by Calculated Risk on 11/27/2024 07:00:00 AM

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

— Mortgage applications increased 6.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 22, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 6.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week and was 119 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 12 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 52 percent higher than the same week one year ago.

“Purchase activity drove overall applications higher last week, as conventional purchase applications picked up pace and mortgage rates declined for the first time in over two months, with the 30-year fixed rate dropping slightly to 6.86 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. With the growth in for-sale inventory and signs that the economy remains strong, buyers have remained in the market even though rates have increased recently. The increase in conventional purchase applications helped push the average purchase loan size to $439,200, its highest level in almost a month. The decline in refinance activity was driven by pullbacks in FHA and VA refinances. Applications were significantly higher than a year ago by most measures, but this was compared to the week of Thanksgiving 2023, which was a week earlier than this year’s holiday.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.86 percent from 6.90 percent, with points remaining unchanged at 0.70 (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 52% year-over-year unadjusted (due to timing of Thanksgiving - this will be down sharply next week). 

Red is a four-week average (blue is weekly).  

Purchase application activity is up about 22% from the lows in late October 2023 and is close to the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index increased as mortgage rates declined in September but has decreased as rates moved back up.

by Calculated Risk on 11/26/2024 07:48:00 PM

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

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

• At 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for 220 thousand initial claims, up from 213 thousand last week.

• Also at 8:30 AM, Gross Domestic Product (Second Estimate) and Corporate Profits (Preliminary), 3rd Quarter 2024. The consensus is that real GDP increased 2.8% annualized in Q3, unchanged from the advance estimate of 2.8% in Q3.

• Also at 8:30 AM, Durable Goods Orders for October from the Census Bureau. The consensus is for a 0.1% increase in durable goods orders.

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

• At 10:00 AM, Personal Income and Outlays, October 2024. The consensus is for a 0.3% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.3%.  PCE prices are expected to be up 2.1% YoY, and core PCE prices up 2.7% YoY.

• Also at 10:00 AM, Pending Home Sales Index for October.

by Calculated Risk on 11/26/2024 04:03:00 PM

The ICE HPI is a repeat sales index. ICE reports the median price change of the repeat sales.  

From Intercontinental Exchange (ICE):

• Home price growth edged slightly higher in October to +3.0% (from +2.9% in September), after easing in each of the previous seven months

• Lower interest rates in August and September combined with weaker Q4 2023 growth numbers cycling out of the 12-month calculation window to cause the slight rise in year-over-year growth

• Annual gains will continue to see upward pressure from Q4 2023 numbers rolling off the books over the next few months, but that annual growth rate should begin to soften again as we move into early 2025, if monthly price gains continue at their current pace

• Rising interest rates in the lead up to, and following, the recent presidential election have led to a modest pull back in demand, which could also lead to softer price gains as we make our way into early 2025

by Calculated Risk on 11/26/2024 02:22:00 PM

From the Fed: Minutes of the Federal Open Market Committee, November 6–7, 2024. Excerpt:

In their discussion of financial stability, participants who commented noted vulnerabilities to the financial system that they assessed warranted monitoring. A couple of participants observed that the banking system was sound but that there continued to be potential risks associated with unrealized losses on bank assets. Many participants discussed vulnerabilities associated with CRE exposures, focusing on risks in the office sector. A few of these participants noted signs that the deterioration of conditions in this sector of the CRE market might be lessening. A couple of participants noted concerns about asset valuation pressures in other markets. Some participants commented on cyber risks that could impair the operation of financial institutions, financial infrastructure, and, potentially, the overall economy; these participants noted, in particular, vulnerabilities that could emanate from third-party service providers. A couple of participants also mentioned third-party service providers in the context of risks associated with brokered and reciprocal deposit arrangements. Several participants noted that leverage in the market for Treasury securities remained a risk and commented that it would be important to monitor developments regarding the market's resilience. A few participants discussed vulnerabilities posed by the growth of private credit and potential links to banks and other financial institutions. A couple of participants commented on the financial condition of low- and moderate-income households that have exhausted their savings and the importance of monitoring rising delinquency rates on credit cards and auto loans. A couple of participants remarked on the successful implementation of the Securities and Exchange Commission's money fund rules, noting that it would reduce financial stability risks posed by domestic MMFs.
...
In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time. Participants noted that monetary policy decisions were not on a preset course and were conditional on the evolution of the economy and the implications for the economic outlook and the balance of risks; they stressed that it would be important for the Committee to make this clear as it adjusted its policy stance. While emphasizing that monetary policy would be data dependent, many participants noted the volatility of recent economic data and highlighted the importance of focusing on underlying economic trends and the evolution of the outlook when assessing incoming information. Some participants remarked that, at a future meeting, there would be value in the Committee considering a technical adjustment to the rate offered at the ON RRP facility to set the rate equal to the bottom of the target range for the federal funds rate, thereby bringing the rate back into an alignment that had existed when the facility was established as a monetary policy tool.
emphasis added

by Calculated Risk on 11/26/2024 10:48:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Decrease Sharply to 610,000 Annual Rate in October

Brief excerpt:

Important: Sales in October were impacted by the hurricanes. The south region was down 27.7% year-over-year (“South” includes Florida, the Carolinas and Georgia - states hit hardest by hurricanes Helene and Milton). Excluding the South, sales were up about 8% year-over-year.

The Census Bureau reported New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 610 thousand. The previous three months were revised down, combined.
...
The next graph shows new home sales for 2023 and 2024 by month (Seasonally Adjusted Annual Rate). Sales in October 2024 were down 9.4% from October 2023.

New home sales, seasonally adjusted, have increased year-over-year in 17 of the last 19 months.

There is much more in the article.

by Calculated Risk on 11/26/2024 10:00:00 AM

The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 610 thousand.

The previous three months were revised down, combined.

Sales of new single-family houses in October 2024 were at a seasonally adjusted annual rate of 610,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 17.3 percent below the revised September rate of 738,000 and is 9.4 percent below the October 2023 estimate of 673,000.
emphasis added

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

New home sales were below pre-pandemic levels.

The second graph shows New Home Months of Supply.

The months of supply increased in October to 9.5 months from 7.7 months in September.

The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 2020.

This is well above the top of the normal range (about 4 to 6 months of supply is normal).

"The seasonally-adjusted estimate of new houses for sale at the end of October was 481,000. This represents a supply of 9.5 months at the current sales rate​."

Sales were well below expectations of 730 thousand SAAR, and sales for the three previous months were revised down, combined. I'll have more later today.

by Calculated Risk on 11/26/2024 09:46:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 3.9% year-over-year in September

Excerpt:

S&P/Case-Shiller released the monthly Home Price Indices for September ("September" is a 3-month average of July, August and September closing prices). September closing prices include some contracts signed in May, so there is a significant lag to this data. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The MoM increase in the seasonally adjusted (SA) Case-Shiller National Index was at 0.33% (a 4.1% annual rate), This was the 20th consecutive MoM increase in the seasonally adjusted index.

On a seasonally adjusted basis, prices increased month-to-month in 18 of the 20 Case-Shiller cities (prices declined in Los Angeles and Miami). Seasonally adjusted). San Francisco has fallen 6.8% from the recent peak, Phoenix is down 3.5% from the peak, and Denver down 2.5%.

by Calculated Risk on 11/26/2024 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for September ("September" is a 3-month average of July, August and September closing prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

From S&P S&P CoreLogic Case-Shiller Index Records 3.9% Annual Gain in September 2024

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.9% annual return for September, down from a 4.3% annual gain in the previous month. The 10-City Composite saw an annual increase of 5.2%, down from a 6.0% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.6%, dropping from a 5.2% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.5% increase in September, followed by Cleveland and Chicago with annual increases of 7.1% and 6.9%, respectively. Denver posted the smallest year-over-year growth with 0.2%.
...
The pre-seasonally adjusted U.S. National Index, 20-City Composite, and 10-City Composite upward trends continued to reverse in September, with a -0.1% drop for the national index, and the 20-City and 10-City Composites saw -0.3% and -0.4% returns for this month, respectively.

After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 0.3%, while the 20-City and 10-City Composite reported monthly rises of 0.2% and 0.1%, respectively.

“Home price growth stalled in the third quarter, after a steady start to 2024,” says Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets. “The slight downtick could be attributed to technical factors as the seasonally adjusted figures boasted a 16th consecutive all-time high.

“We continue to see above-trend price growth in the Northeast and Midwest, growing 5.7% and 5.4%, respectively, led by New York, Cleveland, and Chicago,” Luke continued. “The Big Apple has taken the top spot for five consecutive months, pushing the region ahead of all others since August 2023. The South region reported its slowest growth in over a year, rising 2.8%, barely above current inflation levels.”
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index was up 0.1% in September (SA).  The Composite 20 index was up 0.2% (SA) in September.

The National index was up 0.3% (SA) in September.

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

The Composite 10 SA was up 5.2% year-over-year.  The Composite 20 SA was up 4.6% year-over-year.

The National index SA was up 3.9% year-over-year.

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

by Calculated Risk on 11/25/2024 07:16:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Near Lowest Levels in a Month

Last Monday, mortgage rates were near the highest levels in more than 3 months. A week later, and the average lender is right in line with the lowest levels in more than a month.
...
The average top tier 30yr fixed mortgage rate fell back below 7% with today's move, but not by much. This means many borrowers will still be seeing rates in the low 7s, even for top tier scenarios. [30 year fixed 6.93%]
emphasis added

Tuesday:
• At 9:00 AM ET, S&P/Case-Shiller House Price Index for September. The National index was up 4.2% YoY in August and is expected to increase about the same in September.

• Also at 9:00 AM, FHFA House Price Index for September. This was originally a GSE only repeat sales, however there is also an expanded index. The Conforming loan limits for next year will also be announced.

• At 10:00 AM, New Home Sales for October from the Census Bureau. The consensus is for 730 thousand SAAR, down from 738 thousand in September.

• Also at 10:00 AM, Richmond Fed Survey of Manufacturing Activity for November. This is the last of the regional Fed manufacturing surveys for November.

• At 2:00 PM, FOMC Minutes, Minutes Meeting of November 6-7, 2024

by Calculated Risk on 11/25/2024 04:02:00 PM

Altos reports that active single-family inventory was down 0.4% week-over-week.  Inventory is now 2.8% below the peak for the year (5 weeks ago).

Inventory will now decline seasonally until early next year.

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 2024.  The black line is for 2019.  

Inventory was up 27.1% compared to the same week in 2023 (last week it was up 26.7%), and down 17.5% compared to the same week in 2019 (last week it was down 18.5%). 

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels is about two-thirds closed.

This second inventory graph is courtesy of Altos Research.

As of Nov 22nd, inventory was at 719 thousand (7-day average), compared to 722 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube.