by Calculated Risk on 12/18/2021 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• 4th Look at Local Housing Markets in November This update adds Austin, California, Des Moines, Memphis, Minneapolis, Minnesota, Rhode Island, and Sacramento.

• November Housing Starts: Most Housing Units Under Construction Since 1973 Housing Starts Increased to 1.679 million Annual Rate in November

• The Household Mystery Looking back at People per Household in the '70s

• 3rd Look at Local Housing Markets in November Looks like we will see new record low inventories this winter

This is usually published several times a week, and provides more in-depth analysis of the housing market.

The blog will continue as always!

You can subscribe at https://calculatedrisk.substack.com/  Currently all content is available for free - and some will always be free - but please subscribe!.

by Calculated Risk on 12/18/2021 08:11:00 AM

Happy Holidays and Merry Christmas!

The key economic reports this week are New Home Sales, Existing Home Sales, the 3rd estimate of Q3 GDP, and November Personal income and outlays.

----- Monday, December 20th -----
No major economic releases scheduled.

----- Tuesday, December 21st -----
No major economic releases scheduled.

----- Wednesday, December 22nd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Gross Domestic Product, 3rd quarter 2021 (Third estimate). The second estimate of GDP was 2.1%.

8:30 AM: Chicago Fed National Activity Index for November. This is a composite index of other data.

10:00 AM: Existing Home Sales for November from the National Association of Realtors (NAR). The consensus is for 6.20 million SAAR, down from 6.34 million.

The graph shows existing home sales from 1994 through the report last month.

Housing economist Tom Lawler expects the NAR to report sales of 6.45 million SAAR for November.

----- Thursday, December 23rd -----
8:30 AM: The initial weekly unemployment claims report will be released.  Initial claims were 206 thousand last week.

8:30 AM: Durable Goods Orders for November. 

8:30 AM: Personal Income and Outlays for November. The consensus is for a 0.2% increase in personal income, and for a 1.0% increase in personal spending.

10:00 AM: New Home Sales for November from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the sales rate for last month.

New home sales were at 745 thousand in October.

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

----- Friday, December 24th -----
All US markets will be closed in observance of the Christmas Holiday.

by Calculated Risk on 12/17/2021 07:24:00 PM

The CDC is the source for all data.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	61.3%	---	≥70.0%1
Fully Vaccinated (millions)	203.5	---	≥2321
New Cases per Day3🚩	122,296	120,444	≤5,0002
Hospitalized3🚩	59,995	54,937	≤3,0002
Deaths per Day3🚩	1,179	1,090	≤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.

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 12/17/2021 11:50:00 AM

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 6.45 million in November, up 1,7% from October’s preliminary pace but down 2.1% from last November’s seasonally adjusted pace. Unadjusted sales should be little changed from a year earlier, with the SA/NSA difference reflecting this November’s higher business day count relative to last November’s.

Local realtor reports, as well as reports from national inventory trackers, suggest that the YOY % decline in the inventory of existing homes for sale last month was larger than was the case in October.

Finally, local realtor/MLS reports suggest the median existing single-family home sales price last month was up by about 13.0% from last November.

CR Note: The National Association of Realtors (NAR) is scheduled to release November existing home sales on Wednesday, December 22, 2021, at 10:00 AM ET. The consensus is for 6.20 million SAAR.   Take the over.

by Calculated Risk on 12/17/2021 10:01:00 AM

From Goldman Sachs:

We boosted our Q4 GDP tracking estimate by 0.5pp to +7.0% (qoq ar), reflecting the further recovery in auto production and the sharp rise in housing starts in November. [December 16 estimate]
emphasis added

From BofA:

4Q GDP tracking moved up to 6.5% qoq saar from 6.0%, reflecting the strong signal from the BAC card spending data. [December 10 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2021 is 7.2 percent on December 16, up from 7.0 percent on December 15. [December 16 estimate]

by Calculated Risk on 12/17/2021 08:07:00 AM

Today, in the Real Estate Newsletter: 4th Look at Local Housing Markets in November

Excerpt:

This update adds Austin, California, Des Moines, Memphis, Minneapolis, Minnesota, Rhode Island, and Sacramento.
...
Here is a summary of active listings for these housing markets in November. Inventory was down 15.3% in November month-over-month (MoM) from October, and down 26.7% year-over-year (YoY).

Inventory almost always declines seasonally in November, so the MoM decline is not a surprise. Last month, these markets were down 23.4% YoY, so the YoY decline in November is larger than in October. This isn’t indicating a slowing market.

Notes for all tables:

1. New additions to table in BOLD.

2. Northwest (Seattle), North Texas (Dallas), and Santa Clara (San Jose), Jacksonville, Source: Northeast Florida Association of REALTORS®

3. Totals do not include Denver or Minneapolis (included in state totals).

by Calculated Risk on 12/16/2021 09:01:00 PM

The CDC is the source for all data.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	61.2%	---	≥70.0%1
Fully Vaccinated (millions)	203.2	---	≥2321
New Cases per Day3	119,546	121,284	≤5,0002
Hospitalized3🚩	59,354	54,042	≤3,0002
Deaths per Day3🚩	1,187	1,099	≤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.

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 12/16/2021 02:17:00 PM

Note: Since occupancy declined sharply at the onset of the pandemic, CoStar is comparing to 2019.

From CoStar: STR: US Weekly Hotel Occupancy Improves From Previous Week

U.S. hotel performance increased from the previous week, according to STR‘s latest data through December 11.

December 5-11, 2021 (percentage change from comparable week in 2019*):

• Occupancy: 57.4% (-4.8%)
• Average daily rate (ADR): $128.35 (+2.3%)
• Revenue per available room (RevPAR): $73.73 (-2.7%)

*Due to the steep, pandemic-driven performance declines of 2020, STR is measuring recovery against comparable time periods from 2019.
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 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).

Although down compared to 2019, the 4-week average of the occupancy rate is now above the median rate for the previous 20 years (Blue).

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

The 4-week average of the occupancy rate will now decline seasonally into the new year.

by Calculated Risk on 12/16/2021 12:33:00 PM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Demand for design services continues to grow

Architecture firms reported increasing demand for design services for the tenth consecutive month in November, according to a new report today from The American Institute of Architects (AIA).

The ABI score for November was 51.0, down from 54.3 the previous month. While this score is down slightly from October’s score, it still indicates positive business conditions overall (any score above 50 indicates billings growth). During November, scoring for both the new project inquiries and design contracts moderated slightly, but remained in positive territory, posting scores of 59.4 and 55.8 respectively.

“The period of elevated billing scores nationally, and across the major regions and construction sectors seems to be winding down for this cycle,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Ongoing external challenges like labor shortages, supply chain disruptions, spiking inflation, and prospects for rising interest rates will likely continue to slow the growth in firm billings in the coming months.”
...
• Regional averages: Midwest (57.6); South (53.7); West (50.9); Northeast (45.5)

• Sector index breakdown: mixed practice (56.9); multi-family residential (51.4); commercial/industrial (50.5); institutional (50.1)
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 51.0 in November, down from 54.3 in October. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index was below 50 for eleven consecutive months, but has been positive for the last ten months.  

The eleven months of decline represented a significant decrease in design services, and suggests a decline in CRE investment through most of 2021 (This index usually leads CRE investment by 9 to 12 months), however this suggests a pickup in CRE investment in 2022.

by Calculated Risk on 12/16/2021 10:08:00 AM

Today, in the Real Estate Newsletter: November Housing Starts: Most Housing Units Under Construction Since 1973

Excerpt:

The fourth graph shows housing starts under construction, Seasonally Adjusted (SA).

Red is single family units. Currently there are 752 thousand single family units under construction (SA). This is the highest level since March 2007.

For single family, most of these homes are already sold (Census counts sales when contract is signed). The reason there are so many homes is probably due to construction delays. Since most of these are already sold, it is unlikely this is “overbuilding”, or that this will impact prices.

Blue is for 2+ units. Currently there are 734 thousand multi-family units under construction.  This is the highest level since July 1974! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Census will release data next year on the length of time from start to completion, and that will probably show long delays in 2021. In 2020, it took an average of 6.8 months from start to completion for single family homes, and 15.4 months for buildings with 2 or more units.

Combined, there are 1.486 million units under construction. This is the most since 1973.

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