by Calculated Risk on 2/23/2021 12:48:00 PM

Here is the post earlier on Case-Shiller: Case-Shiller: National House Price Index increased 10.4% year-over-year in December

It has been almost fifteen years since the bubble peak. In the Case-Shiller release today, the seasonally adjusted National Index (SA), was reported as being 28% above the previous bubble peak. However, in real terms, the National index (SA) is about 2% above the bubble peak (and historically there has been an upward slope to real house prices).  The composite 20, in real terms, is still 6% below the bubble peak.

The year-over-year growth in prices increased to 10.4% nationally.

Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $294,000 today adjusted for inflation (47%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).

Nominal House Prices

The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through December) in nominal terms as reported.

In nominal terms, the Case-Shiller National index (SA) and the Case-Shiller Composite 20 Index (SA) are both at new all times highs (above the bubble peak).



Real House Prices

The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to the bubble peak, and the Composite 20 index is back to early 2005.

In real terms, house prices are at 2005 levels.

Note that inflation was negative for a few months earlier this year, and that also boosted real prices.

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

Here is a similar graph using the Case-Shiller National and Composite 20 House Price Indexes.

This graph shows the price to rent ratio (January 2000 = 1.0). The price-to-rent ratio had been moving mostly sideways, but picked up recently.

On a price-to-rent basis, the Case-Shiller National index is back to December 2004 levels, and the Composite 20 index is back to May 2004 levels.

In real terms, prices are back to 2005 levels, and the price-to-rent ratio is back to 2004.

by Calculated Risk on 2/23/2021 10:02:00 AM

From Fed Chair Jerome Powell: Monetary Policy Report – February 2021. A few excerpts:

The initial wave of COVID-19 infections led to a historic contraction in economic activity as a result of both mandatory restrictions and voluntary changes in behavior by households and businesses. The level of gross domestic product (GDP) fell a cumulative 10 percent over the first half of 2020, and the measured unemployment rate spiked to a post–World War II high of 14.8 percent in April. As mandatory restrictions were subsequently relaxed and households and firms adapted to pandemic conditions, many sectors of the economy recovered rapidly and unemployment fell back. Momentum slowed substantially in the late fall and early winter, however, as spending on many services contracted again amid a worsening of the pandemic. All told, GDP is currently estimated to have declined 2.5 percent over the four quarters of last year and payroll employment in January was almost 10 million jobs below pre-pandemic levels, while the unemployment rate remained elevated at 6.3 percent and the labor force participation rate was severely depressed. Job losses have been most severe and unemployment remains particularly elevated among Hispanics, African Americans, and other minority groups as well as those who hold lower-wage jobs.

And on high frequency indicators:

Outside of the labor market, several new high-frequency indicators have been useful in monitoring the massive effects of the COVID-19 pandemic on consumer spending. Weekly data from NPD (a market analytics firm) on nonfood retail sales captured in real time the dramatic and sudden drop in consumption in mid-March; the monthly Census Bureau data recorded that decline only with a lag (figure B, left panel).3 The NPD data also reflected how the income support payments to families, provided by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, rapidly affected consumer spending in mid-April. More recently, the NPD data showed some decline in consumption late last year, followed by a pickup in January after the passage of the most recent fiscal stimulus package. Several nontraditional data sources illustrate that services spending remains depressed as social distancing continues to restrain in-person activity

Click on graph for larger image.

This graph from the report shows a few high frequency indicators (I post several every Monday morning including Hotel Occupancy and TSA data).

by Calculated Risk on 2/23/2021 09:13:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for December ("December" is a 3 month average of October, November and December 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 Reports 10.4% Annual Home Price Gain to End 2020

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 10.4% annual gain in December, up from 9.5% in the previous month. The 10-City Composite annual increase came in at 9.8%, up from 8.9% in the previous month. The 20-City Composite posted a 10.1% year-over-year gain, up from 9.2% in the previous month.

Phoenix, Seattle, and San Diego continued to report the highest year-over-year gains among the 19 cities (excluding Detroit) in December. Phoenix led the way with a 14.4% year-over-year price increase, followed by Seattle with a 13.6% increase and San Diego with a 13.0% increase. Eighteen of the 19 cities reported higher price increases in the year ending December 2020 versus the year ending November 2020.
...
Before seasonal adjustment, the U.S. National Index posted a 0.9% month-over-month increase, while the 10-City and 20-City Composites both posted increases of 0.9% and 0.8% respectively in December. After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.3%, while the 10-City and 20-City Composites both posted increases of 1.2% and 1.3% respectively. In December, 18 cities (excluding Detroit) reported increases before seasonal adjustment, while all 19 cities reported increases after seasonal adjustment.

“Home prices finished 2020 with double-digit gains, as the National Composite Index rose by 10.4% compared to year-ago levels,” says Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. “The trend of accelerating prices that began in June 2020 has now reached its seventh month and is also reflected in the 10- and 20-City Composites (up 9.8% and 10.1%, respectively). The market’s strength continues to be broadly-based: 18 of the 19 cities for which we have December data rose, and 18 cities gained more in the 12 months ended in December than they had gained in the 12 months ended in November.
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 is up 1.2% in December (SA) from November.

The Composite 20 index is up 1.3% (SA) in December.

The National index is 28% above the bubble peak (SA), and up 1.3% (SA) in December.  The National index is up 73% from the post-bubble low set in December 2011 (SA).

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

The Composite 10 SA is up 9.8% compared to December 2019.  The Composite 20 SA is up 10.1% year-over-year.

The National index SA is up 10.4% year-over-year.

Note: According to the data, prices increased in 19 cities month-over-month seasonally adjusted.

Price increases were above expectations.  I'll have more later.

by Calculated Risk on 2/22/2021 09:11:00 PM

From Matthew Graham at Mortgage News Daily: February Easily The Worst Month For Rates in Long Time

There are still 4 business days left in the month of February and thus still 4 days for the bond market to undergo an epic recovery that helps mortgage rates come back down. But traders and market-watchers alike have pined for--if not outright expected--such a recovery several times in the past few weeks only to be disappointed. Merely avoiding additional rate spikes would be a victory at this point.

Even if we can manage to avoid further rate spikes, February will still go down as the worst month for rates since January 2018 (March 2020 was worse at face value, but it's not really a fair comparison due to the unprecedented bond market reaction to the pandemic).

Some back-of-the-napkin math (OK, it's actually more official than that) shows the average lender charging at least a quarter of a percent more today than at the end of January. Depending on the initial rate quote, today's rates are .375% higher in many cases. [30 year fixed 3.10%]
emphasis added

Tuesday:
• At 9:00 AM ET, FHFA House Price Index for December 2020. This was originally a GSE only repeat sales, however there is also an expanded index.

• Also at 9:00 AM, S&P/Case-Shiller House Price Index for December. The consensus is for a 9.1% year-over-year increase in the Comp 20 index for December.

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for February.

• Also at 10:00 AM, Testimony, Fed Chair Jerome Powell, Semiannual Monetary Policy Report to the Congress, Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate

by Calculated Risk on 2/22/2021 06:52:00 PM

SPECIAL NOTE: The Covid Tracking Project will end daily updates on March 7th.

From Bloomberg on vaccinations as of Feb 22nd.

"In the U.S., more Americans have now received at least one dose than have tested positive for the virus since the pandemic began. So far, 64.2 million doses have been given. In the last week, an average of 1.37 million doses per day were administered.

Here is the CDC COVID Data Tracker. This site has data on vaccinations, cases and more.

The US is averaged 1.3 million tests per day over the last week.  The percent positive over the last 7 days was 4.8%.

Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to below 1%, so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,238,604 test results reported over the last 24 hours.

There were 52,530 positive tests.

Over 58,000 US deaths have been reported in February. See the graph on US Daily Deaths here.

This data is from the COVID Tracking Project.

And check out COVID Act Now to see how each state is doing. (updated link to new site)

Click on graph for larger image.

This graph shows the 7 day average of positive tests reported and daily hospitalizations. 

The dashed line is the post-summer surge low for hospitalizations.

by Calculated Risk on 2/22/2021 04:44:00 PM

Note: This is as of February 14th.

From the MBA: Share of Mortgage Loans in Forbearance Declines to 5.22%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 7 basis points from 5.29% of servicers’ portfolio volume in the prior week to 5.22% as of February 14, 2021. According to MBA’s estimate, 2.6 million homeowners are in forbearance plans.
...
“The share of loans in forbearance has declined for three weeks in a row, with portfolio and PLS loans decreasing the most this week. This decline was due to a sharp increase in borrower exits, particularly for IMB servicers,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Requests for new forbearances dropped to 6 basis points, matching a survey low.”

Fratantoni added, “The housing market is quite strong, with home sales, home construction, and home price data all testifying to this strength. Policymakers and the mortgage industry have helped enable this during the pandemic by providing millions of homeowners support in the form of forbearance. The decision to extend the allowable duration of forbearance plans should provide for a smoother transition this year as the job market continues to recover.” emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April, then trended down - and has mostly moved slowly down recently.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.07% to 0.06%."

by Calculated Risk on 2/22/2021 02:17:00 PM

From WardsAuto: U.S. Light Vehicle Sales & Inventory Forecast, February 2021 (pay content)

Click on graph for larger image.

This graph shows actual sales from the BEA (Blue), and Wards forecast for February (Red).

Sales have bounced back from the April low, but will likely be down around 7% year-over-year in February. The weather has impacted sales this month.

The Wards forecast of 15.6 million SAAR, would be down about 6% from January.

by Calculated Risk on 2/22/2021 11:36:00 AM

Watching existing home "for sale" inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing.

And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here.

And in 2015, it appeared the inventory build in several markets was ending, and that boosted price increases.  

In 2020, with the pandemic, inventory dropped to record lows, and prices really increased (record low mortgage rates and demographics were factors too).

I don't have a crystal ball, but watching inventory helps understand the housing market.

Click on graph for larger image.

This graph below shows existing home months-of-supply (from the NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999 through November 2020).

Case-Shiller for December 2020 will be released tomorrow.

There is a clear relationship, and this is no surprise (but interesting to graph).

If months-of-supply is high, prices decline. If months-of-supply is low, prices rise.

In the existing home sales report released last week, the NAR reported months-of-supply at 1.9 months in January. There is a seasonal pattern to inventory, but this is a record low - and prices are increasing sharply.

by Calculated Risk on 2/22/2021 11:08:00 AM

One of the key questions for 2021 is: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2021?

Tracking inventory will be very important this year.

Click on graph for larger image in graph gallery.

This inventory graph is courtesy of Altos Research.

As of February 19th, inventory was at 337 thousand (7 day average), compared to 723 thousand the same week a year ago.  That is a decline of over 53%.

A week ago, inventory was at 344 thousand, and was down 53% YoY.  Seasonally inventory should bottom by early March.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 2/22/2021 08:47:00 AM

These indicators are mostly for travel and entertainment.    It will interesting to watch these sectors recover as the vaccine is distributed.   

IMPORTANT: Be safe now - if all goes well, we could all be vaccinated by Q2 2021.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

Click on graph for larger image.

This data shows the seven day average of daily total traveler throughput from the TSA for 2019-2020 (Blue) and 2020-2021 (Red).

The dashed line is the percent of last year for the seven day average.

This data is as of February 21st.

The seven day average is down 58.8% from last year (41.2% of last year).  (Dashed line)

There was a slow increase from the bottom, with ups and downs due to the holidays - but TSA data has mostly moved sideways.

----- Restaurants: OpenTable -----
The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

Thanks to OpenTable for providing this restaurant data:

This data is updated through February 20 2021.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Dining picked up during the holidays.  Note that dining is generally lower in the northern states - Illinois, Pennsylvania, and New York.  Dining in Texas declined sharply due to the weather.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week (red) and the maximum and minimum for the years 2016 through 2019.  Blue is 2020 and Red is 2021.  

The data is from BoxOfficeMojo through February 18th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales were at $8 million last week (compared to usually around $200 million per week at this time of year).

----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2021, black is 2020, blue is the median, and dashed light blue is for 2009 (the worst year since the Great Depression for hotels - before 2020).

This data is through February 13th. Hotel occupancy is currently down 29.0% year-over-year. Seasonally we'd expect that business travel would start to pick up in the new year, but there will probably not be much pickup early in 2021.

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

----- Gasoline Supplied: Energy Information Administration -----
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020. At one point, gasoline supplied was off almost 50% YoY. Red is for 2021.

As of February 12th, gasoline supplied was off about 4.5% (about 95.5% of the same week in 2019).

Note: People driving instead of flying might have boosted gasoline consumption.

----- Transit: Apple Mobility -----
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.

There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.

This data is through February 20th for the United States and several selected cities.

The graph is the running 7 day average to remove the impact of weekends.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data directions requests, public transit in the 7 day average for the US is at 50% of the January 2020 level. It is at 44% in Chicago, and 32% in Houston (weather related decline) - and mostly moving sideways, and moving up a little recently.

----- New York City Subway Usage -----
Here is some interesting data on New York subway usage (HT BR).

This graph is from Todd W Schneider. This is daily data since early 2020.

This data is through Friday, February 19th.

Schneider has graphs for each borough, and links to all the data sources.

He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".