by Calculated Risk on 4/03/2023 11:14:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Black Knight Mortgage Monitor: Home Prices Increased Slightly in February; Prices Up 1.9% YoY

A brief excerpt:

Here is a graph of the Black Knight HPI. The index is still up 1.9% year-over-year and will likely turn negative YoY soon.

• A modest easing of affordability in January and early February along with tightening inventory levels drove home prices slightly higher

• On an adjusted basis, prices were up 0.16% for the month, the strongest single month gain since May of last year, while non-adjusted they were up 0.68%

• The headline annual home price growth rate fell by 164 bps in the month to 1.94%, the first time we’ve seen annual home price growth below 2% since early 2012

• Price growth is expected to cross over into negative territory by April but may return above 0% before the end of the year if inventory challenges persist and interest rates ease

• All in, home prices nationally are now down 2.6% from their 2022 peak, marginally improved from 2.7% in January
emphasis added

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

by Calculated Risk on 4/03/2023 10:21:00 AM

From the Census Bureau reported that overall construction spending decreased:

Construction spending during February 2023 was estimated at a seasonally adjusted annual rate of $1,844.1 billion, 0.1 percent below the revised January estimate of $1,845.4 billion. The February figure is 5.2 percent above the February 2022 estimate of $1,753.1 billion.
emphasis added

Private spending was "virtually unchanged" and public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $1,453.2 billion, virtually unchanged from the revised January estimate of $1,453.6 billion. ...

In February, the estimated seasonally adjusted annual rate of public construction spending was $391.0 billion, 0.2 percent below the revised January estimate of $391.8 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 9.8% below the recent peak.

Non-residential (blue) spending is at a new peak.

Public construction spending is close to the recent peak.

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

On a year-over-year basis, private residential construction spending is down 5.7%. Non-residential spending is up 19.4% year-over-year. Public spending is up 12.8% year-over-year.

This was at consensus expectations of a 0.1% decrease in spending; however, construction spending for the previous two months was revised up.

by Calculated Risk on 4/03/2023 10:04:00 AM

(Posted with permission). The ISM manufacturing index indicated contraction. The PMI® was at 46.3% in March, down from 47.7% in February. The employment index was at 46.9%, down from 49.1% last month, and the new orders index was at 44.3%, up from 47.0%.

From ISM: Manufacturing PMI® at 46.3% March 2023 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector contracted in March for the fifth consecutive month following a 28-month period 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 March Manufacturing PMI® registered 46.3 percent, 1.4 percentage points lower than the 47.7 percent recorded in February. Regarding the overall economy, this figure indicates a fourth month of contraction after a 30-month period of expansion. The Manufacturing PMI® is at its lowest level since May 2020, when it registered 43.5 percent. The New Orders Index remained in contraction territory at 44.3 percent, 2.7 percentage points lower than the figure of 47 percent recorded in February. The Production Index reading of 47.8 percent is a 0.5-percentage point increase compared to February’s figure of 47.3 percent. The Prices Index registered 49.2 percent, down 2.1 percentage points compared to the February figure of 51.3 percent. The Backlog of Orders Index registered 43.9 percent, 1.2 percentage points lower than the February reading of 45.1 percent. The Employment Index continued in contraction territory, registering 46.9 percent, down 2.2 percentage points from February’s reading of 49.1 percent. The Supplier Deliveries Index figure of 44.8 percent is 0.4 percentage point lower than the 45.2 percent recorded in February; this is the index’s lowest reading since March 2009 (43.2 percent). The Inventories Index dropped into contraction at 47.5 percent, 2.6 percentage points lower than the February reading of 50.1 percent. The New Export Orders Index reading of 47.6 percent is 2.3 percentage points lower than February’s figure of 49.9 percent. The Imports Index continued in contraction territory at 47.9 percent, 2 percentage points below the 49.9 percent reported in February.”
emphasis added

This suggests manufacturing contracted in March.  This was below the consensus forecast. 

by Calculated Risk on 4/03/2023 08:18:00 AM

Altos reports that active single-family inventory was down 0.8% week-over-week. Inventory still hasn't bottomed seasonally!

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of March 31st, inventory was at 410 thousand (7-day average), compared to 413 thousand the prior week.   

Year-to-date, inventory is down 16.5%, and at the lowest point so far this year.

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 62.2% compared to the same week in 2022 (last week it was up 64.3%), and down 50.8% compared to the same week in 2019 (last week down 50.2%). 

A key will be when inventory starts increasing in 2023 - not yet!

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 4/02/2023 06:42:00 PM

Weekend:
• Schedule for Week of April 2, 2023

Monday:
• At 10:00 AM ET, ISM Manufacturing Index for March. The consensus is for the ISM to be at 47.5, down from 47.7 in February.  

• Also at 10:00 AM, Construction Spending for February. The consensus is for 0.1% decrease in construction spending.

• All day, Light vehicle sales for March. The consensus is for light vehicle sales to be 14.9 million SAAR in March, unchanged from 14.9 million in February (Seasonally Adjusted Annual Rate).

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

Oil prices were up over the last week with WTI futures at $75.67 per barrel and Brent at $79.89 per barrel. A year ago, WTI was at $99, and Brent was at $106 - so WTI oil prices are DOWN 23% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.48 per gallon. A year ago, prices were at $4.20 per gallon, so gasoline prices are down $0.72 per gallon year-over-year.

by Calculated Risk on 4/02/2023 10:23:00 AM

Here is another monthly update on framing lumber prices.

This graph shows CME random length framing futures through March 31st.

Lumber is currently at $360 per 1000 board feet.

This is down from the peak of $1,733, and down 63% from $1008 a year ago.

Prices are below the pre-pandemic levels of around $400.

Click on graph for larger image.

There is somewhat of a seasonal demand for lumber, and lumber prices usually peak in April or May.

It is unlikely we will see a significant runup in prices this Spring due to the housing slowdown.

by Calculated Risk on 4/01/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• Inflation Adjusted House Prices 4.6% Below Peak Price-to-rent index is 7.9% below recent peak

• Year-over-year Rent Growth Continues to Decelerate

• Case-Shiller: National House Price Index "Declining Trend Continued" to 3.8% year-over-year increase in January

• Freddie Mac House Price Index Declines for 8th Consecutive Month in February

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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by Calculated Risk on 4/01/2023 08:11:00 AM

The key report scheduled for this week is the March employment report on Friday.

Other key reports include the February Trade Deficit and March Auto Sales.

For manufacturing, the March ISM Manufacturing survey will be released.

----- Monday, April 3rd -----
10:00 AM: ISM Manufacturing Index for March. The consensus is for the ISM to be at 47.5, down from 47.7 in February.  

10:00 AM: Construction Spending for February. The consensus is for 0.1% decrease in construction spending.

All Day: Light vehicle sales for March. The consensus is for light vehicle sales to be 14.9 million SAAR in March, unchanged from 14.9 million in February (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the February sales rate.

----- Tuesday, April 4th -----
8:00 AM: Corelogic House Price index for February.

10:00 AM ET: Job Openings and Labor Turnover Survey for February from the BLS.

This graph shows job openings (black line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings decreased in January to 10.8 million from 11.2 million in December.

----- Wednesday, April 5th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for March. This report is for private payrolls only (no government). The consensus is for 200,000 payroll jobs added in March, down from 242,000 added in February.

8:30 AM: Trade Balance report for February from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. 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.

The consensus is the trade deficit to be $68.7 billion.  The U.S. trade deficit was at $68.3 billion in January.

10:00 AM: the ISM Services Index for March.

----- Thursday, April 6th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 196 thousand initial claims, down from 198 thousand last week.

----- Friday, April 7th -----
8:30 AM: Employment Report for March.   The consensus is for 240,000 jobs added, and for the unemployment rate to be unchanged at 3.6%.

There were 311,000 jobs added in February, and the unemployment rate was at 3.6%.

This graph shows the jobs added per month since January 2022.

by Calculated Risk on 3/31/2023 09:10:00 PM

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

On COVID (focus on hospitalizations and deaths).  Data is now weekly.

After the first few weeks, the pandemic low for weekly deaths was the week of July 7, 2021, at 1,690 deaths.

Weekly deaths just set a new pandemic low at 1,596, although the data might be revised up.

COVID Metrics
	Now	Week Ago	Goal
New Cases per Week2	139,931	154,244	≤35,0001
Hospitalized2	14,650	15,965	≤3,0001
Deaths per Week2	1,596	2,260	≤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.

For cases, the low was 82,186.  

For COVID hospitalizations, the low was 9,821. 

by Calculated Risk on 3/31/2023 01:23:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Declines for 8th Consecutive Month in February

A brief excerpt:

Freddie Mac reported that its “National” Home Price Index (FMHPI) declined for the eighth consecutive month on a seasonally adjusted basis in February, putting the National FMHPI down 2.5% from its June 2022 peak, and down 4.7% Not Seasonally Adjusted (NSA) from the peak.

On a year-over-year basis, the National FMHPI was up 1.1% in February, down from 2.9% YoY in January.  The YoY increase peaked at 19.2% in July 2021. ...

In February, 29 states and D.C. were below their 2022 peaks, Seasonally Adjusted. The largest seasonally adjusted declines from the recent peak were in Idaho (-10.0%), Nevada (-8.4%), Washington (-7.5%), Arizona (-7.1%), California (-6.9%), Utah (-6.8%), and D.C. (-6.7%).
...
For cities (Core-based Statistical Areas, CBSA), here are the 30 cities with the largest declines from the peak, seasonally adjusted.

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