by Calculated Risk on 10/21/2025 12:19:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Early Read on September Existing Home Sales, and Update on MBS Yields and Spreads

A brief excerpt:

From housing economist Tom Lawler:

Early Read on Existing Home Sales in September

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.00 million in September, unchanged from August’s preliminary pace (which looked too high relative to state and local realtor data) and up 2.6% last September’s seasonally adjusted pace. Unadjusted sales should show a larger YOY % increase, reflecting this September’s higher business day count relative to last September’s.

Local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by about 2.2% from a year earlier.

CR Note: The NAR is scheduled to release September Existing Home sales on Thursday, October 23rd at 10:00 AM. The consensus is for the NAR to report sales of 4.06 million SAAR. Last year, the NAR reported sales in September 2024 at 3.90 million SAAR.

There is also an update on MBS Yields and Spreads in the article.

by Calculated Risk on 10/21/2025 11:31:00 AM

Catching up ...

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 37, up from 32 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Amid Market Challenges, Builder Expectations Rise in October

Even as builders continue to grapple with market and macroeconomic uncertainty, sentiment levels posted a solid gain in October as future sales expectations surpassed the 50-point breakeven mark for the first time since last January.

Builder confidence in the market for newly built single-family homes was 37 in October, up five points from September and the highest reading since April, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.

“While recent declines for mortgage rates are an encouraging sign for affordability conditions, the market remains challenging,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “The housing market has some areas with firm demand, including smaller builders shifting to remodeling and ongoing solid conditions for the luxury market. However, most home buyers are still on the sidelines, waiting for mortgage rates to move lower.”

“The HMI gain in October is a positive signal for 2026 as our forecast is for single-family housing starts to gain ground next year,” said NAHB Chief Economist Robert Dietz. “The 30-year fixed-rate mortgage fell from just above 6.5% at the start of September to 6.3% in early October. Combined with anticipated further easing by the Fed, builders expect a slightly improving sales environment, albeit one in which persistent supply-side cost factors remain a challenge.”

With the government shutdown continuing and an expectation of no Census housing construction data for September being published this week, Dietz noted the following: “Based on modeling of historical data, the October increase for the HMI suggests an approximate 3% increase for the September single-family permit data on a seasonally adjusted annual rate basis. Our model suggests a 2% to 4% range for the increase based on the statistical relationship.”

In a sign of ongoing challenges for the housing market, the latest HMI survey also revealed that 38% of builders reported cutting prices in October. This share has alternated between 37% and 39% since June. Meanwhile, the average price reduction rose to 6% in October after averaging 5% for several months previously. The last time builders reduced prices by 6% was a year ago in October 2024. The use of sales incentives was 65% in October, unchanged from September.
...
All the HMI subindices rose in October. The component measuring current sales conditions increased four points to 38, the index gauging future sales jumped nine points to 54 and the gauge charting traffic of prospective buyers posted a four-point gain to 25.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 46, the Midwest was unchanged at 42, the South increased two points to 31 and the West gained two points to 28.
emphasis added

Click on graph for larger image.

This graph shows the NAHB index since Jan 1985.

The index has been below 50 for eighteen consecutive months.

by Calculated Risk on 10/21/2025 08:47:00 AM

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

The first graph is the monthly data (with a strong seasonal pattern for imports).

Click on graph for larger image.

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday and then decline sharply and bottom in the Winter depending on the timing of the Chinese New Year.  

Imports were down 7% YoY in September, and exports were down 2% YoY.    

To remove the strong seasonal component for inbound traffic, the second graph shows the rolling 12-month average.

On a rolling 12-month basis, inbound traffic decreased 0.6% in September compared to the rolling 12 months ending the previous month.   

Outbound traffic decreased 0.1% compared to the rolling 12 months ending the previous month.

This is the 10th consecutive month with exports down YoY.

by Calculated Risk on 10/20/2025 07:13:00 PM

From Matthew Graham at Mortgage News Daily: Another Boring Day With Mortgage Rates Near 3-Year Lows

[W]e're hanging out near 3 year lows with minimal volatility. In order to see sharper, more sustained momentum, we'd likely need the government shutdown to end. That would allow the most consequential economic reports (like the jobs report) to be released. It would also allow data collection to resume for future jobs reports.

Between now and then, there is other data to guide the rate market, but it's just not as heavy hitting. This week is particularly light in that regard, but there's one exception. The BLS received an exception to compile September's CPI inflation data, to be released this Friday. It's not quite on par with the jobs report, but it can certainly get rates moving (for better or worse, depending on the details). [30 year fixed 6.22%]
emphasis added

Tuesday:
• No major economic releases scheduled.

by Calculated Risk on 10/20/2025 01:43:00 PM

Today, in the Calculated Risk Real Estate Newsletter: California Home Sales Up 6.6% Year-over-year SAAR in September

A brief excerpt:

The NAR is scheduled to release September Existing Home sales on Thursday, October 24th at 10:00 AM. The consensus is for the NAR to report sales of 4.06 million SAAR. Last year, the NAR reported sales in September 2024 at 3.90 million SAAR.

California reports Seasonally Adjusted (SA) sales and some measures of inventory whereas most of the local is Not Seasonally Adjusted (NSA).

From the California Association of Realtors® (C.A.R.): California home sales rebound in September with modest monthly and annual gains, C.A.R. says

After five consecutive months of year-over-year declines, September home sales activity climbed 5 percent from the 264,240 homes sold in August and rose 6.6 percent from a year ago, when 260,340 homes were sold on an annualized basis. September marked the 36th straight month in which the seasonally adjusted sales rate remained below the 300,000 benchmark. ...

This is in line with national sales being up year-over-year.

There is much more in the article.

by Calculated Risk on 10/20/2025 11:36:00 AM

Altos reports that active single-family inventory was up 0.3% week-over-week.  Inventory usually starts to decline in the fall and then declines sharply during the holiday season.

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 16.1% compared to the same week in 2024 (last week it was up 17.0%), and down 8.1% compared to the same week in 2019 (last week it was down 9.5%). 

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

This second inventory graph is courtesy of Altos Research.

As of October 17th, inventory was at 859 thousand (7-day average), compared to 857 thousand the prior week. 

Mike Simonsen discusses this data and much more regularly on YouTube

by Calculated Risk on 10/19/2025 08:16:00 AM

Note: CR is on vacation until Oct 21st.

This is the 21st year I've been writing this blog!

Starting in January 2005, I was very bearish on housing - and in early 2007, I predicted a recession.

However in 2009 I became more optimistic. For example, in February 2009, I wrote: Looking for the Sun (Note: that post shocked many readers since I had been very bearish).

A few years later, in early 2012, when many people were still bearish on housing, I called the bottom for housing: The Housing Bottom is Here

Then I spent a number of years arguing against the recession callers, and the new housing bubble calls. A few examples:

In 2015, I wrote The Endless Parade of Recession Calls

For the last 6+ years, there have been an endless parade of incorrect recession calls. The most reported was probably the multiple recession calls from ECRI in 2011 and 2012.
...
I disagreed with that call in 2011; I wasn't even on recession watch!

And I updated that post several times.

And on housing, over seven years ago, in January 2018, I was quoted in a Bloomberg article:

Bill McBride, who runs the Calculated Risk blog and also called the crash, doesn’t think home prices are inflated this time around. Unlike in 2005, lenders are acting responsibly and the Wild West of real estate speculation hasn’t returned, he said. There is less to speculate on, too. Compared with the overbuilding that preceded the bust, today’s pace of construction isn’t fast enough, he said.

“Lending standards are still pretty good,” McBride said, and he doesn’t expect mortgage rates to “take off” in the short term.

And in December 2018, I disagreed with Professor Shiller A comment on Professor Shiller's "The Housing Boom Is Already Gigantic. How Long Can It Last?". My conclusion:

No big deal, and definitely not a "gigantic" boom in house prices.

In 2021, I wrote: Is there a New Housing Bubble?

The lack of wild speculation doesn't mean house prices can't decline, but it means that we won't see cascading declines in prices like what happened when the housing bubble burst.
...
From a historical perspective, house prices are high. But lending standards have been solid, and we haven't seen significant speculation - so I wouldn't call this a bubble.

Also in 2021, I started my real estate newsletter.  

Note: for $25 you can read the entire archive and one month of daily posts - but make sure you cancel or substack will bill you every month! For $100, you will usually receive 4 to 6 articles per week for a year, you can read the archive and comment on all the posts.

A few key articles:

Housing and Demographics: The Next Big Shift

Housing: Don't Compare the Current Housing Boom to the Bubble and Bust

Household Formation Drives Housing Demand

The Long-Term Housing and Population Shift

Stay tuned!

by Calculated Risk on 10/18/2025 08:11:00 AM

NOTE: I'm on vacation and returning this week. Government data might be rescheduled due to the government shutdown.

The key economic report this week is September Existing Home sales.

For manufacturing, the Kansas City Fed manufacturing survey will be released this week.

----- Monday, October 20th -----
No major economic releases scheduled.

----- Tuesday, October 21st -----
No major economic releases scheduled.

----- Wednesday, October 22nd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

During the day: The AIA/Deltek's Architecture Billings Index for September (a leading indicator for commercial real estate).

----- Thursday, October 23rd -----
8:30 AM: The initial weekly unemployment claims report will be released. 

8:30 AM ET: Chicago Fed National Activity Index for September. This is a composite index of other data.

10:00 AM: Existing Home Sales for September from the National Association of Realtors (NAR).  

The graph shows existing home sales from 1994 through the report last month.

11:00 AM: Kansas City Fed Survey of Manufacturing Activity for October.

----- Friday, October 24th -----
8:30 AM: CPI.

by Calculated Risk on 10/17/2025 08:11:00 AM

From March 2013: Business Cycles and Markets

I've been asked several times about the recent ECRI recession call (obviously I disagreed with their incorrect recession call in 2011 - I wasn't even on recession watch then and I'm not on recession watch now - and I also think ECRI is wrong about a recession starting in mid-2012). ...

It seems to me ECRI is trying to make this an academic exercise and hoping for some significant downward revisions. Right now the data doesn't indicate a recession in 2012, but, as Menzie Chinn notes, "all of these series will be revised, so one wouldn’t want to state definitively we are not in a recession – therein lies the path to embarrassment. But the case still has to be made for recession."

But why do we care? ...

Why is there so much focus on the business cycle? For companies, especially cyclical companies, the reason is obvious – it helps with planning, staffing and investment.

But why are investors so focused on the business cycle? Obviously earnings decline in a recession, and stock prices fall too. The following graph shows the year-over-year (YoY) change in the S&P 500 (using average monthly prices) since 1970. Notice that the market usually declines YoY in a recession.
...
So calling a recession isn’t just an academic exercise, there is some opportunity to preserve capital.

Note: From June 2015: ECRI Admits Incorrect Recession Call

CR Note: I will be returning on October 21st (unless I change my mind or get lost), and I should start posting soon. Best to all!

by Calculated Risk on 10/16/2025 08:11:00 AM

Note: CR is on vacation, and I will return on October 21st.

In 2005 and 2006, I was researching previous housing bubble / busts to try to predict what would happen following the bursting of the housing bubble.

So, in April 2008, when many pundits were calling the housing bottom, I wrote: Housing Bust Duration

After another year (or two) of rapidly falling prices, it's very likely that real prices will continue to fall - but at a slower pace. During the last few years of the bust, real prices will be flat or decline slowly - and the conventional wisdom will be that homes are a poor investment.

The Los Angeles bust took 86 months in real terms from peak to trough (about 7 years) using the Case-Shiller index. If the Composite 20 bust takes a similar amount of time, the real price bottom will happen in early 2013 or so.

And then in February 2012 I wrote: The Housing Bottom is Here

There are several reasons I think that house prices are close to a bottom. First prices are close to normal looking at the price-to-rent ratio and real prices (especially if prices fall another 4% to 5% NSA between the November Case-Shiller report and the March report). Second the large decline in listed inventory means less downward pressure on house prices, and third, I think that several policy initiatives will lessen the pressure from distressed sales (the probable mortgage settlement, the HARP refinance program, and more).

And in March 2013, I wrote about the two bottoms - one for activity and the other for prices: Housing: The Two Bottoms

I pointed out there are usually two bottoms for housing: the first for new home sales, housing starts and residential investment, and the second bottom is for house prices.
...
[I]t appears activity bottomed in 2009 through 2011 (depending on the measure) and house prices bottomed in early 2012.

by Calculated Risk on 10/15/2025 08:11:00 AM

Note: CR is on vacation, and I will return on October 21st.

In early 2009, many analysts were predicting the 2nd Great Depression. However I started seeing some positive signs ... and I was able to call the end of the recession in mid-2009.

From January 2009: Vehicle Sales

David Rosenberg at Merrill Lynch wrote a research piece last week: "Not Your Father’s Recession ...(But Maybe Your Grandfather’s)" (no link)

Needless to say, the piece wasn't too upbeat.

But I was intrigued by some of the comments on vehicle sales.
...
Currently this ratio is at 23.9 years, the highest ever. This is an unsustainable level (I doubt most vehicles will last 24 years!), and the ratio will probably decline over the next few years. This could happen with vehicles being removed from the fleet, but more likely because of a sales increase.
...
Sales won't increase right away (look at the depressed sales during the early '80s), but this does suggest that auto sales are closer to the bottom than the top, and that auto sales will increase significantly in the future - although sales in 2009 will probably be dismal.

And from February 2009: Looking for the Sun

2009 will be a grim economic year. The unemployment rate will rise all year, house prices will fall, commercial real estate (CRE) will get crushed ... but there might be a few rays of sunshine too.
...
Even though most of the economic news will be ugly in 2009, my guess is all three of these series will find a bottom (or at least the pace of decline will slow significantly). This means that the drag on employment in these industries, and the drag on GDP, will slow or stop.

These will be rays of sunshine in a very dark season. That doesn't mean a thaw, but it will be a beginning ...

CR Note: I do not have a crystal ball, but I was looking past the horrible day-to-day numbers and starting to see the end of the recession.

by Calculated Risk on 10/14/2025 04:56:00 PM

Note: CR is on vacation, and I will return on October 21st.

In December 2007, most analysts were still dramitically underestimating the probably losses for lenders and financial institutions.

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

The global race is on to find the best phrase to describe the housing and credit mess. The U.K.’s Telegraph quotes an economist who says it “could make 1929 look like a walk in the park” if central banks don’t solve the crisis in a matter of weeks.

The report cites the recent prediction from Barclays Capital that losses from the subprime-mortgage meltdown could hit $700 billion. That would top Merrill Lynch’s recent estimate of $500 billion. The Australian newspaper notes that a $700 billion “bloodbath” — potentially leading the U.S. economy into “the blackest year since the Great Depression” — would top the GDPs of all but 15 nations.

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.

And if you look at the post the WSJ referenced, the first paragraph starts: "Within the next couple of years, probably somewhere between 10 million and 20 million U.S. homeowners will owe more on their homes, than their homes are worth."

I was a grizzly bear!

by Calculated Risk on 10/13/2025 08:11:00 AM

CR Note: On vacation. I will return on October 21st (If I don't get lost!)

In December 2006, my friend Doris "Tanta" Dungey started writing for Calculated Risk.

From December 2006, until she passed away from ovarian cancer on Nov 30, 2008, Tanta was my co-blogger. Tanta worked as a mortgage banker for 20 years, and we started chatting in early 2005 about the housing bubble and the changes in lending practices. In 2006, Tanta was diagnosed with late stage cancer, and she took an extended medical leave while undergoing treatment. While on medical leave she wrote for this blog, and her writings received widespread attention and acclaim.

If you want to understand the mortgage industry, read Tanta's posts (here is The Compleat UberNerd and a Compendium of Tanta's Posts).

As an example, here is a brief excerpt from Foreclosure Sales and REO For UberNerds

The following is not an exhaustive discussion of all of the issues involved in foreclosures and REO. It’s a start at unpacking some of the concepts and definitions. We have been seeing, and are going to continue to see, a lot of information presented on foreclosure sales, REO sales, and their impacts on existing home transaction volumes and prices in various market areas. As always with “UberNerd” posts, this is long and excruciating. Proceed with typical motivation as you may consider your own best interest in an open market in blog postings.

And an excerpts from Mortgage Servicing for UberNerds

StillLearning asked in the comments about mortgage servicing, and since y’all are nerds, not dummies, here’s my highly-selective occasionally-oversimplified summary for you that skips the boring parts like how your check gets out of the “lockbox” and that stuff. We can discuss extra-credit issues like “excess servicing” and “subservicing” and “SFAS 144 meets MSR” and “negative convexity” and other kinds of inside baseball in the comments. There is a lot that can be said about loan servicing, but let’s start with the basics:

Servicers have two major types of servicing portfolio: loans they service for themselves and loans they service for other investors. In accounting terms, the “compensation” is the same, meaning that even if you are the noteholder, you pay yourself to service the loans in the same way that an outside investor would pay you, and it shows on the books that way. The differences in compensation stem from the basic fact that one is generally more motivated to do a good job servicing (particularly collecting and efficiently liquidating REO) for one’s own investment than for someone else’s.

Also see In Memoriam: Doris "Tanta" Dungey for photos, links to obituaries in the NY Times, Washington Post and much more.

by Calculated Risk on 10/11/2025 08:11:00 AM

NOTE: I'm on vacation returning next week. Government data might be rescheduled due to the government shutdown.

The key economic reports this week are September CPI, Retail Sales and Housing Starts.

For manufacturing, September Industrial Production, and the October New York and Philly Fed surveys will be released this week.

----- Monday, October 13th -----
Columbus Day Holiday: Banks will be closed in observance of Columbus Day. The stock market will be open.

----- Tuesday, October 14th -----
6:00 AM: NFIB Small Business Optimism Index for September.

----- Wednesday, October 15th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The Consumer Price Index for September from the BLS. 

8:30 AM ET: The New York Fed Empire State manufacturing survey for October. 

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

----- Thursday, October 16th -----
8:30 AM: The initial weekly unemployment claims report will be released. 

8:30 AM: The Producer Price Index for September from the BLS. 

8:30 AM ET: The Philly Fed manufacturing survey for October. 

8:30 AM ET: Retail sales for September will be released.  

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

10:00 AM: The October NAHB homebuilder survey. Any number below 50 indicates that more builders view sales conditions as poor than good.

----- Friday, October 17th -----
8:30 AM: Housing Starts for September.

This graph shows single and multi-family housing starts since 1968.

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

This graph shows industrial production since 1967.

by Calculated Risk on 10/10/2025 08:21:00 AM

Note: CR is on vacation until Oct 21st.

This interview was in July 2024 and is still holding up!

I'm not sure about "renowned" but this interview hits several of the key points I've been discussing about housing.

From Lance Lambert at ResiClub: Renowned housing analyst who predicted the 2008 home price crash weighs in on the current market Here is the intro:

Years before the housing bubble burst in 2008, housing analyst Bill McBride began chronicling the troubles in the U.S. housing market in his blog Calculated Risk.

Not only did he predict the crash, but he also called the 2012 housing price bottom. Fast-forward to 2024, and this cycle he hasn’t been as concerned as he was in 2007.

McBride has maintained for the past few years that this housing cycle will ultimately resemble something closer to the 1978 to 1982 period—a time of overheated house price growth that saw spiked interest rates, strained affordability, crashed existing home sales volume, and yet no national home price crash—rather than the 2007-2011 national housing price crash years.

To better understand Bill McBride's perspective on the current housing and economic cycle, ResiClub reached out and conducted a Q&A with him.

Enjoy!

by Calculated Risk on 10/09/2025 09:31:00 AM

CR Note: On vacation. I will return on Tuesday, October 21st. (If I don't get lost!)

In December 2006, my friend Doris "Tanta" Dungey started writing for Calculated Risk.

When some people say that here are few women bloggers in finance and economics, I remind them that Tanta was the best of all of us!

From December 2006, until she passed away from ovarian cancer on Nov 30, 2008, Tanta was my co-blogger. Tanta worked as a mortgage banker for 20 years, and we started chatting in early 2005 about the housing bubble and the changes in lending practices. In 2006, Tanta was diagnosed with late stage cancer, and she took an extended medical leave while undergoing treatment. While on medical leave she wrote for this blog, and her writings received widespread attention and acclaim.

Here are excerpts from her first two posts:

From December 2006: Let Slip the Dogs of Hell

I still haven’t gotten over the fact that there’s a “capital management” group out there having named itself “Cerberus”. Those of you who were not asleep in Miss Buttkicker’s Intro to Western Civ will recognize Cerberus; the rest of you may have picked up the mythological fix from its reprise as “Fluffy” in the first Harry Potter novel. Wherever you get your culture, Cerberus is the three-headed dog who guards the gates of Hell. It takes three heads to do that, of course, because it’s never clear, in theology or finance, whether the idea is to keep the righteous from falling into the pit or the demons from escaping out of it (the third head is busy meeting with the regulators). Cerberus is relevant not just because it supplies me with today’s metaphor, but because it was the Biggest Dog of three (including Citigroup and Aozora, a Japanese bank) who in April bought a 51% stake in GMAC’s mega-mortgage operation, GM having, of course, once been renowned as one of the Big Three Automakers until it became one of the Big Three Financing Outfits With A Sideline In Cars. I tried to find a link for you to Aozora Bank’s announcement of the purchase, but the only press release I could find for that day involved the loss of customer data. They must have been so busy letting GMAC into the underworld that the dog head keeping the deposit tickets from getting out got distracted.
...
Now, I’m just a Little Mortgage Weenie, not a Big Finance Dog, but bear with me while I ask some stupid questions. Like: how do the Big Dogs maintain “diverse and flexible production channels” (i.e., little mortgage banker Puppies to sell you correspondent business and little broker Puppies to sell you wholesale business) when “market share currently held by top-tier players” expands to two-thirds (meaning less diverse off-load strategies for the Little Puppies in the “production channels,” putting them at further pipeline/counterparty risk unless they become Bigger Puppies, which makes them competitors instead of “channels,”), while at the same time watching some of the Little Puppies (in whom the Big Dogs have a major equity stake) crawl under the porch to die? I know Citi doesn’t seem to have noticed that the “increased regulatory scrutiny” is not just of “products” but of “wholesale operational/management controls,” but I did.

And from December 2006: On Hybrids, Teasers, and Other Mortgage Guidance Problems

First of all, a “hybrid ARM” is called a “hybrid” because it is, basically, a cross between a fixed rate and adjustable rate mortgage. Before the early 90s, an “ARM” basically meant a one-year ARM. The initial interest rate was set for one year, and the rate adjusted every year. The only real variations on this theme involved shortening the adjustment frequency: you could get an ARM that adjusted every six months instead of one year.

Around the early 90s, the “hybrid ARM” was introduced. It had an initial period in which the rate was “fixed” that didn’t match the subsequent adjustment frequency: this is the classic 3/1, 5/1, 7/1, and even 10/1 ARM. The whole idea of the hybrid ARM was to provide a kind of medium-range risk/reward tradeoff for borrowers and lenders.

CR Note: If you want to understand the mortgage industry, read Tanta's posts (here is The Compleat UberNerd and a Compendium of Tanta's Posts).

Also see In Memoriam: Doris "Tanta" Dungey for photos, links to obituaries in the NY Times, Washington Post and much more.

by Calculated Risk on 10/08/2025 11:08:00 AM

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

Mortgage applications decreased 4.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 3, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 18 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 14 percent higher than the same week one year ago.

“With mortgage rates on fixed-rate loans little changed last week, refinance application activity generally declined, with the exception of a modest increase for FHA refinance applications,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Refinance volume remains somewhat elevated relative to levels of a month ago. Purchase activity declined by about 1 percent for the week but continues to show moderate growth on an annual basis, and stronger growth for FHA loans, favored by first-time homebuyers.

Added Fratantoni, “The ARM share increased to 9.5 percent last week from 8.4 percent the prior week. Our survey shows 5/1 ARM rates are averaging almost a percentage point below 30-year fixed rates, and this differential is leading more purchase and refinance applicants to consider ARMs."

on the road, no graphs this week!

by Calculated Risk on 10/08/2025 08:11:00 AM

Note: CR is on vacation until Oct 21st.

This is the 21st year I've been writing this blog!

Starting in January 2005, I was very bearish on housing - and in early 2007, I predicted a recession.

However in 2009 I became more optimistic. For example, in February 2009, I wrote: Looking for the Sun (Note: that post shocked many readers since I had been very bearish).

A few years later, in early 2012, when many people were still bearish on housing, I called the bottom for housing: The Housing Bottom is Here

Then I spent a number of years arguing against the recession callers, and the new housing bubble calls. A few examples:

In 2015, I wrote The Endless Parade of Recession Calls

For the last 6+ years, there have been an endless parade of incorrect recession calls. The most reported was probably the multiple recession calls from ECRI in 2011 and 2012.
...
I disagreed with that call in 2011; I wasn't even on recession watch!

And I updated that post several times.

And on housing, over seven years ago, in January 2018, I was quoted in a Bloomberg article:

Bill McBride, who runs the Calculated Risk blog and also called the crash, doesn’t think home prices are inflated this time around. Unlike in 2005, lenders are acting responsibly and the Wild West of real estate speculation hasn’t returned, he said. There is less to speculate on, too. Compared with the overbuilding that preceded the bust, today’s pace of construction isn’t fast enough, he said.

“Lending standards are still pretty good,” McBride said, and he doesn’t expect mortgage rates to “take off” in the short term.

And in December 2018, I disagreed with Professor Shiller A comment on Professor Shiller's "The Housing Boom Is Already Gigantic. How Long Can It Last?". My conclusion:

No big deal, and definitely not a "gigantic" boom in house prices.

In 2021, I wrote: Is there a New Housing Bubble?

The lack of wild speculation doesn't mean house prices can't decline, but it means that we won't see cascading declines in prices like what happened when the housing bubble burst.
...
From a historical perspective, house prices are high. But lending standards have been solid, and we haven't seen significant speculation - so I wouldn't call this a bubble.

Also in 2021, I started my real estate newsletter.  

Note: for $25 you can read the entire archive and one month of daily posts - but make sure you cancel or substack will bill you every month! For $100, you will usually receive 4 to 6 articles per week for a year, you can read the archive and comment on all the posts.

A few key articles:

Housing and Demographics: The Next Big Shift

Housing: Don't Compare the Current Housing Boom to the Bubble and Bust

Household Formation Drives Housing Demand

The Long-Term Housing and Population Shift

Stay tuned!

by Calculated Risk on 10/07/2025 08:00:00 PM

I'll be lost in the wilderness - with little wifi - until probably October 21st.

Best to all!

by Calculated Risk on 10/07/2025 02:11:00 PM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Decline Slightly in September

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were down slightly in September compared to August. The Manheim Used Vehicle Value Index (MUVVI) declined to 207.0, lower by 0.2% versus August levels but showing an increase of 2% from a year ago. The seasonal adjustment caused the index to decrease for the month, as non-seasonally adjusted values moved slightly higher in September. The non-adjusted price in September increased just 0.1% compared to August, moving the unadjusted average price higher by 2.1% year over year. The long-term move on average for non-seasonally adjusted values is a decline of 0.3% in the month, demonstrating that the unadjusted depreciation trends in September were less than normally seen.
emphasis added

Click on graph for larger image.

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

The Manheim index suggests used car prices were declined slightly in September (seasonally adjusted) and were up 2% YoY.