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Monday, February 03, 2025

ISM® Manufacturing index Increased to 50.9% in January

by Calculated Risk on 2/03/2025 10:00:00 AM

(Posted with permission). The ISM manufacturing index indicated expansion. The PMI® was at 50.9% in January, up from 49.2% in December. The employment index was at 50.3%, up from 45.4% the previous month, and the new orders index was at 55.1%, up from 52.1%.

From ISM: Manufacturing PMI® at 50.9% January 2025 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector expanded in January after 26 consecutive months of contraction, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

The Manufacturing PMI® registered 50.9 percent in January, 1.7 percentage points higher compared to the seasonally adjusted 49.2 percent recorded in December. The overall economy continued in expansion for the 57th 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 was in expansion territory for the third month after seven months of contraction, strengthening again to a reading of 55.1 percent, 3 percentage points higher than the seasonally adjusted 52.1 percent recorded in December. The January reading of the Production Index (52.5 percent) is 2.6 percentage points higher than December’s seasonally adjusted figure of 49.9 percent. The index returned to expansion after eight months in contraction. The Prices Index continued in expansion (or ‘increasing’) territory, registering 54.9 percent, up 2.4 percentage points compared to the reading of 52.5 percent in December. The Backlog of Orders Index registered 44.9 percent, down 1 percentage point compared to the 45.9 percent recorded in December. The Employment Index registered 50.3 percent, up 4.9 percentage points from December’s seasonally adjusted figure of 45.4 percent.
emphasis added
This suggests manufacturing expanded in January.  This was above the consensus forecast.

Housing Feb 3rd Weekly Update: Inventory Down 0.3% Week-over-week, Up 27.7% Year-over-year

by Calculated Risk on 2/03/2025 08:11:00 AM

Altos reports that active single-family inventory was down 0.3% week-over-week.

Inventory always declines seasonally in the Winter and usually bottoms in late January or February. Inventory is now up 1.7% from the bottom three weeks ago. If three weeks ago was the seasonal bottom, that would be very early in the year, but that has happened before.

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

Altos Year-over-year Home InventoryClick on graph for larger image.

The red line is for 2024.  The black line is for 2019.  

Inventory was up 27.7% compared to the same week in 2024 (last week it was up 26.5%), and down 22.2% compared to the same week in 2019 (last week it was down 23.0%). 

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels has closed significantly!

Altos Home InventoryThis second inventory graph is courtesy of Altos Research.

As of Jan 31st, inventory was at 635 thousand (7-day average), compared to 637 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube

Sunday, February 02, 2025

Monday: ISM Manufacturing, Construction Spending, Vehicle Sales

by Calculated Risk on 2/02/2025 07:23:00 PM

Weekend:
Schedule for Week of February 2, 2025

Monday:
• At 10:00 AM ET, ISM Manufacturing Index for January. The consensus is for the ISM to be at 49.5, up from 49.3 in December.

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

• All day, Light vehicle sales for January. Sales were at 16.8 million in December (Seasonally Adjusted Annual Rate). Wards expects vehicle sales to decrease to 15.6 million SAAR in January.

• At 2:00 PM, Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS).

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 95 and DOW futures are down 470 (fair value).

Oil prices were down over the last week with WTI futures at $74.05 per barrel and Brent at $76.39 per barrel. A year ago, WTI was at $72, and Brent was at $80 - so WTI oil prices are up about 3% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.05 per gallon. A year ago, prices were at $3.15 per gallon, so gasoline prices are down $0.10 year-over-year.

Hotels: Occupancy Rate Decreased 3.4% Year-over-year

by Calculated Risk on 2/02/2025 08:25:00 AM

As expected with the MLK Day holiday, the U.S. hotel industry reported mixed year-over-year comparisons, according to CoStar’s latest data through 25 January. ...

119-25 January 2025 (percentage change from comparable week in 2024):

Occupancy: 54.3% (-3.4%)
• Average daily rate (ADR): US$154.21 (+3.4%)
• Revenue per available room (RevPAR): US$83.74 (-0.2%)
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Hotel Occupancy RateClick 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 both 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.

This is the weakest period of the year for hotel occupancy and the 4-week average will increase seasonally for the next few months.

Saturday, February 01, 2025

Update: Lumber Prices Up 6% YoY

by Calculated Risk on 2/01/2025 05:15:00 PM

This might be something to watch again. Here is another monthly 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 January 31, 2025, LBR was at $592.50 per 1000 board feet, up 6.4% from a year ago.

Lumber PricesClick 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.

We didn't see a significant runup in the Spring period of 2023 or 2024 due to the housing slowdown.  

But we might see an increase due to the tariffs on Canada.

Real Estate Newsletter Articles this Week: New Home Sales Increase to 698,000 Annual Rate in December

by Calculated Risk on 2/01/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

New Home SalesClick on graph for larger image.

New Home Sales Increase to 698,000 Annual Rate in December

Case-Shiller: National House Price Index Up 3.8% year-over-year in November

Inflation Adjusted House Prices 1.1% Below 2022 Peak

Freddie Mac House Price Index Increased in December; Up 4.0% Year-over-year

Final Look at Local Housing Markets in December and a Look Ahead to January Sales

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

Schedule for Week of February 2, 2025

by Calculated Risk on 2/01/2025 08:11:00 AM

The key reports scheduled for this week are the January employment report and the December trade deficit​.

Other key indicators include the January ISM manufacturing index and January vehicle sales.

----- Monday, February 3rd -----

10:00 AM: ISM Manufacturing Index for January. The consensus is for the ISM to be at 49.5, up from 49.3 in December.

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

Vehicle SalesAll day: Light vehicle sales for January. Sales were at 16.8 million in December (Seasonally Adjusted Annual Rate).

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

Wards expects vehicle sales to decrease to 15.6 million SAAR in January.

2:00 PM: Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS).

----- Tuesday, February 4th -----

Job Openings and Labor Turnover Survey10:00 AM ET: Job Openings and Labor Turnover Survey for December from the BLS.

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

Jobs openings increased in November to 8.10 million from 7.84 million in October.

The number of job openings (black) were down 9% year-over-year. Quits were down 13% year-over-year.

----- Wednesday, February 5th -----

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for January. This report is for private payrolls only (no government). The consensus is for 150,000 payroll jobs added in January, up from 122,000 added in December.

U.S. Trade Deficit8:30 AM: Trade Balance report for December 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 $87.0 billion.  The U.S. trade deficit was at $78.2 billion in November.

10:00 AM: ISM Services Index for January.

----- Thursday, February 6th -----

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a increase to 214 thousand from 207 thousand last week.

----- Friday, February 7th -----

Employment per month8:30 AM: Employment Report for December.   The consensus is for 170,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

There were 256,000 jobs added in December, and the unemployment rate was at 4.1%.

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

NOTE: For the household survey, new population controls will be used - and this will boost overall household employment. For the establishment survey, the annual benchmark revision will be included, lowering past job growth.

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

Friday, January 31, 2025

January 31st COVID Update: COVID in Wastewater Increasing

by Calculated Risk on 1/31/2025 07:38:00 PM

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

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So I'm no longer tracking hospitalizations.

COVID Metrics
 NowWeek
Ago
Goal
Deaths per Week🚩773628≤3501
1my goals to stop weekly posts.
🚩 Increasing number weekly for Deaths.
✅ Goal met.

COVID-19 Deaths per WeekClick on graph for larger image.

This graph shows the weekly (columns) number of deaths reported since Jan 2023.

Although weekly deaths met the original goal to stop posting, I'm continuing to post now that deaths are above the goal again - and at a minimum, I'll continue to post through the Winter.  

Weekly deaths have been increasing, and weekly deaths are well above the low of 313 in early June 2024.

And here is a graph I'm following concerning COVID in wastewater as of January 30th:

COVID-19 WastewaterThis appears to be a leading indicator for COVID hospitalizations and deaths.

Nationally COVID in wastewater is "High" according to the CDC.   

Initial Q1 GDP Tracking: Mid-to-high 2% Range

by Calculated Risk on 1/31/2025 02:09:00 PM

From Goldman:

We launched our Q1 GDP tracking estimate at +2.6% (quarter-over-quarter annualized) and our Q1 domestic final sales estimate at +2.3%. We launched our past-quarter GDP tracking estimate at +2.3%, in line with the advance reading. [Jan 31st estimate]
emphasis added
And from the Atlanta Fed: GDPNow
The initial GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is 2.9 percent on January 31. The initial estimate of last quarter's real GDP growth rate released by the US Bureau of Economic Analysis on January 30 was 2.3 percent, the same as the final GDPNow model nowcast after rounding. [Jan 31st estimate]

Freddie Mac House Price Index Increased in December; Up 4.0% Year-over-year

by Calculated Risk on 1/31/2025 10:42:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Increased in December; Up 4.0% Year-over-year

A brief excerpt:

Freddie Mac reported that its “National” Home Price Index (FMHPI) increased 0.54% month-over-month on a seasonally adjusted (SA) basis in December. On a year-over-year basis, the National FMHPI was up 4.0% in December, up from up 3.9% YoY in November. The YoY increase peaked at 19.0% in July 2021, and for this cycle, bottomed at up 0.9% YoY in May 2023. ...

Freddie HPI CBSAFor cities (Core-based Statistical Areas, CBSA), here are the 30 cities with the largest declines from the peak, seasonally adjusted. Austin continues to be the worst performing city. However, 6 of the 7 cities with the largest price declines are in Florida (and Florida has 14 of the 30 cities with the largest price declines).
There is much more in the article!