by Calculated Risk on 11/25/2022 08:08:00 PM

NOTE: COVID stats are updated on Fridays.

On COVID (focus on hospitalizations and deaths).  Data has switched to weekly.

Weekly deaths bottomed in July 2021 at 1,666.

COVID Metrics
	Now	Week Ago	Goal
New Cases per Week2🚩	305,082	281,691	≤35,0001
Hospitalized2	21,293	21,578	≤3,0001
Deaths per Week2🚩	2,644	2,266	≤3501
1my goals to stop weekly posts, 2Weekly for Cases, Currently Hospitalized, and Deaths 🚩 Increasing number weekly for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported.

by Calculated Risk on 11/25/2022 10:38:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller, FHFA House Prices Indexes and Conforming Loan Limits will be released on Tuesday

Brief excerpt:

Last week, the National Association of Realtors® (NAR) reported that median house prices were up 6.6% year-over-year (YoY) in October. This is down from the peak growth rate of 25.2% YoY in May 2021.

Last month, Case-Shiller reported that the National Index was up 13.0% YoY in August, down from a YoY peak of 20.8% in March 2022.

The median prices reported by the NAR are for the most recent month only, so the prices are very timely. However, the prices can be distorted by the mix of homes sold.

Case-Shiller is a repeat sales index (they compare the current price of home to the previous sales price), and it a three-month average. So, the most recent report (for August), was actually for homes closed in June, July and August.

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.

The following graph shows YoY price changes for the NAR median house prices, Case-Shiller National price index, and the FHFA purchase-only index (Fannie and Freddie loans only).

Most of the time, the NAR median price leads the Case-Shiller index, and even though the Case-Shiller September index will show a solid YoY gain, I expect house price growth to decelerate further in coming months and turn negative YoY soon.

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

by Calculated Risk on 11/25/2022 09:15:00 AM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for October 2022. Over the past three months, the indexes increased in 36 states, decreased in 11 states, and remained stable in three, for a three-month diffusion index of 50. Additionally, in the past month, the indexes increased in 20 states, decreased in 22 states, and remained stable in eight, for a one-month diffusion index of -4. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 0.7 percent over the past three months and 0.1 percent in October
emphasis added

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on map for larger image.

Here is a map of the three-month change in the Philly Fed state coincident indicators. This map was all red during the worst of the Pandemic and also at the worst of the Great Recession.

The map is mostly positive on a three-month basis.

Source: Philly Fed.

And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. 

This graph includes states with minor increases (the Philly Fed lists as unchanged).

In October 23 states had increasing activity including minor increases.

by Calculated Risk on 11/24/2022 11:28:00 AM

Here are five economic reasons to be thankful this Thanksgiving. (Hat Tip to Neil Irwin who started doing this years ago)

1) The Unemployment Rate is Near 50 Year Low

The unemployment rate was at 3.7% in October. The unemployment rate is down from 14.7% in April 2020 (the highest since the Great Depression).

The unemployment rate is down from 4.6% a year ago (October 2021). 

This was just up from 3.5% in September - and that matched the lowest unemployment rate since 1969!

2) Low unemployment claims.

This graph shows the 4-week moving average of weekly claims since 1971.

Weekly claims were at 240,000 last week.

The dashed line on the graph is the current 4-week average.

Even though weekly claims have moved up a little recently, the 4-week average is close to the lowest level in 50 years.

3) Mortgage Debt as a Percent of GDP is much lower than during Housing Bubble

This graph shows household mortgage debt as a percent of GDP.  

Note this graph was impacted by the sharp decline in Q2 2020 GDP.

Mortgage debt is up $1.46 trillion from the peak during the housing bubble, but, as a percent of GDP is at 48.9%, down from a peak of 73.3% of GDP during the housing bust.

4) Mortgage Delinquency Rate at Lowest Level since at least 1979

This graph, based on data from the MBA through Q3 2022, shows the percent of loans delinquent by days past due.  Mortgage delinquencies were at the lowest level since the MBA survey started in 1979.

Note: The sharp increase in 2020 in the 90-day bucket was due to loans in forbearance (included as delinquent, but not reported to the credit bureaus).

The percent of loans in the foreclosure process increased year-over-year in Q3 with the end of the foreclosure moratoriums.

5) Household Debt burdens at Low Levels

This graph, based on data from the Federal Reserve, shows the Total Debt Service Ratio (DSR), and the DSR for mortgages (blue) and consumer debt (yellow).

The Household debt service ratio was at 13.2% in 2007 and has fallen to under 10% now., and the DSR for mortgages (blue) are near the lowest level for the last 35 years.  

This data suggests aggregate household cash flow is in a solid position.

Happy Thanksgiving to All!

by Calculated Risk on 11/23/2022 06:12:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate in October was 0.66%, down from 0.67% September. Freddie's rate is down year-over-year from 1.32% in October 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.

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

Note that multi-family delinquencies have been increasing and were at 0.15% in October.

by Calculated Risk on 11/23/2022 12:49:00 PM

From BofA:

On net, today's data pushed up our 4Q US GDP tracking from 1.4% q/q saar to 1.8% q/q saar and left our 3Q US GDP tracking unchanged at 3.0% q/q saar. [Nov 23rd estimate]
emphasis added

From Goldman:

We boosted our Q4 GDP tracking estimate by 0.5pp to +1.5% (qoq ar). [Nov 23rd estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2022 is 4.3 percent on November 23, up from 4.2 percent on November 17. [Nov 23rd estimate]

by Calculated Risk on 11/23/2022 10:39:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Increased in October; Completed Inventory Increased

Brief excerpt:

The next graph shows the months of supply by stage of construction. “Months of supply” is inventory at each stage, divided by the sales rate.

There are 1.2 months of completed supply (red line). This is getting close to the normal level.

The inventory of new homes under construction is at 5.7 months (blue line). This elevated level of homes under construction is due to supply chain constraints.

And a record 111 thousand homes have not been started - about 2.1 months of supply (grey line) - about double the normal level. Homebuilders are probably waiting to start some homes until they have a firmer grasp on prices and demand.
...
First, as I discussed two months ago, the Census Bureau overestimates sales, and underestimates inventory when cancellation rates are rising, see: New Home Sales and Cancellations: Net vs Gross Sales. So, take the headline sales number with a large grain of salt - the actual negative impact on the homebuilders is far greater than the headline number suggests!
...
There are a large number of homes under construction, and this suggests we will see a sharp increase in completed inventory over the next several months - and that will put pressure on new home prices.

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

by Calculated Risk on 11/23/2022 10:08:00 AM

The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 632 thousand.

The previous two months were revised down.

Sales of new single‐family houses in October 2022 were at a seasonally adjusted annual rate of 632,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.5 percent above the revised September rate of 588,000, but is 5.8 percent below the October 2021 estimate of 671,000.
emphasis added

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

New home sales are below pre-pandemic levels.

The second graph shows New Home Months of Supply.

The months of supply decreased in October to 8.9 months from 9.4 months in September.

The all-time record high was 12.1 months of supply in January 2009. The all-time record low was 3.5 months, most recently in October 2020.

This is well above the top of the normal range (about 4 to 6 months of supply is normal).

"The seasonally‐adjusted estimate of new houses for sale at the end of October was 470,000. This represents a supply of 8.9 months at the current sales rate."

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In October 2022 (red column), 48 thousand new homes were sold (NSA). Last year, 51 thousand homes were sold in October.

The all-time high for October was 105 thousand in 2005, and the all-time low for October was 23 thousand in 2010.

This was above expectations, however sales in the two previous months were revised down. I'll have more later today.

by Calculated Risk on 11/23/2022 08:35:00 AM

The DOL reported:

In the week ending November 19, the advance figure for seasonally adjusted initial claims was 240,000, an increase of 17,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 222,000 to 223,000. The 4-week moving average was 226,750, an increase of 5,500 from the previous week's revised average. The previous week's average was revised up by 250 from 221,000 to 221,250.
emphasis added

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 increased to 226,750.

The previous week was revised up.

Weekly claims were above the consensus forecast.

by Calculated Risk on 11/23/2022 07:00:00 AM

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

Mortgage applications increased 2.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 18, 2022. Last week’s results include an adjustment for the observance of Veterans Day.

... The Refinance Index increased 2 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 9 percent compared with the previous week and was 41 percent lower than the same week one year ago.

“The 30-year fixed-rate mortgage fell for the second week in a row to 6.67 percent and is now down almost 50 basis points from the recent peak of 7.16 percent one month ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year. As a result of the drop in mortgage rates, both purchase and refinance applications picked up slightly last week. However, refinance activity is still more than 80 percent below last year’s pace.”

Added Kan, “With the decline in rates, the ARM share of applications also decreased to 8.8 percent of loans last week, down from the range of 10 and 12 percent during the past two months.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.67 percent from 6.90 percent, with points increasing to 0.68 from 0.56 (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 4% below the pandemic low and just up from the lowest level since 2015.

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