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Friday, January 17, 2025

Q4 GDP Tracking: 2.1% to 3.0% Range

by Calculated Risk on 1/17/2025 03:31:00 PM

From BofA:

Since our last weekly publication, our 4Q GDP tracking estimate has moved up three-tenths to 2.1% q/q saar. [Jan 17th estimate]
emphasis added
From Goldman:
Following this morning’s data, we boosted our Q4 GDP tracking estimate by 0.1pp to +2.6% (quarter-over-quarter annualized) and our Q4 domestic final sales forecast by the same amount to +2.6%. [Jan 17th estimate]
And from the Atlanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2024 is 3.0 percent on January 17, unchanged from January 16 after rounding. After this morning’s releases from the US Census Bureau and the Federal Reserve Board of Governors, an increase in the nowcast of fourth-quarter real personal consumption expenditures growth from 3.7 percent to 3.8 percent was offset by a decrease in the nowcast of the contribution of inventory investment to real GDP growth from -0.37 percentage points to -0.41 percentage points. [Jan 17th estimate]

Lawler: Early Read on Existing Home Sales in December

by Calculated Risk on 1/17/2025 12:06:00 PM

From housing economist Tom Lawler:

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 4.15 million in December, unchanged from November’s preliminary pace and up 7.0% from last December’s seasonally adjusted pace. Unadjusted sales should show a somewhat higher YOY % gain, reflecting this December’s business day count compared to last December’s.

Local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by about 5.6% from a year earlier.

CR Note: The NAR is scheduled to release December Existing Home sales on Friday, January 24th at 10:00 AM. The consensus is for 4.20 million SAAR, up from 4.15 million in November. Last year, the NAR reported sales in December 2023 at 3.88 million SAAR. This will be the third consecutive month with a year-over-year increase following YoY declines every month since July 2021.

Housing Starts Increased to 1.499 million Annual Rate in December

by Calculated Risk on 1/17/2025 09:29:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Housing Starts Increased to 1.499 million Annual Rate in December

A brief excerpt:

Total housing starts in December were above expectations and starts in October and November were revised up.

The third graph shows the month-to-month comparison for total starts between 2023 (blue) and 2024 (red).

Starts 2023 vs 2024Total starts were down 4.4% in December compared to December 2023. The YoY decrease in December total starts was mostly due to a difficult comparison to starts in December 2023.

Single family starts have been up year-over-year in 13 of the last 18 months, whereas multi-family has been up year-over-year in only 3 of last 19 months. For the year, total starts were down 2.6% compared to 2023. Single family starts were up 6.6% YoY in 2024, and multi-family were down 18.8% YoY.
There is much more in the article.

Industrial Production Increased 0.9% in December

by Calculated Risk on 1/17/2025 09:15:00 AM

Earlier from the Fed: Industrial Production and Capacity Utilization

Industrial Production (IP) increased 0.9 percent in December after moving up 0.2 percent in November. In December, gains in the output of aircraft and parts contributed 0.2 percentage point to total IP growth following the resolution of a work stoppage at a major aircraft manufacturer. Manufacturing output rose 0.6 percent after gaining 0.4 percent in November. The indexes for mining and utilities climbed 1.8 percent and 2.1 percent, respectively, in December. At 103.2 percent of its 2017 average, total IP in December was 0.5 percent above its year-earlier level. Capacity utilization stepped up to 77.6 percent, a rate that is 2.1 percentage points below its long-run (1972–2023) average.
emphasis added
Capacity UtilizationClick on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and close to the level in February 2020 (pre-pandemic).

Capacity utilization at 77.6% is 2.1% below the average from 1972 to 2023.  This was above consensus expectations.

Note: y-axis doesn't start at zero to better show the change.


Industrial Production The second graph shows industrial production since 1967.

Industrial production increased to 103.2. This is above the pre-pandemic level.

Industrial production was well above consensus expectations.

Housing Starts Increased to 1.499 million Annual Rate in December

by Calculated Risk on 1/17/2025 08:30:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,499,000. This is 15.8 percent above the revised November estimate of 1,294,000, but is 4.4 percent below the December 2023 rate of 1,568,000. Single-family housing starts in December were at a rate of 1,050,000; this is 3.3 percent above the revised November figure of 1,016,000. The December rate for units in buildings with five units or more was 418,000.

An estimated 1,364,100 housing units were started in 2024. This is 3.9 percent below the 2023 figure of 1,420,000.

Building Permits:
Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,483,000. This is 0.7 percent below the revised November rate of 1,493,000 and is 3.1 percent below the December 2023 rate of 1,530,000. Single-family authorizations in December were at a rate of 992,000; this is 1.6 percent above the revised November figure of 976,000. Authorizations of units in buildings with five units or more were at a rate of 437,000 in December.

An estimated 1,471,200 housing units were authorized by building permits in 2024. This is 2.6 percent below the 2023 figure of 1,511,100.
emphasis added
Multi Housing Starts and Single Family Housing StartsClick on graph for larger image.

The first graph shows single and multi-family housing starts since 2000.

Multi-family starts (blue, 2+ units) increased month-over-month in December.   Multi-family starts were down 8.4% year-over-year.

Single-family starts (red) increased in December and were down 2.6% year-over-year.

Multi Housing Starts and Single Family Housing StartsThe second graph shows single and multi-family housing starts since 1968.

This shows the huge collapse following the housing bubble, and then the eventual recovery - and the recent collapse and recovery in single-family starts.

Total housing starts in December were above expectations and starts in October and November were revised up.

I'll have more later …

Thursday, January 16, 2025

Friday: Housing Starts, Industrial Production

by Calculated Risk on 1/16/2025 07:41:00 PM

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

Friday:
• At 8:30 AM ET, Housing Starts for December. The consensus is for 1.315 million SAAR, up from 1.289 million SAAR.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for December. The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 77.0%.

Housing Discussion with Altos Research's Mike Simonsen

by Calculated Risk on 1/16/2025 02:39:00 PM

Here is a YouTube video of a discussion with Mike Simonsen. Enjoy.

NAHB: Builder Confidence "Edges Up" in January

by Calculated Risk on 1/16/2025 10:19:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 47, up from 46 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Edges Up Even as Market Risk Concerns Rise

Builder sentiment edged higher to begin the year on hopes for an improved economic growth and regulatory environment. At the same time, builders expressed concerns over how building material tariffs and costs and a larger government deficit would put upward pressure on inflation and mortgage rates.

Builder confidence in the market for newly built single-family homes was 47 in January, up one point from December, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.

“Builders are facing continued challenges for housing demand in the near-term, with mortgage rates up from near 6.1% in late September to above 6.9% today,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “Land is expensive and financing for private builders remains costly. However, there is hope that policymakers are taking the impact of regulatory hurdles seriously and will make improvements in 2025.”

“NAHB is forecasting a slight gain for single-family housing starts in 2025, as the market faces offsetting upside and downside risks from an improving regulatory outlook and ongoing elevated interest rates,” said NAHB Chief Economist Robert Dietz. “And while ongoing, but slower easing from the Federal Reserve should help financing for private builders currently squeezed out of some local markets, builders report cancellations are climbing as a direct result of mortgage rates rising back up near 7%.”

The latest HMI survey also revealed that 30% of builders cut home prices in January. This share has been stable between 30% and 33% since last July. Meanwhile, the average price reduction was 5% in January, the same rate as in December. The use of sales incentives was 61% in January. This share has remained between 60% and 64% since last June.
...
The HMI index gauging current sales conditions rose three points to 51 and the gauge charting traffic of prospective buyers posted a two-point gain to 33. The component measuring sales expectations in the next six months fell six points to 60 in part due to the elevated interest rate environment. While this serves as a cautionary note, the future sales component is still the highest of the three sub-indices and well above the breakeven level of 50.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased five points to 60, the Midwest moved one point higher to 47, the South posted a one-point gain to 46 and the West fell one point to 40.
emphasis added
NAHB HMI Click on graph for larger image.

This graph shows the NAHB index since Jan 1985.

This was above the consensus forecast.

Retail Sales Increased 0.4% in December

by Calculated Risk on 1/16/2025 10:12:00 AM

On a monthly basis, retail sales increased 0.4% from November to December (seasonally adjusted), and sales were up 3.9 percent from December 2023.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for December 2024, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $729.2 billion, an increase of 0.4 percent from the previous month, and up 3.9 percent from December 2023. ... The October 2024 to November 2024 percent change was revised from up 0.7 percent to up 0.8 percent.
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Retail Sales Click on graph for larger image.

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

Retail sales ex-gasoline was up 0.4% in December.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by 4.1% on a YoY basis.

Year-over-year change in Retail Sales The change in sales in December were slightly below expectations, however sales in October and November were revised up.

Weekly Initial Unemployment Claims Increase to 217,000

by Calculated Risk on 1/16/2025 10:02:00 AM

The DOL reported:

In the week ending January 11, the advance figure for seasonally adjusted initial claims was 217,000, an increase of 14,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 201,000 to 203,000. The 4-week moving average was 212,750, a decrease of 750 from the previous week's revised average. The previous week's average was revised up by 500 from 213,000 to 213,500.
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The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 213,000.

The previous week was revised up.

Weekly claims were close to the consensus forecast.