increases, as slower homebuying activity led to declines in applications across the various loan types.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.64 percent from 6.69 percent, with points decreasing to 0.59 from 0.60 (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 has increased from the bottom, but remains very low.

by Calculated Risk on 9/02/2025 08:21:00 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 10:00 AM, Job Openings and Labor Turnover Survey for July from the BLS.

• At 2:00 PM, the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

by Calculated Risk on 9/02/2025 12:27:00 PM

From the Census Bureau reported that overall construction spending decreased:

Construction spending during July 2025 was estimated at a seasonally adjusted annual rate of $2,139.1 billion, 0.1 percent below the revised June estimate of $2,140.5 billion. The July figure is 2.8 percent below the July 2024 estimate of $2,200.7 billion
emphasis added

Private spending decreased and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,623.3 billion, 0.2 percent below the revised June estimate of $1,626.3 billion. ...

In July, the estimated seasonally adjusted annual rate of public construction spending was $515.8 billion, 0.3 percent above the revised June estimate of $514.3 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.

Private residential (red) spending is 9.4% below the peak in 2022.

Private non-residential (blue) spending is 6.9% below the peak in December 2023.

Public construction spending (orange) is at a new peak.

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

On a year-over-year basis, private residential construction spending is down 5.3%. Private non-residential spending is down 3.7% year-over-year. Public spending is up 3.4% year-over-year.

This was below consensus expectations; however, spending for the previous two months was revised up slightly.

by Calculated Risk on 9/02/2025 10:00:00 AM

(Posted with permission). The ISM manufacturing index indicated contraction. The PMI® was at 48.7% in August, up from 48.0% in July. The employment index was at 43.8%, up from 43.4% the previous month, and the new orders index was at 51.4%, up from 47.1%.

From ISM: MManufacturing PMI® at 48.7% August 2025 ISM® Manufacturing PMI® Report

Economic activity in the manufacturing sector contracted in August for the sixth consecutive month, following a two-month expansion preceded by 26 straight months of contraction, say the nation's supply executives in the latest ISM® Manufacturing PMI® Report.

The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

“The Manufacturing PMI® registered 48.7 percent in August, a 0.7-percentage point increase compared to the 48 percent recorded in July. The overall economy continued in expansion for the 64th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index indicated growth in August following a six-month period of contraction; the figure of 51.4 percent is 4.3 percentage points higher than the 47.1 percent recorded in July. The August reading of the Production Index (47.8 percent) is 3.6 percentage points lower than July’s figure of 51.4 percent. The Prices Index remained in expansion (or ‘increasing’) territory, registering 63.7 percent, down 1.1 percentage points compared to the reading of 64.8 percent reported in July. The Backlog of Orders Index registered 44.7 percent, down 2.1 percentage points compared to the 46.8 percent recorded in July. The Employment Index registered 43.8 percent, up 0.4 percentage point from July’s figure of 43.4 percent.
emphasis added

This suggests manufacturing contracted in August.  This was at the consensus forecast, although employment was weak and prices very strong.

by Calculated Risk on 9/02/2025 08:08:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Declined in July; Up 1.4% Year-over-Year

A brief excerpt:

Freddie Mac reported that its “National” Home Price Index (FMHPI) decreased -0.22% month-over-month (MoM) on a seasonally adjusted (SA) basis in July. On a year-over-year (YoY) basis, the National FMHPI was up 1.4% in July, down from up 1.8% YoY in June. 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 July, 31 states and D.C. were below their previous peaks, Seasonally Adjusted. The largest seasonally adjusted declines from the recent peaks are in D.C. (-5.2), California (-3.3%), North Carolina (-2.9%), Maryland (-2.7%), and Florida (-2.5%).

For cities (Core-based Statistical Areas, CBSA), 254 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 4 of the 5 cities with the largest price declines are in Florida. And 11 of the 30 cities are in Florida.

More cities (9) in California are now on the list.

There is much more in the article!

by Calculated Risk on 9/01/2025 06:12:00 PM

Weekend:
• Schedule for Week of August 31, 2025

Tuesday:
• At 10:00 AM ET, ISM Manufacturing Index for August. The consensus is for the ISM to be at 48.6, up from 48.0 in July.

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

• All Day, Light vehicle sales for August.

The consensus is for light vehicle sales to be 16.1 million SAAR in July, down from 16.4 million in June (Seasonally Adjusted Annual Rate).

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

Oil prices were up over the last week with WTI futures at $64.61 per barrel and Brent at $68.15 per barrel. A year ago, WTI was at $77, and Brent was at $82 - so WTI oil prices are down about 16% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.15 per gallon. A year ago, prices were at $3.28 per gallon, so gasoline prices are down $0.13 year-over-year.

by Calculated Risk on 9/01/2025 05:04:00 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 29, 2025, LBR was at $548.50 per 1,000 board feet, up 11% 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 9/01/2025 08:11:00 AM

Altos reports that active single-family inventory was down 0.1% week-over-week.

Inventory is now up 37.8% from the seasonal bottom in January.   Usually, inventory is up about 21.5% from the seasonal low by this week in the year.   So, 2025 saw 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 22.4% compared to the same week in 2024 (last week it was up 22.2%), and down 10.3% compared to the same week in 2019 (last week it was down 9.4%). 

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 29th, inventory was at 861 thousand (7-day average), compared to 861 thousand the prior week. 

Mike Simonsen discusses this data and much more regularly on YouTube

by Calculated Risk on 8/31/2025 09:21:00 AM

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. 23

• Active inventory climbed 20.3% year over year

The number of homes active on the market climbed 20.3% year over year, easing slightly compared to the previous week for the 10th consecutive week. Nevertheless, last week was the 94th consecutive week of annual gains in inventory. There were roughly 1.1 million homes for sale last week, marking the 17th week in a row over the million-listing threshold. 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 2.7% year over year

New listings rose 2.7% last week compared with the same period last year, a lower rate compared to the previous week, as the number of new listings remains below the spring and early summer norm. Homeowners are showing less urgency to list, as rising inventory and cautious buyer activity continue to temper the market.

• The median listing price was flat year over year

The median list price has been flat compared to the same week in 2024 for three weeks in a row. Meanwhile, the median list price per square foot, which accounts for changes in home size, also remained flat year over year, pausing its nearly two-year growth streak. The flattened trends in both price measurements suggest that we are entering a period of pricing stability, as buyers are squeezed by high mortgage rates and sellers are slow to adjust expectations.

by Calculated Risk on 8/30/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Case-Shiller: National House Price Index Up 1.9% year-over-year in June

• New Home Sales at 652,000 Annual Rate in July

• Fannie and Freddie: Single Family Serious Delinquency Rates Unchanged in July

• Inflation Adjusted House Prices 2.5% Below 2022 Peak

• Final Look at Local Housing Markets in July and a Comment on July Sales from Tom Lawler

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

by Calculated Risk on 8/30/2025 08:11:00 AM

The key report this week is the August employment report on Friday.

Other key indicators include the August ISM manufacturing index, August auto sales, and Trade Deficit for July.

----- Monday, September 1st -----
All US markets will be closed in observance of the Labor Day holiday.

----- Tuesday, September 2nd -----
10:00 AM: ISM Manufacturing Index for August. The consensus is for the ISM to be at 48.6, up from 48.0 in July.

10:00 AM: Construction Spending for July. The consensus is for a 0.1% increase in construction spending.

All Day: Light vehicle sales for August.

The consensus is for light vehicle sales to be 16.1 million SAAR in July, down from 16.4 million in June (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the sales rate for last month.

----- Wednesday, September 3rd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM Job Openings and Labor Turnover Survey for July from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

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

The number of job openings (black) were unchanged year-over-year and Quits were down 4% year-over-year.

2:00 PM: the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, September 4th -----
8:15 AM: The ADP Employment Report for August. This report is for private payrolls only (no government). The consensus is for 72,000 payroll jobs added in August, down from 104,000 in July.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for initial claims to increase to 232 thousand from 229 thousand last week.

8:30 AM: Trade Balance report for July from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. 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.

The consensus is the trade deficit to be $64.2 billion.  The U.S. trade deficit was at $60.2 Billion the previous month.

10:00 AM: the ISM Services Index for August.

----- Friday, September 5th -----
8:30 AM: Employment Report for August. The consensus is for 78,000 jobs added, and for the unemployment rate to increase to 4.3%.

There were 73,000 jobs added in July, and the unemployment rate was at 4.2%.

This graph shows the jobs added per month since January 2021.

by Calculated Risk on 8/29/2025 02:20:00 PM

From Goldman:

We lowered our Q3 GDP tracking estimate by 0.2pp to +1.6% (quarter-over-quarter annualized), reflecting the wider-than-expected goods trade deficit. Our Q3 domestic final sales estimate stands at +0.6%. [August 29th estimate]
emphasis added

And from the Atlanta Fed:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.5 percent on August 29, up from 2.2 percent on August 26. After recent releases from the US Census Bureau and the US Bureau of Economic Analysis, the nowcasts of third-quarter real personal consumption expenditures growth and second-quarter real gross private domestic investment growth increased from 2.2 percent and 4.4 percent, respectively, to 2.3 percent and 6.1 percent, while the nowcast of the contribution of net exports to third-quarter real GDP growth increased from -0.36 percentage points to 0.59 percentage points. [August 29th estimate]

by Calculated Risk on 8/29/2025 11:13:00 AM

Hotel occupancy was weak over the summer months, likely due to less international tourism.  The fall months are mostly domestic travel.

From STR: U.S. hotel results for week ending 23 August

The U.S. hotel industry reported negative year-over-year comparisons, according to CoStar’s latest data through 23 August. ...

17-23 August 2025 (percentage change from comparable week in 2024):

• Occupancy: 65.4% (-1.1%)
• Average daily rate (ADR): US$155.09 (-0.2%)
• Revenue per available room (RevPAR): US$101.38 (-1.3%)
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 decrease seasonally until the Fall travel period.

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 8/29/2025 09:24:00 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 July 2025.

CPI Shelter was up 3.7% year-over-year in July, down from 3.8% in June, and down from the cycle peak of 8.2% in March 2023.

Housing (PCE) was up 4.0% YoY in July, down from 4.1% in June 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: 2.6%
Core PCE Prices: 3.0%
Core minus Housing: 2.9%

by Calculated Risk on 8/29/2025 08:30:00 AM

From the BEA: Personal Income and Outlays, July 2025

Personal income increased $112.3 billion (0.4 percent at a monthly rate) in July, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)—personal income less personal current taxes—increased $93.9 billion (0.4 percent) and personal consumption expenditures (PCE) increased $108.9 billion (0.5 percent).

Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $110.9 billion in July. Personal saving was $985.6 billion in July and the personal saving rate—personal saving as a percentage of disposable personal income—was 4.4 percent.

From the preceding month, the PCE price index for July increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

From the same month one year ago, the PCE price index for July increased 2.6 percent. Excluding food and energy, the PCE price index increased 2.9 percent from one year ago.
emphasis added

The July PCE price index increased 2.6 percent year-over-year (YoY), unchanged from 2.6 percent YoY in June.

The PCE price index, excluding food and energy, increased 2.9 percent YoY, up from 2.8 percent in June.

The following graph shows real Personal Consumption Expenditures (PCE) through July 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 and PCE were at expectations.

Inflation was at expectations.

by Calculated Risk on 8/28/2025 07:47:00 PM

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

Friday:
• At 8:30 AM ET, Personal Income and Outlays, July 2025. 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 0.3%.  PCE prices are expected to be up 2.6% YoY, and core PCE prices up 2.9% YoY.

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

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

by Calculated Risk on 8/28/2025 04:48:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Fannie and Freddie: Single Family Serious Delinquency Rates Unchanged in July

Excerpt:

Freddie Mac reported that the Single-Family serious delinquency rate in July was 0.55%, unchanged from 0.55% June. Freddie's rate is up year-over-year from 0.51% in July 2024, however, this is below the pre-pandemic level of 0.60%.

Freddie's serious delinquency rate peaked in February 2010 at 4.20% following the housing bubble and peaked at 3.17% in August 2020 during the pandemic.

Fannie Mae reported that the Single-Family serious delinquency rate in July was 0.53%, unchanged from 0.53% in June. The serious delinquency rate is up year-over-year from 0.49% in July 2024, however, this is below the pre-pandemic lows of 0.65%

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59% following the housing bubble and peaked at 3.32% in August 2020 during the pandemic.

There is much more in the article.

by Calculated Risk on 8/28/2025 12:20:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 2.5% Below 2022 Peak

Excerpt:

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

In the June Case-Shiller house price index released Tuesday, the seasonally adjusted National Index (SA), was reported as being 77% above the bubble peak. However, in real terms, the National index (SA) is about 10.0% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is 1.4% 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 $443,000 today adjusted for inflation (48% 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 2.5% below the recent peak, and the Composite 20 index is 2.7% below the recent peak in 2022.

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

It has now been 37 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!