by Calculated Risk on 7/01/2025 11:45:00 AM

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

Excerpt:

Freddie Mac reported that the Single-Family serious delinquency rate in May was 0.55%, down from 0.57% April. Freddie's rate is up year-over-year from 0.49% in May 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 May was 0.53%, down from 0.55% in April. The serious delinquency rate is up year-over-year from 0.48% in May 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 7/01/2025 10:10:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 7.8 million in May, the U.S. Bureau of Labor Statistics reported today. Over the month, both hires and total separations were little changed at 5.5 million and 5.2 million, respectively. Within separations, quits (3.3 million) and layoffs and discharges (1.6 million) changed little.
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 May; the employment report this Friday will be for June.

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 increased in May to 7.77 million from 7.40 million in April.

The number of job openings (black) were down 2% year-over-year. 

Quits were down 2% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 7/01/2025 10:00:00 AM

(Posted with permission). The ISM manufacturing index indicated expansion. The PMI® was at 49.0% in June, up from 48.5% in May. The employment index was at 45.0%, down from 46.8% the previous month, and the new orders index was at 46.2%, down from 47.6%.

From ISM: Manufacturing PMI® at 49% June 2025 Manufacturing ISM® Report On Business®

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 49 percent in June, a 0.5-percentage point increase compared to the 48.5 percent recorded in May. The overall economy continued in expansion for the 62nd 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 contracted for the fifth month in a row following a three-month period of expansion; the figure of 46.4 percent is 1.2 percentage points lower than the 47.6 percent recorded in May. The June reading of the Production Index (50.3 percent) is 4.9 percentage points higher than May’s figure of 45.4, returning the index to expansion territory. The Prices Index remained in expansion (or ‘increasing’) territory, registering 69.7 percent, up 0.3 percentage point compared to the reading of 69.4 percent reported in May. The Backlog of Orders Index registered 44.3 percent, down 2.8 percentage points compared to the 47.1 percent recorded in May. The Employment Index registered 45 percent, down 1.8 percentage points from May’s figure of 46.8 percent.

“The Supplier Deliveries Index indicated slower delivery performance, though the pace picked up somewhat: The reading of 54.2 percent is down 1.9 percentage points from the 56.1 percent recorded in May. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index registered 49.2 percent, up 2.5 percentage points compared to May’s reading of 46.7 percent.

“The New Export Orders Index reading of 46.3 percent is 6.2 percentage points higher than the reading of 40.1 percent registered in May. The Imports Index gained back its loss from the previous month, registering 47.4 percent, 7.5 percentage points higher than May’s reading of 39.9 percent.”
emphasis added

This suggests manufacturing contracted in June.  This was slightly above the consensus forecast. New export orders were still weak; employment was weak and prices very strong.

by Calculated Risk on 6/30/2025 08:16:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Take Another Step Toward April Lows

April 3rd and 4th saw the average top tier 30yr fixed mortgage rates well into the "mid 6's." Many lenders were able to quote 6.5% at the time. Just a few days ago, we noted there was still a ways to go before breaking below those early April levels, but the past few days have taken us within striking distance. [30 year fixed 6.67%]
emphasis added

Tuesday:
• At 9:30 AM ET, Discussion, Fed Chair Jerome Powell, Policy Panel Discussion, At the European Central Bank Forum on Central Banking 2025, Sintra, Portugal

• At 10:00 AM, ISM Manufacturing Index for June. The consensus is for the ISM to be at 48.8, up from 48.5 in May. 

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

• At 10:00 AM, Job Openings and Labor Turnover Survey for May from the BLS.

• Late in the day, Light vehicle sales for June. The consensus is for light vehicle sales to be 15.5 million SAAR in June, down from 15.6 million in May (Seasonally Adjusted Annual Rate).

by Calculated Risk on 6/30/2025 04:20:00 PM

Today President Trump put out a note urging Fed Chair Powell to lower rates.

The following image, courtesy of Conor Sen, shows the central bank rates around the world. Mr. Trump wrote:

Jerome, You are, as usual, "Too Late". You have cost the USA a fortune - and continue to do so - you should lower the rate - by a lot! Hundreds of billions of dollars being lost! No Inflation.

Mr. Trump also wrote "Should be here" and referenced rates between 0.25% and 1.75%.  The current Fed's Fund rate is between 4.25% and 4.5%.   Fed Chair Powell is probably correct about rates currently being "modestly" restrictive, but it is possible we are neutral now.

First, there is some inflation.  The current rate of core PCE inflation was at 2.7% year-over-year in May, up from 2.5% in April. Core PCE inflation has slowed to 1.7% annualized over the last 3 months. Add in a 1.75% real rate - and you get close to the current Fed Funds rate.

It is difficult to predict what will happen over the next year.  There is considerable uncertainty about the impact of policy on inflation and the economy in coming months.

 

Click on graph for larger image.

Goldman Sachs economists noted today:

"We are pulling forward our forecast for the next cut to September. We had previously expected a cut in December because we thought that the peak summer tariff effects on monthly inflation would make it awkward to cut sooner. But the very early evidence suggests that the tariff effects look a bit smaller than we expected, other disinflationary forces have been stronger, and we suspect that the Fed leadership shares our view that tariffs will only have a one-time price level effect. And while the labor market still looks healthy, it has become hard to find a job, and both residual seasonality and immigration policy changes pose near-term downside risk to payrolls."

Maybe the impact on inflation from the tariffs will be less than expected. And it seems likely the impact will be mostly transitory.

It is also possible the economic weakness from policy (immigration, fiscal) will more than offset any boost to inflation from the tariffs.  Although immigration policy might push up inflation for food, etc.  It is very uncertain right now. 

It appears that currently Fed Funds policy is reasonably appropriate.

by Calculated Risk on 6/30/2025 01:16:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Declined in May; Up 2.2% Year-over-year

A brief excerpt:

Freddie Mac reported that its “National” Home Price Index (FMHPI) decreased -0.23% month-over-month (MoM) on a seasonally adjusted (SA) basis in May. On a year-over-year (YoY) basis, the National FMHPI was up 2.2% in May, down from up 2.6% YoY in April. 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 May, 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. (-4.7), Colorado (-3.1%), Idaho (-3.0%), Texas (-2.7%), and Florida (-2.2%).

For cities (Core-based Statistical Areas, CBSA), 257 of the 384 CBSAs are below their previous peaks.

Here are the 30 cities with the largest declines from the peak, seasonally adjusted. Austin continues to be the worst performing city. However, 4 of the 6 cities with the largest price declines are in Florida. Cities in Florida (10) and Texas (7) dominate this list.

There is much more in the article!

by Calculated Risk on 6/30/2025 09:51:00 AM

Today, in the Calculated Risk Real Estate Newsletter: FHFA’s National Mortgage Database: Outstanding Mortgage Rates, LTV and Credit Scores

A brief excerpt:

Here are some graphs on outstanding mortgages by interest rate, the average mortgage interest rate, borrowers’ credit scores and current loan-to-value (LTV) from the FHFA’s National Mortgage Database through Q1 2025 (released last Friday).
...
This shows the surge in the percent of loans under 3% starting in early 2020 as mortgage rates declined sharply during the pandemic.

Note that a fairly large percentage of mortgage loans were under 4% prior to the pandemic!

The percent of outstanding loans under 4% peaked in Q1 2022 at 65.1% (now at 53.4%), and the percent under 5% peaked at 85.6% (now at 71.3%). These low existing mortgage rates made it difficult for homeowners to sell their homes and buy a new home since their monthly payments would increase sharply.

This was a key reason existing home inventory levels were so low. However, time is eroding this lock-in effect.

There is much more in the article.

by Calculated Risk on 6/30/2025 08:11:00 AM

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

Inventory is now up 33.1% from the seasonal bottom in January and is increasing.   Usually, inventory is up about 20% from the seasonal low by this week in the year.   So, 2025 is seeing a larger than normal pickup 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 28.7% compared to the same week in 2024 (last week it was up 30.7%), and down 14.1% compared to the same week in 2019 (last week it was down 13.2%). 

This is the highest level since November 2019.

For 2019, this was the week inventory peaked for the year (then moved sideways for several months), so any further increase this year will close to gap to 2019.  It now appears inventory will be close to 2019 levels towards the end of 2025.

This second inventory graph is courtesy of Altos Research.

As of June 27th, inventory was at 831 thousand (7-day average), compared to 829 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube

by Calculated Risk on 6/29/2025 07:08:00 PM

Weekend:
• Schedule for Week of June 29, 2025

Monday:
• At 9:45 AM ET, Chicago Purchasing Managers Index for June.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for June.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 17 and DOW futures are up 212 (fair value).

Oil prices were down over the last week with WTI futures at $65.52 per barrel and Brent at $67.77 per barrel. A year ago, WTI was at $83, and Brent was at $82 - so WTI oil prices are down about 21% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.17 per gallon. A year ago, prices were at $3.49 per gallon, so gasoline prices are down $0.32 year-over-year.

by Calculated Risk on 6/29/2025 08:11:00 AM

From STR: U.S. hotel results for week ending 21 June

The U.S. hotel industry reported positive year-over-year comparisons, according to CoStar’s latest data through 21 June. ...

15-21 June 2025 (percentage change from comparable week in 2024):

• Occupancy: 70.5% (+1.3%)
• Average daily rate (ADR): US$163.77 (+2.0%)
• Revenue per available room (RevPAR): US$115.39 (+3.3%)
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 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.

The 4-week average will increase during the summer travel season; however, we will likely see a hit to occupancy during the summer months due to less international tourism.