by Calculated Risk on 2/07/2023 11:20:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Declines for 7th Consecutive Month in December

A brief excerpt:

Freddie Mac recently reported that its “National” Home Price Index (FMHPI) declined for the seventh consecutive month on a seasonally adjusted basis in December, putting the National FNHPI down 2.5% from its May 2022 peak, and down 5.0% Not Seasonally Adjusted (NSA) from the peak.

On a year-over-year basis, the National FMHPI was up 4.1% in December, down from 6.0% YoY in November.  The YoY increase peaked at 19.3% in July 2021.

In December, 36 states and D.C. were below their 2022 peaks in December, Seasonally Adjusted. The largest seasonally adjusted declines from the recent peak were in Arizona (-8.5%), Idaho (-7.2%), Nevada (-6.8%), Washington (-6.7%), California (-6.3%), Utah (-5.4%), and Colorado (-5.2%).
...
Based on the recent trend, this index will be negative year-over-year in March.

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

by Calculated Risk on 2/07/2023 09:37:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Increase in January

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased 2.5% in January compared to December. The Manheim Used Vehicle Value Index (MUVVI) rose to 224.8, down 12.8% from a year ago. January’s increase was driven in part by the seasonal adjustment. The non-adjusted price change in January was an increase of 1.5% compared to December, moving the unadjusted average price down 11.0% year over year.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices increased in January (seasonally adjusted) and were down 12.8% year-over-year (YoY).  

It is likely this index will be down further YoY in early 2023.   

by Calculated Risk on 2/07/2023 08:40:00 AM

From the Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $67.4 billion in December, up $6.4 billion from $61.0 billion in November, revised.

December exports were $250.2 billion, $2.2 billion less than November exports. December imports were $317.6 billion, $4.2 billion more than November imports.
emphasis added

Click on graph for larger image.

Exports decreased and imports increased in December.

Exports are up 8% year-over-year; imports are up 2% year-over-year.

Both imports and exports decreased sharply due to COVID-19 and then bounced back.  Both have decreased recently.

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive.

The trade deficit with China decreased to $23.5 billion in December, from $36.2 billion a year ago.

The trade deficit was slightly smaller than the consensus forecast.

by Calculated Risk on 2/07/2023 08:00:00 AM

Notes: This CoreLogic House Price Index report is for December. The recent Case-Shiller index release was for November. The CoreLogic HPI is a three-month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: Peak Fall Mortgage Rates Further Cooled Home Price Growth in December, CoreLogic Reports

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

The effect of rising mortgage rates on housing demand in 2022 became even more evident in December, with annual home price growth dipping to 6.9%, down from a series high of 20% appreciation in April. Only nine states registered double-digit year-over-year price increases in December, compared with 48 that posted double-digit gains in April.
...
“The continued slowing of home prices at the end of 2022 reflects weaker housing market demand, primarily caused by higher mortgage rates and a more pessimistic economic outlook in general,” said Selma Hepp, chief economist at CoreLogic. “But while prices continued to fall from November, the rate of decline was lower than that seen in the summer and still adds up to only a 3% cumulative drop in prices since last spring’s peak.”

“Some exurban regions that became increasingly popular during the COVID-19 pandemic saw prices jump and affordability erode at the time, but these areas are now seeing major corrections,” Hepp continued. “And while price deceleration will likely persist into the spring of 2023, when the market will probably see some year-over-year declines, the recent decrease in mortgage rates has stimulated buyer demand and could result in a more optimistic homebuying season than many expected.”
...
U.S. home prices (including distressed sales) increased by 6.9% year over year in December 2022 compared to December 2021. On a month-over-month basis, home prices declined by 0.4% compared to November 2022.
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by Calculated Risk on 2/06/2023 09:00:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Jump to Highest Levels in a Month

Mortgage rates were already under quite a bit of pressure on Friday following the stunningly strong jobs report in the morning. Strong economic data is generally bad for rates. One reason for that is the data's impact on decisions made by the Federal Reserve. This is especially true of the jobs report. ...

In the space of just two days, the average lender is nearly half a percent higher on a top tier conventional 30yr scenario. [30 year fixed 6.39%]
emphasis added

Tuesday:
• At 8:00 AM ET, CoreLogic House Price index for December.

• At 8:30 AM, Trade Balance report for December from the Census Bureau. The consensus is the trade deficit to be $68.5 billion.  The U.S. trade deficit was at $61.5 billion in November.

• At 12:40 PM, Discussion Fed Chair Jerome Powell, Conversation with David Rubenstein, Chairman of the Economic Club of Washington, D.C. at the Economic Club of Washington, D.C.

by Calculated Risk on 2/06/2023 07:10:00 PM

From the Federal Reserve: The January 2023 Senior Loan Officer Opinion Survey on Bank Lending Practices

The January 2023 Senior Loan Officer Opinion Survey (SLOOS) on Bank Lending Practices addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the fourth quarter of 2022.

Regarding loans to businesses, survey respondents on balance reported tighter standards and weaker demand for commercial and industrial (C&I) loans to large, middle-market, and small firms over the fourth quarter.2 Meanwhile, banks reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories.

For loans to households, banks reported that lending standards tightened or remained basically unchanged across all categories of residential real estate (RRE) loans and demand for these loans weakened. In addition, banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs). Standards tightened and demand weakened, on balance, for credit card, auto, and other consumer loans.
emphasis added

Click on graph for larger image.

This graph on Residential Real Estate demand is from the Senior Loan Officer Survey Charts.

This shows that demand has declined sharply.

The left graph is 1990 to 2014.  The right graph is 2015 to Q4 2022.

by Calculated Risk on 2/06/2023 01:12:00 PM

The BEA released their estimate of vehicle sales for January last week.

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the January 2023 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new all-time high of 570 thousand SAAR in April 2019.

Click on graph for larger image.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 308 thousand SAAR in May 2020.  

Heavy truck sales were at 466 thousand SAAR in January, down from 501 thousand in December, and up 6.4% from 438 thousand SAAR in January 2022.  

Usually, heavy truck sales decline sharply prior to a recession.   Sales were solid in January.

by Calculated Risk on 2/06/2023 09:39:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Black Knight Mortgage Monitor: Home Prices Declined in December; Down 5.3% since June

A brief excerpt:

Here is a graph of the Black Knight HPI. The index is still up 5.0% year-over-year but declined for the sixth straight month in December and is now 5.3% off the peak in June.

• December’s 0.45% seasonally adjusted decline was roughly on par with the 0.48% average seen over the past 6 months, with an even sharper 0.89% decline on an unadjusted basis

• Nationally, home prices are now 5.3% off their summer peak (2.9% when accounting for typical seasonal patterns)

• December’s decline pushed the annual home price growth rate down to 5.0% -- now only 0.4% above its 30-year average – and the slowest home price growth rate since June 2020 in the early stages of the pandemic

• If the current rate of monthly declines persists, we would see the annual home price growth rate go negative within the next three months

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

by Calculated Risk on 2/06/2023 08:11:00 AM

Altos reports inventory was down 1.9% week-over-week. Usually inventory bottoms in early February; however, in 2022, inventory bottomed in early March.  

Here are the same week inventory changes for the last five years:

2023: -8.7K

2022: -16.0K 

2021: -13.4K

2020: -4.3K

2019: -10.9K

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of February 3rd, inventory was at 457 thousand (7-day average), compared to 466 thousand the prior week.   

The second graph shows the seasonal pattern for active single-family inventory since 2015.

The red line is for 2023.  The black line is for 2019.  Note that inventory is up from the previous two years (the record low was in 2022), but still well below normal levels.

Inventory was up 78.8% compared to the same week in 2022 (last week it was up 71.5%), and down 44.0% compared to the same week in 2019 (last week down 43.7%). 

A key will be when inventory starts increasing in 2023 - so far inventory has declined about 6.9% over the first five weeks of 2023.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 2/05/2023 06:15:00 PM

Weekend:
• Schedule for Week of February 5, 2023

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures are down 13 and DOW futures are down 81 (fair value).

Oil prices were down over the last week with WTI futures at $73.39 per barrel and Brent at $79.94 per barrel. A year ago, WTI was at $92, and Brent was at $97 - so WTI oil prices are DOWN 20% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.43 per gallon. A year ago, prices were at $3.28 per gallon, so gasoline prices are up $0.15 per gallon year-over-year.