by Calculated Risk on 11/08/2018 08:34:00 AM

The DOL reported:

In the week ending November 3, the advance figure for seasonally adjusted initial claims was 214,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 214,000 to 215,000. The 4-week moving average was 213,750, a decrease of 250 from the previous week's revised average. The previous week's average was revised up by 250 from 213,750 to 214,000.
emphasis added

The previous week was revised up.

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 213,750.

This was slightly higher than the consensus forecast. The low level of claims suggest few layoffs.

by Calculated Risk on 11/07/2018 08:27:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 213 thousand initial claims, down from 214 thousand the previous week.

• At 2:00 PM, FOMC Meeting Announcement. No change to policy is expected at this meeting.

by Calculated Risk on 11/07/2018 04:46:00 PM

As expected, the deficit is increasing significantly.

From the CBO: Monthly Budget Review: Summary for Fiscal Year 2018

In fiscal year 2018, which ended on September 30, the federal budget deficit totaled $779 billion—$113 billion more than the shortfall recorded in 2017. The deficit increased to 3.8 percent of the nation’s gross domestic product (GDP) in 2018, up from 3.5 percent in 2017 and 3.2 percent in 2016. Outlays in 2018 were reduced by a shift in the timing of certain payments; those payments were instead made in fiscal year 2017 because October 1, 2017 (the first day of fiscal year 2018), fell on a weekend. If not for that shift, the deficit in 2018 would have been $823 billion, or 4.1 percent of GDP.

CBO is projecting the deficit next year will probably be close to $1 Trillion (about 4.6% of GDP).

by Calculated Risk on 11/07/2018 02:59:00 PM

Towards the end of each year I collect some housing forecasts for the following year.  This is just a beginning (I'll gather many more).

The table below shows a few forecasts for 2019:

From Fannie Mae: Housing Forecast: October 2018

From Freddie Mac: Freddie Mac October Forecast: Economic Growth and Home Sales Slow as Mortgage Rates Rise

From NAHB: Economic and Housing Forecasts

From NAR: Economic & Housing Market Outlook November 2018

Note: For comparison, new home sales in 2018 will probably be around 623 thousand, and total housing starts around 1.265 million.

Housing Forecasts for 2019
	New Home Sales (000s)	Single Family Starts (000s)	Total Starts (000s)	House Prices1
Fannie Mae	679	963	1,303	4.1%2
Freddie Mac			1,350	4.6%2
NAHB	639	885	1,268
NAR	623			3.1%3
1Case-Shiller unless indicated otherwise 2FHFA Purchase-Only Index 3NAR Median Prices

by Calculated Risk on 11/07/2018 10:11:00 AM

The Northwest Multiple Listing Service reported Slower Market Means Homebuyers Have "Newfound Ability to Negotiate"

Seven months of steadily rising housing inventory reversed course in October when Northwest Multiple Listing Service brokers added the fewest new listings since February, according to a new report. MLS members believe the onset of wintry weather and transition to the holiday season are factors, but suggested the slower pace also signals improving conditions for house-hunters.

"After months of inventory growth that more than quadrupled the number of homes buyers have to choose from, things got back on a seasonal track with new listings and total supply falling in October," said Robert Wasser, a director with Northwest MLS, when comparing those metrics with September.

"Buyers are catching on to their newfound ability to negotiate. For the first time since 2012, closed sales system-wide rose from September to October," noted Wasser, a branch manager with Windermere Real Estate in Bellevue.
emphasis added

The press release is for the Northwest. In Seattle, sales were down 17.5% year-over-year, and inventory was up 102% year-over-year. This is another market with inventory increasing sharply year-over-year, but months-of-supply in Seattle is still on the low side at 2.4 months.

by Calculated Risk on 11/07/2018 07:00:00 AM

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

Mortgage applications decreased 4.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 2, 2018.

... The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier to the lowest level since November 2016. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 0.2 percent lower than the same week one year ago. ...

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 5.15 percent from 5.11 percent, with points increasing to 0.51 from 0.50 (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 refinance index since 1990.

Refinance activity will not pick up significantly unless mortgage rates fall 50 bps or more from the recent level.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 0.2% year-over-year.

by Calculated Risk on 11/06/2018 03:26:00 PM

If you read my site, you know I'm focused on the facts.   Donald Trump has always been at war with the data. From 2016:

Trump says he thinks the US unemployment rate is close to 20 percent and not the 5 percent reported by the Labor Department.

Anyone who believes the 5 percent is a “dummy,” he said.

When asked yesterday about his dishonest and racist advertisements, Donald Trump said they are "effective". He doesn't care about the truth, just his version of "winning".

Note: Trump lies about almost everything (see: Daniel Dale's Trump Checks).

The only way to stop the racist and hateful rhetorical and frequent lies is to show Mr. Trump that they are not "effective".

And that means to vote for Democrats for the House and Senate.

Also, the economy will be fine if the Democrats control the House and / or Senate.  That is just fear mongering.

So Vote.  And Vote for Democrats.   And make sure your friends and neighbors vote.

by Calculated Risk on 11/06/2018 02:22:00 PM

An interesting article by Nancy Sarnoff at the Houston Chronicle: Builders shrink home sizes to appeal to more buyers (ht MV)

After years of catering to move-up buyers with substantial budgets, builders are introducing new models with lower price tags and smaller footprints — oftentimes the size of a two-bedroom apartment. They’re doing so by building on smaller lots, skimping on high-end materials, such as granite and brick, and designing floor plans that eliminate formal dining and living rooms, foyers and other spaces that often go unused.
...
These developments have helped shrink the size of the average Houston-area home to 2,846 square feet from 3,084 in 2015, according to data from Metrostudy, a consulting firm for the homebuilding industry.
…
When the housing market recovered ... builders began targeting buyers who could spend big on large homes. Few offered floor plans under about 1,900 square feet.

CR Note: This is good to see and makes sense. Some smaller homes are a key for further increases in new home sales. It made sense for builders to target higher end homes following the housing bust, but now builders also need to offer more smaller homes and lower prices.

by Calculated Risk on 11/06/2018 12:11:00 PM

Notes: This CoreLogic House Price Index report is for September. The recent Case-Shiller index release was for August. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic Reports September Home Prices Increased by 5.6 Percent Year Over Year

CoreLogic® ... today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for September 2018, which shows home prices rose both year over year and month over month. Home prices increased nationally by 5.6 percent year over year from September 2017. On a month-over-month basis, prices increased by 0.4 percent in September 2018. (August 2018 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results each month.)

Looking ahead, the CoreLogic HPI Forecast indicates home prices will increase by 4.7 percent on a year-over-year basis from September 2018 to September 2019. On a month-over-month basis, home prices are expected to decrease by 0.6 percent from September to October 2018. The CoreLogic HPI Forecast is a projection of home prices calculated using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
emphasis added

CR Note: The CoreLogic YoY increase has been in the 5% to 7% range for the last few years.  This is still near the middle of that range.  The year-over-year comparison has been positive for over six consecutive years since turning positive year-over-year in February 2012.

by Calculated Risk on 11/06/2018 10:07:00 AM

Notes: In September there were 7.009 million job openings, and, according to the September Employment report, there were 5.964 million unemployed. So, for the sixth consecutive month, there were more job openings than people unemployed. Also note that the number of job openings has exceeded the number of hires since January 2015 (almost 4 years).

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings decreased to 7.0 million on the last business day of September, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were both little changed at 5.7 million. Within separations, the quits rate was unchanged at 2.4 percent and the layoffs and discharges rate was little changed at 1.1 percent. ...

The number of quits was little changed in September at 3.6 million. The quits rate was 2.4 percent. The number of quits was little changed for total private and for government.
emphasis added

The following graph shows job openings (yellow 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 September, the most recent employment report was for October.

Click on graph for larger image.


Note that hires (dark blue) and total separations (red and light blue columns stacked) are 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.

Jobs openings decreased in September to 7.009 million from 7.293 million in August.

The number of job openings (yellow) are up 12% year-over-year.

Quits are up 11% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Job openings are at a high level, and quits are increasing year-over-year. This was a strong report.