by Calculated Risk on 11/23/2021 11:19:00 AM

Today, in the Real Estate Newsletter: Final Look: Local Housing Markets in October

Excerpt:

Here is a summary of active listings for the housing markets that have reported in October. For these markets, inventory was down 5.9% in October MoM from September, and down 26.5% YoY.

Of these markets, inventories in Jacksonville, Miami and San Diego are at record lows. Sacramento and Washington, D.C. are the only markets with inventory up YoY in October (Austin is essentially unchanged YoY).

Inventory almost always declines seasonally in October, so the MoM decline is not a surprise. Last month, these markets were down 24.5% YoY, so the YoY decline in October is larger than in September. This is not indicating a slowing market.

In California, the C.A.R. reported inventory was down 18.3% YoY, but this isn’t included in the table since C.A.R. doesn’t report monthly numbers.

You can subscribe at https://calculatedrisk.substack.com/ (Currently all content is available for free, but please subscribe).

by Calculated Risk on 11/23/2021 09:16:00 AM

Last month, in the Real Estate Newsletter, I wrote: The Coming Deceleration in House Price Growth

Here is an update to the graph:

Not only is Case-Shiller released with a lag (the release next week will be for September, whereas the NAR release yesterday was for October), but the 3-month average means the September release will include sales in July and August too.

Although median prices can be distorted by the mix, and repeat sales indexes (like Case-Shiller and the FHFA) are more accurate measures of house prices, the median price index might provide earlier hints on the direction of prices.

Click on graph for larger image.

This graph - as of the NAR release in October 2020 (a year ago) - shows median prices started to take off, even though the most recent Case-Shiller report only showed a very modest pickup in prices.

This shows the lag in the Case-Shiller report.

The second graph - as of the NAR release yesterday - shows that Case-Shiller followed the median prices up, and that median prices are now falling.

 Note: the NAR YoY change in September 2021 was revised down, so there was a slight uptick in October prices YoY.

This suggests that Case-Shiller will start to show some deceleration later this year - but still be up solidly YoY.

by Calculated Risk on 11/22/2021 06:23:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Under Pressure After Powell Nomination and Bond Auctions

Mortgage rates began the new week on a bad note with the average lender full erasing the improvement seen on Friday. This leaves many lenders at their highest levels since April, but in those cases, it should be noted that today's rates are extremely close to those seen in late October. In other words, we're essentially back in line with the highest levels in more than 7 months. [30 year fixed 3.24%]
emphasis added

by Calculated Risk on 11/22/2021 03:05:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 452,657,967, as of a week ago 442,005,260, or 1.52 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	59.2%	58.8%	≥70.0%1
Fully Vaccinated (millions)	196.4	195.3	≥2321
New Cases per Day3🚩	91,021	81,495	≤5,0002
Hospitalized3🚩	40,755	40,485	≤3,0002
Deaths per Day3	985	1,042	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37-day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  Note: COVID will probably stay endemic (at least for some time).

KUDOS to the residents of the 5 states that have achieved 70% of total population fully vaccinated: Vermont at 72.6%, Rhode Island, Connecticut, Maine, and Massachusetts at 70.8%.

KUDOS also to the residents of the 16 states and D.C. that have achieved 60% of total population fully vaccinated: New York at 68.1%, New Jersey, Maryland, Washington, Virginia, New Hampshire, Oregon, District of Columbia, New Mexico, Colorado, California, Minnesota, Pennsylvania, Illinois, Delaware, Florida, and Hawaii at 60.7%.

The following 19 states have between 50% and 59.9% fully vaccinated: Wisconsin at 59.3%, Nebraska, Iowa, Utah, Michigan, Texas, Kansas, Arizona, Nevada, South Dakota, North Carolina, Alaska, Ohio, Kentucky, Montana, Oklahoma, South Carolina, Missouri and Indiana at 50.5%.

Next up (total population, fully vaccinated according to CDC) are Georgia at 49.3%, Tennessee at 49.2%, Arkansas at 49.0%, Louisiana at 48.6% and North Dakota at 48.4%.

Click on graph for larger image.

This graph shows the daily (columns) and 7-day average (line) of positive tests reported.

by Calculated Risk on 11/22/2021 10:35:00 AM

Today, in the Real Estate Newsletter: Existing-Home Sales Increased to 6.34 million in October

Excerpt:

Sales in October (6.34 million SAAR) were up 0.8% from last month, and were 5.8% below the October 2020 sales rate.

Some of the increase in sales since the beginning of the pandemic was probably related to record low mortgage rates, strong second home buying, a strong stock market and favorable demographics.

Also, the delay in the 2020 buying season pushed the seasonally adjusted number to very high levels over the winter. This means there are going to be some difficult year-over-year (YoY) comparisons in the last quarter of 2021.

This graph shows existing home sales by month for 2020 and 2021.

This was the third month this year with sales down year-over-year. This should continue through the rest of the year, since sales averaged 6.7million SAAR over the last three months of 2020.

You can subscribe at https://calculatedrisk.substack.com/ (Currently all content is available for free, but please subscribe).

by Calculated Risk on 11/22/2021 10:11:00 AM

From the NAR: Existing-Home Sales Inch Up 0.8% in October

Existing-home sales increased in October, marking two straight months of growth, according to the National Association of Realtors®. Two of the four major U.S. regions saw month-over-month sales climb, one region reported a drop and the fourth area held steady in October. On a year-over-year basis, each region witnessed sales decrease.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 0.8% from September to a seasonally adjusted annual rate of 6.34 million in October. Sales fell 5.8% from a year ago (6.73 million in October 2020).
...
Total housing inventory at the end of October amounted to 1.25 million units, down 0.8% from September and down 12.0% from one year ago (1.42 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, equal to September's supply, and down from 2.5 months in October 2020.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in October (6.34 million SAAR) were up 0.8% from last month, and were 5.8% below the October 2020 sales rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.25 million in October from 1.26 million in September.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was down 12.0% year-over-year in October compared to October 2020.

Months of supply was unchanged at 2.4 months in October from 2.4 months in September.

This was above the consensus forecast. I'll have more later.

by Calculated Risk on 11/22/2021 09:46:00 AM

Tracking existing home inventory will be very important this year.

Click on graph for larger image in graph gallery.

This inventory graph is courtesy of Altos Research.

As of November 19th, inventory was at 385 thousand (7 day average), compared to 514 thousand for the same week a year ago.  That is a decline of 25.2%.

Compared to the same week in 2019, inventory is down 56.1% from 877 thousand.  A week ago, inventory was at 394 thousand, and was down 25.0% YoY.   

Seasonally, inventory bottomed in April (usually inventory bottoms in January or February). Inventory was about 26% above the record low in early April.

Inventory peaked for the year in early September.   Eleven weeks ago inventory was at 437 thousand (the peak for the year), so inventory is currently off about 12.0% from the peak for the year.  

Mike Simonsen discusses this data regularly on Youtube.  

Altos Research has also seen a significant pickup in price decreases - now well above the level of a year ago - but still below a normal rate for November.

by Calculated Risk on 11/22/2021 08:35:00 AM

These indicators are mostly for travel and entertainment.    It is interesting to watch these sectors recover as the pandemic subsides.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

This data is as of November 20th.

Click on graph for larger image.

This data shows the 7-day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Blue) and 2021 (Red).

The dashed line is the percent of 2019 for the seven day average.

The 7-day average is down 14.3% from the same day in 2019 (85.7% of 2019).  (Dashed line)

Overall, air travel had been off about 20% relative to 2019 for the last four months (with some ups and downs) - and picking up recently.

----- Restaurants: OpenTable -----
The second graph shows the 7-day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

IMPORTANT: OpenTable notes: "we’ve updated the data including downloadable dataset from January 1, 2021 onward to compare seated diners from 2021 to 2019, as opposed to year over year." Thanks!

Thanks to OpenTable for providing this restaurant data:

This data is updated through November 20, 2021.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Dining picked up for the Labor Day weekend, but declined after the holiday - and appears to be declining slightly again.  The 7-day average for the US is down 5% compared to 2019.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue).  

Blue is 2020 and Red is 2021.  

The data is from BoxOfficeMojo through November 18th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales were at $89 million last week, down about 66% from the median for the week. 

----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

This data is through November 13th. The occupancy rate was down 4.0% compared to the same week in 2019.

Notes: Y-axis doesn't start at zero to better show the seasonal change.

The occupancy rate will now decline seasonally into the new year.

----- Gasoline Supplied: Energy Information Administration -----
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020.  Red is for 2021.

As of November 12th, gasoline supplied was up slightly compared to the same week in 2019.

There was the ninth week, out of the last 20, that gasoline supplied was up slightly compared to the same week in 2019 - so consumption is running close to 2019 levels now.

----- Transit: Apple Mobility -----
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.

There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.

This data is through November 20th 

for the United States and several selected cities.

The graph is the running 7-day average to remove the impact of weekends.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data directions requests, public transit in the 7 day average for the US is at 112% of the January 2020 level. 

New York City is doing well by this metric, but subway usage in NYC is down sharply (next graph).

----- New York City Subway Usage -----
Here is some interesting data on New York subway usage (HT BR).

This graph is from Todd W Schneider. 

This graph shows how much MTA traffic has recovered in each borough (Graph starts at first week in January 2020 and 100 = 2019 average).

Manhattan is at about 42% of normal.

This data is through Friday, November 19th.

He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".

by Calculated Risk on 11/21/2021 07:03:00 PM

Weekend:
• Schedule for Week of November 21, 2021

Monday:
• At 8:30 AM ET: Chicago Fed National Activity Index for October. This is a composite index of other data.

• At 10:00 AM, Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for 6.20 million SAAR, down from 6.29 million in September. Housing economist Tom Lawler expects the NAR to report 6.34 million SAAR.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 4 and DOW futures are up 50 (fair value).

Oil prices were down over the last week with WTI futures at $75.46 per barrel and Brent at $78.29 per barrel. A year ago, WTI was at $42, and Brent was at $44 - so WTI oil prices are up 80% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.39 per gallon. A year ago prices were at $2.10 per gallon, so gasoline prices are up $1.29 per gallon year-over-year.

by Calculated Risk on 11/21/2021 11:44:00 AM

Calling the beginning or end of a recession usually takes time.   However, the economic decline in March 2020 was so severe that the National Bureau of Economic Research (NBER) quickly called the end of the expansion in February.

The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.
...
The usual definition of a recession involves a decline in economic activity that lasts more than a few months. However, in deciding whether to identify a recession, the committee weighs the depth of the contraction, its duration, and whether economic activity declined broadly across the economy (the diffusion of the downturn). The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.

And then - just two months later - in July 2020, the NBER called the end of the recession:

The committee has determined that a trough in monthly economic activity occurred in the US economy in April 2020. The previous peak in economic activity occurred in February 2020. The recession lasted two months, which makes it the shortest US recession on record.
...
In determining that a trough occurred in April 2020, the committee did not conclude that the economy has returned to operating at normal capacity. An expansion is a period of rising economic activity spread across the economy, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.

The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession associated with the February 2020 peak. The basis for this decision was the length and strength of the recovery to date.

It will take some time for all major indicators to be above their previous high after the pandemic recession because of the severe contraction as the graphs below show.  All of the following graphs show each measure as a percent of the previous peak.

GDP is the key measure, as the NBER committee notes in their business cycle dating procedure:

The committee views real GDP as the single best measure of aggregate economic activity.

Click on graph for larger image.

This graph is for real GDP through Q3 2021.

The previous high for real GDP was in Q4 2019.

Real GDP was above Q4 2019 levels in Q2 2021. 

This was a very quick return to new highs, especially given the severity of the downturn.  However, as NBER noted, this was the shortest recession on record (due to the pandemic).

The second graph is for monthly industrial production based on data from the Federal Reserve through Oct 2021.

Industrial production is off 2.5% from the previous peak.

Note that industrial production was weak prior to the onset of the pandemic, and industrial production has recovered to the pre-pandemic level.

The third graph is for employment through October 2021.

Historically employment was a coincident indicator for the end of recessions, but wasn't true for the previous three recessions (1990-1991, 2001, 2007-2009).

Employment is currently off about 2.8% from the pre-recession peak (dashed line).  This is a significant improvement from off 14.7% in April 2020.

There is still ways to go for employment to recover to pre-pandemic levels.

And the last graph is for real personal income excluding transfer payments through September 2021.

Real personal income less transfer payments was still off slightly from the previous peak in September.

These graphs are useful in trying to identify peaks and troughs in economic activity.

Although economic activity bottomed in April 2020, only one of these four major indicators (GDP) is above the previous peak (although real personal income excluding transfer payments is close).