by Calculated Risk on 9/27/2022 09:48:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index "Continued its Deceleration" to 15.8% year-over-year increase in July

Excerpt:

Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for July were released today. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The Case-Shiller Home Price Indices for “July” is a 3-month average of May, June and July closing prices. May closing prices include some contracts signed in March, so there is a significant lag to this data.

The MoM decrease in Case-Shiller was at -0.24%. This was the first MoM decrease since February 2012, and since this includes closings in May and June, this suggests prices fell sharply in July.

On a seasonally adjusted basis, prices declined in 12 of the 20 Case-Shiller cities on a month-to-month basis: Phoenix, Los Angeles, San Diego, San Francisco, Denver, Washington DC, Boston, Detroit, Minneapolis, Portland, Dallas and Seattle all saw month-to-month price declines in the July report.
...
On the FHFA index: FHFA House Price Index Down 0.6 Percent in July; Up 13.9 Percent from Last Year

House prices fell nationwide in July, down 0.6 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 13.9 percent from July 2021 to July 2022.

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 9/27/2022 09:11:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for July ("July" is a 3-month average of May, June and July closing prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

From S&P: S&P Corelogic Case-Shiller Index Continued its Deceleration in July

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 15.8% annual gain in July, down from 18.1% in the previous month. The 10-City Composite annual increase came in at 14.9%, down from 17.4% in the previous month. The 20-City Composite posted a 16.1% year-over-year gain, down from 18.7% in the previous month.

Tampa, Miami, and Dallas reported the highest year-over-year gains among the 20 cities in July. Tampa led the way with a 31.8% year-over-year price increase, followed by Miami in second with a 31.7% increase, and Dallas in third with a 24.7% increase. All 20 cities reported lower price increases in the year ending July 2022 versus the year ending June 2022.
...
Before seasonal adjustment, the U.S. National Index posted a -0.3% month-over-month decrease in July, while the 10-City and 20-City Composites both posted decreases of -0.8%.

After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of -0.2%, and the 10-City and 20-City Composites posted decreases of -0.5% and -0.4%, respectively.

In July, only 7 cities reported increases before and after seasonal adjustments.

“Although U.S. housing prices remain substantially above their year-ago levels, July’s report reflects a forceful deceleration,” says Craig J. Lazzara, Managing Director at S&P DJI. “For example, while the National Composite Index rose by 15.8% in the 12 months ended July 2022, its year-over-year price rise in June was 18.1%. The -2.3% difference between those two monthly rates of gain is the largest deceleration in the history of the index. We saw similar patterns in our 10-City Composite (up 14.9% in July vs. 17.4% in June) and our 20-City Composite (up 16.1% in July vs. 18.7% in June). On a monthover-month basis, all three composites declined in July"
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is down 0.5% in July (SA).

The Composite 20 index is down 0.4% (SA) in July.

The National index is 65% above the bubble peak (SA), and down 0.2% (SA) in July.  The National index is up 136% from the post-bubble low set in February 2012 (SA).

The second graph shows the year-over-year change in all three indices.

The Composite 10 SA is up 14.9% year-over-year.  The Composite 20 SA is up 16.1% year-over-year.

The National index SA is up 15.8% year-over-year.

Price increases were lower than expectations.  I'll have more later.

by Calculated Risk on 9/26/2022 09:10:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Now at 20-Year Highs

The most recent historical high water market for mortgage rates was "14 years." It was broken so many times in September that we officially declared it to be boring last Tuesday. Now, less than a week later, 14-year highs would be more exciting than boring. As of mid-day today, we're officially at 20 year highs. [30 year fixed 6.87%]
emphasis added

Tuesday:
• At 8:30 AM ET, Durable Goods Orders for August from the Census Bureau. The consensus is for a 0.1% decrease in durable goods orders.

• At 9:00 AM, S&P/Case-Shiller House Price Index for July. The consensus is for a 17.0% year-over-year increase in the Comp 20 index for July.

• Also at 9:00 AM, FHFA House Price Index for July. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 10:00 AM, New Home Sales for August from the Census Bureau. The consensus is for 500 thousand SAAR, down from 511 thousand in July.

• Also at 10:00 AM, the Richmond Fed manufacturing survey for September. This is the last of the regional surveys for September.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
New Cases per Day2	50,017	58,522	≤5,0001
Hospitalized2	22,280	26,467	≤3,0001
Deaths per Day2	348	391	≤501
1my goals to stop daily posts, 27-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 deaths reported.

NOTE: Cases have declined by more than half, and deaths lag cases - so we might see average daily deaths in the 200s soon (good news, but still too high).

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 9/26/2022 05:05:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate in August was 0.70%, down from 0.73% July. Freddie's rate is down year-over-year from 1.62% in August 2021.

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.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

Click on graph for larger image

Mortgages in forbearance are being counted as delinquent in this monthly report but are not reported to the credit bureaus.

This is very different from the increase in delinquencies following the housing bubble.   Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes - and they will be able to restructure their loans once they are employed.

The serious delinquency rate was at 0.60% just prior to the pandemic - almost back.

by Calculated Risk on 9/26/2022 12:31:00 PM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales and Cancellations: Net vs Gross Sales

A brief excerpt:

Tomorrow (Tuesday), the Census Bureau will report new home sales for August. The consensus is for 500 thousand on a Seasonally Adjusted Annual rates (SAAR) basis, down from 511 thousand in July.
...
When looking at new home sales, we are interested in net sales for each month, however the Census Bureau reports gross new sales. A simple equation would be:

Sales (net) = Sales (gross) – Cancellations + Sales of earlier cancellations.

In the long run, the cancellation terms balance out, and the Census Bureau numbers are what we want. In other words, Sales(net) = sales(gross). But in the short run, when cancellations increase, the Census Bureau overestimates sales; and when cancellations decrease, the Census Bureau underestimates sales.
...
The bottom line is - with rapidly rising cancellations - the Census Bureau will overestimate sales tomorrow (and underestimate new home inventory).

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 9/26/2022 09:02:00 AM

Active inventory increased for the 2nd consecutive week, increasing 0.9% last week, and hitting a new peak for the year.  Here are the same week inventory changes for the last four years:

2022: +4.9K

2021: -3.7K

2020: -5.2K

2019: -0.3K

Inventory bottomed seasonally at the beginning of March 2022 and is now up 131% since then.  More than double!  Altos reports inventory is up 28.7% year-over-year. 

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of September 23rd, inventory was at 557 thousand (7-day average), compared to 552 thousand the prior week.  Inventory was up 0.9% from the previous week. 

Inventory is still historically low. Compared to the same week in 2021, inventory is up 28.7% from 433 thousand, however compared to the same week in 2020 inventory is down 1.9% from 568 thousand.  Compared to 3 years ago, inventory is down 42.2% from 963 thousand.

Here are the inventory milestones I’m watching for with the Altos data:

1. The seasonal bottom (happened on March 4th for Altos) ✅

2. Inventory up year-over-year (happened on May 13th for Altos) ✅

3. Inventory up compared to two years ago (currently down 1.9% according to Altos)

4. Inventory up compared to 2019 (currently down 42.2%).

Here is a graph of the inventory change vs 2021, 2020 (milestone 3 above) and 2019 (milestone 4).

The blue line is the year-over-year data, the red line is compared to two years ago, and dashed purple is compared to 2019.

Two years ago (in 2020) inventory was declining all year, so the two-year comparison will get easier all year.  

Based on the recent changes in inventory, my current estimate is inventory will be up compared to 2020 in Q4 of this year.

A key will be if inventory increases in the Fall this year.  Inventory was up slightly in September.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 9/26/2022 08:36:00 AM

These indicators are mostly for travel and entertainment.    It is interesting to watch these sectors recover as the pandemic subsides.  Notes: I've added back gasoline supplied to see if there is an impact from higher gasoline prices.

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

This data is as of September 25th.

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 (Black), 2021 (Blue) and 2022 (Red).

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

The 7-day average is down 2.7% from the same day in 2019 (90.9% of 2019).  (Dashed line) 

Air travel - as a percent of 2019 - had been moving sideways over the last several months, off about 10% from 2019.   Travel has picked up recently 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).  

Black is 2020, Blue is 2021 and Red is 2022.  

The data is from BoxOfficeMojo through September 22nd.

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

Movie ticket sales were at $71 million last week, down about 52% 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 2022, black is 2020, blue is the median, and dashed light blue is for 2021. Dashed purple is 2019 (STR is comparing to a strong year for hotels).

This data is through Sept 17th. The occupancy rate was down 2.4% compared to the same week in 2019. 

The 4-week average of the occupancy rate is above the median rate for the previous 20 years (Blue).

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

----- 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.  Purple is for 2021, and Red is for 2022.

As of September 16th, gasoline supplied was down 6.9% compared to the same week in 2019.

Recently gasoline supplied has been running below 2019 and 2021 levels - and sometimes below 2020.

by Calculated Risk on 9/25/2022 06:32:00 PM

Weekend:
• Schedule for Week of September 25, 2022

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

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

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 6 and DOW futures are down 42 (fair value).

Oil prices were down over the last week with WTI futures at $78.74 per barrel and Brent at $86.15 per barrel. A year ago, WTI was at $75, and Brent was at $79 - so WTI oil prices are up 5% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.65 per gallon. A year ago, prices were at $3.17 per gallon, so gasoline prices are up $0.48 per gallon year-over-year.

by Calculated Risk on 9/25/2022 11:58:00 AM

On Friday, the average 30-year mortgage rate hit 6.7% for zero points and top tier scenarios. This was the highest rate in 14 years and is close to the highest rate in over 20 years (above 6.76% will be the highest since early 2002).

Here is a graph showing the 30-year rate using Freddie Mac PMMS, and MND for last week.

Click on graph for larger image.

This is a graph from Mortgage News Daily (MND) showing 30-year fixed rates from three sources (MND, MBA, Freddie Mac) over the last 5 years.  

Yes, rates were much higher in the 1980 period, but it is the change in monthly payments that impacts housing. Monthly payments include principal, interest, taxes, insurance (PITI), and sometimes HOA fees (Homeowners Association). We could also include maintenance, utilities and other costs.

The following graph shows the year-over-year change in principal & interest (P&I) assuming a fixed loan amount since 1977. Currently P&I is up about 52% year-over-year for a fixed amount (this doesn’t take into account the change in house prices).

This is above the previous record increase of 50% in 1980.  This assumed a fixed loan amount - if we add in the year-over-year increase in house prices, payments would be up around 65% YoY for the same house.

This is one of the reasons I've argued in my real estate newsletter Housing: Don't Compare the Current Housing Boom to the Bubble and Bust, Look instead at the 1978 to 1982 period for lessons.

I'll have much more in the newsletter.

by Calculated Risk on 9/24/2022 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• August Housing Starts: Record Number of Housing Units Under Construction

• NAR: Existing-Home Sales Decreased Slightly to 4.80 million SAAR in August

• Why Measures of Existing Home Inventory appear Different

• Final Look at Local Housing Markets in August

• 3rd Look at Local Housing Markets in August


This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

You can subscribe at https://calculatedrisk.substack.com/

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