by Calculated Risk on 11/02/2022 08:26:00 AM

From ADP: ADP National Employment Report: Private Sector Employment Increased by 239,000 Jobs in October; Annual Pay was Up 7.7%

Private sector employment increased by 239,000 jobs in October and annual pay was up 7.7 percent year-over-year, according to the October ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”).

The jobs report and pay insights use ADP’s fine-grained anonymized and aggregated payroll data of over 25 million U.S. employees to provide a representative picture of the labor market. The report details the current month’s total private employment change, and weekly job data from the previous month. ADP’s pay measure uniquely captures the earnings of a cohort of almost 10 million employees over a 12-month period.

“This is a really strong number given the maturity of the economic recovery but the hiring was not broad based,” said Nela Richardson, chief economist, ADP. “Goods producers, which are sensitive to interest rates, are pulling back, and job changers are commanding smaller pay gains. While we’re seeing early signs of Fed-driven demand destruction, it’s affecting only certain sectors of the labor market.”
emphasis added

This was above the consensus forecast of 200,000.  The BLS report will be released Friday, and the consensus is for 2o0 thousand non-farm payroll jobs added in October.

by Calculated Risk on 11/02/2022 07:00:00 AM

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

Mortgage applications decreased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 28, 2022. This week’s results include revised data to reflect an update to last week’s survey results.

... The Refinance Index increased 0.2 percent from the previous week and was 85 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 41 percent lower than the same week one year ago.

“Mortgage applications declined for the sixth consecutive week despite a slight drop in rates. The 30-year fixed rate decreased for the first time in over two months to 7.06 percent, but remained close to its highest since 2002,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Apart from the ARM loan rate, rates for all other loan types were more than three percentage points higher than they were a year ago. These elevated rates continue to put pressure on both purchase and refinance activity and have added to the ongoing affordability challenges impacting the broader housing market, as seen in the deteriorating trends in housing starts and home sales.”

Added Kan: “With most homeowners locked into significantly lower rates, refinance applications continued to run more than 80 percent below last year’s pace, while the refinance share of applications was 28.6 percent – the fifth straight week below 30 percent.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 7.06 percent from 7.16 percent, with points decreasing to 0.73 from 0.88 (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.

With higher mortgage rates, the refinance index has declined sharply this year.

The refinance index is near the lowest level since the year 2000.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 41% year-over-year unadjusted.

The purchase index is 12% below the pandemic low and at the lowest level since 2015.

Note: Red is a four-week average (blue is weekly).

by Calculated Risk on 11/01/2022 09:00:00 PM

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

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

• At 8:15 AM, The ADP Employment Report for October. This report is for private payrolls only (no government).  The consensus is for 200,000 jobs added, down from 208,000 in September.

• At 2:00 PM, FOMC Meeting Announcement. The FOMC is expected to raise rates 75bp at this meeting.

• At 2:30 PM, Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

by Calculated Risk on 11/01/2022 05:58:00 PM

Wards Auto released their estimate of light vehicle sales for October. Wards Auto estimates sales of 14.90 million SAAR in October 2022 (Seasonally Adjusted Annual Rate), up 10.4% from the September sales rate, and up 12.7% from October 2021. 

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and Wards Auto's estimate for October (red).

The impact of COVID-19 was significant, and April 2020 was the worst month.  After April 2020, sales increased, and were close to sales in 2019 (the year before the pandemic).  

However, sales decreased late last year due to supply issues.  It appears the "supply chain bottom" was in September 2021.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Sales in October were above the consensus forecast of 14.3 million SAAR.

by Calculated Risk on 11/01/2022 12:34:00 PM

Today, in the Calculated Risk Real Estate Newsletter: How Much will the Fannie & Freddie Conforming Loan Limit Increase for 2023?

A brief excerpt:

The Official Limits will be released On Tuesday, November 29th
...
This graph shows the CLL since 1979. Note that during periods when house prices decline, the CLL is not reduced. The CLL was at $417,000 from 2006 through 2016, and only increased slightly in 2017 as the house price index caught back up to the previous high reached during the housing bubble. ...

The adjustment is based on the House Price Index value in Q3 divided by Q3 in the prior year. The FHFA index is a repeat sales index, similar to Case-Shiller.
...
We need the house price data through September 2022 to calculate the conforming loan limit for 2023. This quarterly data will be released on November 29th. Currently we only have data for Q2 2022 for the quarterly index (up 17.0% from Q2 2021), however, the Purchase-Only index was up 11.9% through August 2022. Clearly prices have slowed sharply in Q3. Using the purchase index as a guide, and assuming a similar decline in September in the YoY price change - the CLL will increase around 12% in 2023.

Based on an estimated 12% year-over-year house price change, the CLL will be around $725,000 in 2023. For high-cost areas like Los Angeles, the limit could increase to around $1.08 million.

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

by Calculated Risk on 11/01/2022 10:29:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings increased to 10.7 million on the last business day of September, the U.S. Bureau of Labor Statistics reported today. The number of hires edged down to 6.1 million, while total separations decreased to 5.7 million. Within separations, quits (4.1 million) changed little and layoffs and discharges (1.3 million) edged down.
emphasis added

The following graph shows job openings (black 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 employment report this Friday will be for October.

Click on graph for larger image.

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

The spike in layoffs and discharges in March 2020 is labeled, but off the chart to better show the usual data.

Jobs openings increased in September to 10.717 million from 10.280 million in August.

The number of job openings (black) were up slightly year-over-year. 

Quits were down 5% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 11/01/2022 10:21:00 AM

From the Census Bureau reported that overall construction spending increased:

Construction spending during September 2022 was estimated at a seasonally adjusted annual rate of $1,811.1 billion, 0.2 percent above the revised August estimate of $1,807.0 billion. The September figure is 10.9 percent above the September 2021 estimate of $1,632.9 billion.
emphasis added

Private spending increased and public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $1,450.3 billion, 0.4 percent above the revised August estimate of $1,444.9 billion. ...

In September, the estimated seasonally adjusted annual rate of public construction spending was $360.9 billion, 0.4 percent below the revised August estimate of $362.1 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential (red) spending is 35% above the bubble peak (in nominal terms - not adjusted for inflation).

Non-residential (blue) spending is 28% above the bubble era peak in January 2008 (nominal dollars).

Public construction spending is 11% above the peak in March 2009.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 12.7%. Non-residential spending is up 10.5% year-over-year. Public spending is up 7.1% year-over-year.

This was above consensus expectations of a 0.5% decrease in spending; and construction spending for the previous two months combined were revised up sharply.

by Calculated Risk on 11/01/2022 10:08:00 AM

(Posted with permission). The ISM manufacturing index indicated expansion. The PMI® was at 50.2% in October, down from 50.9% in September. The employment index was at 50.0%, up from 48.7% last month, and the new orders index was at 49.2%, up from 47.1%.

From ISM: Manufacturing PMI® at 50.2% October 2022 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector grew in October, with the overall economy achieving a 29th consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The October Manufacturing PMI® registered 50.2 percent, 0.7 percentage point lower than the 50.9 percent recorded in September. This figure indicates expansion in the overall economy for the 29th month in a row after contraction in April and May 2020. The Manufacturing PMI® figure is the lowest since May 2020, when it registered 43.5 percent. The New Orders Index remained in contraction territory at 49.2 percent, 2.1 percentage points higher than the 47.1 percent recorded in September. The Production Index reading of 52.3 percent is a 1.7-percentage point increase compared to September’s figure of 50.6 percent. The Prices Index registered 46.6 percent, down 5.1 percentage points compared to the September figure of 51.7 percent. This is the index’s lowest reading since May 2020 (40.8 percent). The Backlog of Orders Index registered 45.3 percent, 5.6 percentage points lower than the September reading of 50.9 percent. After one month of contraction, the Employment Index was unchanged at 50 percent, 1.3 percentage points higher than the 48.7 percent recorded in September. The Supplier Deliveries Index reading of 46.8 percent is 5.6 percentage points lower than the September figure of 52.4 percent. This reading, the index’s lowest since March 2009 (43.2 percent), ended a streak of 79 months in ‘slowing’ territory. The Inventories Index registered 52.5 percent, 3 percentage points lower than the September reading of 55.5 percent. The New Export Orders Index reading of 46.5 percent is down 1.3 percentage points compared to September’s figure of 47.8 percent. This is the index’s lowest figure since May 2020, when it registered 39.5 percent. The Imports Index remained in expansion territory at 50.8 percent, 1.8 percentage points below the September reading of 52.6 percent.”
emphasis added

This suggests manufacturing expanded at a slower pace in October than in September.  This was slightly above the consensus forecast.

by Calculated Risk on 11/01/2022 08:00:00 AM

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: While Buyer Demand Cools, Home Prices Dropped by 0.5% in September From the Previous Month

CoreLogic® ... today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for September 2022.

U.S. home price growth continued to relax on a year-over-year basis in September, posting an 11.4% increase. As in previous months, Southeastern states put up significantly higher price gains than the national growth rate, with Florida again leading the country for the eighth consecutive month. Although rising mortgage rates continue to dampen housing demand nationwide, out-migration from more expensive states on the West Coast and in the Northeast is likely fueling homebuyer enthusiasm for properties in relatively more affordable Southeastern states. CoreLogic expects annual U.S. home price growth to continue to slow over the next 12 months to 3.9% by September 2023.

“The rapid increase in prices during the COVID-19 pandemic caused many U.S. housing markets to reach completely unaffordable levels for potential local homebuyers,” said Selma Hepp, interim lead of the Office of the Chief Economist at CoreLogic. “On the West Coast and in Mountain-West states, home prices are slowing from this spring’s high but remain elevated from a year ago. By contrast, markets that continue to see an in-migration of higher-income households are still experiencing home price gains that are notably higher than the national rate of appreciation.”
...
U.S. home prices (including distressed sales) increased 11.4% year over year in September 2022 compared to September 2021. On a month-over-month basis, home prices declined by 0.5% compared to August 2022.
emphasis added

by Calculated Risk on 10/31/2022 08:57:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Slightly Higher To Start The Week. More Volatility Ahead

Mortgage rates are fresh off their best week since at least July and their best winning streak (in terms of consecutive days moving lower) in well over a year. The price of admission happened to be the highest rates in more than 20 years, so the recent improvements were really nothing more than a balancing act. ... [30 year fixed 7.13%]
emphasis added

Tuesday:
• At 8:00 AM ET, Corelogic House Price index for September.

• At 10:00 AM, ISM Manufacturing Index for October.  The consensus is for 49.9, down from 50.9. 

• Also at 10:00 AM, Construction Spending for September.  The consensus is for 0.5% decrease in spending.

• Late, Light vehicle sales for October. The consensus is for sales of 14.3 million SAAR, up from 13.5 million SAAR in September (Seasonally Adjusted Annual Rate).