by Calculated Risk on 4/25/2023 10:50:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Increase to 683,000 Annual Rate in March

Brief excerpt:

The next graph shows new home sales for 2022 and 2023 by month (Seasonally Adjusted Annual Rate). Sales in March 2023 were down 3.4% from March 2022.

It seems likely that new home sales will be up year-over-year sometime in the next few months.
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As previously discussed, the Census Bureau overestimates sales, and underestimates inventory when cancellation rates are rising, see: New Home Sales and Cancellations: Net vs Gross Sales. This has reversed now since cancellation rates have started to decline. When a previously cancelled home is resold, the home builder counts it as a sale, but the Census Bureau does not (since it was already counted).

There are still a large number of homes under construction, and this suggests we might see a further increase in completed inventory over the next several months, but in general, this is a positive report for new home sales.

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

by Calculated Risk on 4/25/2023 10:07:00 AM

The Census Bureau reports New Home Sales in March were at a seasonally adjusted annual rate (SAAR) of 683 thousand.

The previous three months were revised down slightly, combined.

Sales of new single‐family houses in March 2023 were at a seasonally adjusted annual rate of 683,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.6 percent above the revised February rate of 623,000, but is 3.4 percent below the March 2022 estimate of 707,000.
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 close to pre-pandemic levels.

The second graph shows New Home Months of Supply.

The months of supply decreased in March to 7.6 months from 8.4 months in February.

The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 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 March was 432,000. This represents a supply of 7.6 months at the current sales rate."

Sales were above expectations of 630 thousand SAAR, however, sales in the three previous months were revised down slightly, combined. I'll have more later today.

by Calculated Risk on 4/25/2023 09:46:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index "Declines Moderated" to 2.0% year-over-year increase in February

Excerpt:

Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for February 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 "February" is a 3-month average of December, January and February closing prices. December closing prices include some contracts signed in October, so there is a significant lag to this data.

The MoM increase in the seasonally adjusted Case-Shiller National Index was at 0.16%. This increase followed seven consecutive MoM decreases.

On a seasonally adjusted basis, prices declined in 11 of 20 Case-Shiller cities on a month-to-month basis. The largest monthly declines seasonally adjusted were in Seattle (-1.5%), Las Vegas (-0.9%), and Portland (-0.4%). Seasonally adjusted, San Francisco has fallen 13.5% from the peak in May 2022 and Seattle is down 12.8% from the peak. All 20 cities have seen price declines from the recent peak (SA).

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

by Calculated Risk on 4/25/2023 09:15:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for February ("February" is a 3-month average of December, January and February 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 Declines Moderated in February

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 2.0% annual gain in February, down from 3.7% in the previous month. The 10-City Composite annual increase came in at 0.4%, down from 2.5% in the previous month. The 20-City Composite posted a 0.4% year-over-year gain, down from 2.6% in the previous month.

Miami, Tampa, and Atlanta again reported the highest year-over-year gains among the 20 cities in February. The order remained the same with Miami leading the way with a 10.8% year-over-year price increase, followed by Tampa in second with a 7.7% increase, and Atlanta in third with a 6.6% increase. All 20 cities reported lower prices in the year ending February 2023 versus the year ending January 2023.
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Before seasonal adjustment, the U.S. National Index posted a 0.2% month-over-month increase in February, while the 10-City and 20-City Composites posted increases of 0.3% and 0.2%, respectively.

After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 0.2%, while both the 10-City and 20-City Composites posted increases of 0.1%.

In January, before seasonal adjustment, 19 cities reported declines with only Miami reporting an increase at 0.1%. After seasonal adjustment, 15 cities reported declines while Miami, Boston, Charlotte, and Cleveland had slight increases.

“Home price trends moderated in February 2023,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite, which had declined for seven consecutive months, rose a modest 0.2% in February, and now stands 4.9% below its June 2022 peak. Our 10- and 20-City Composites performed similarly, with February gains of 0.3% and 0.2%; these Composites are currently 6.0% and 6.6% below their respective peaks. On a trailing 12-month basis, the National Composite is only 2.0% above its level in February 2022; the 10- and 20-City Composites are both up 0.4% on a year-over-year basis."
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 up 0.1% in February (SA) and down 4.3% from the recent peak in June 2022.

The Composite 20 index is up 0.1% (SA) in February and down 4.6% from the recent peak in June 2022.

The National index is up 0.2% (SA) in February and is down 2.8% from the peak in June 2022.

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

The Composite 10 SA is up 0.4% year-over-year.  The Composite 20 SA is up 0.4% year-over-year.

The National index SA is up 2.0% year-over-year.

Annual price increases were below expectations.  I'll have more later.

by Calculated Risk on 4/24/2023 09:00:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Slightly Lower to Start The Week

The average lender moved slightly lower in cost. The change was small enough that most borrowers will see it in the form of a modest reduction in upfront costs without any change in the quoted interest rate (relative to what the same scenario would have been quoted on Friday). [30 year fixed 6.59%]
emphasis added

Tuesday:
• At 9:00 AM ET, S&P/Case-Shiller House Price Index for February. The consensus is for a 2.5% year-over-year increase in the Comp 20 index for February.

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

• At 10:00 AM, New Home Sales for March from the Census Bureau. The consensus is for 630 thousand SAAR, down from 640 thousand in February.

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for April.

by Calculated Risk on 4/24/2023 04:27:00 PM

From WardsAuto: April U.S. Light-Vehicle Sales to Post Strong Growth; Inventory to Fall from March (pay content).  Brief excerpt:

Even though the seasonally adjusted annual rate could decline slightly from the prior quarter’s 15.2 million units, sales volume is forecast to rise a robust 13% year-over-year in Q2. Inventory will undergo a seasonally related month-to-month decline in April but resume growth by the end of the quarter.
emphasis added

Click on graph for larger image.

This graph shows actual sales from the BEA (Blue), and Wards forecast for April (Red).

The Wards forecast of 15.5 million SAAR, would be up 4.6% from last month, and up 8.5% from a year ago.

Vehicle sales are usually a transmission mechanism for Federal Open Market Committee (FOMC) policy, although far behind housing.  This time vehicle sales were more suppressed by supply chain issues and have picked up recently.

by Calculated Risk on 4/24/2023 09:56:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Final Look at Local Housing Markets in February

A brief excerpt:

Every month I track about 40 local housing markets in the US to get an early sense of changes in the housing market. After the National Association of Realtors® (NAR) releases the monthly existing home sales report, I pick up additional local market data that is reported after the NAR (and I’m frequently adding more markets). This is the final look at local markets in March.

The big story for March existing home sales was the sharp year-over-year (YoY) decline in sales. Also, active inventory increased YoY, but is still historically low - and new listings were down YoY.

First, here is a table comparing the year-over-year Not Seasonally Adjusted (NSA) declines in sales this year from the National Association of Realtors® (NAR) with the local markets I track. So far, these measures have tracked closely. The NAR reported sales were down 23.0% NSA YoY in February.
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Note: Even if existing home sales activity bottomed in December (4.03 million SA) and January (4.00 million SA), there are usually two bottoms for housing - the first for activity and the second for prices. See Has Housing "Bottomed"?

My early expectation is we will see a somewhat similar YoY sales decline NSA in April as in March. Even though mortgage rates were higher for contracts signed in March (closed sales in April will be mostly for contracts signed in February and March) sales were already declining in March 2022, as 30-year mortgage rates moved above 4% for the first time since early 2019 (yes, rates were below 4% prior to the pandemic).

More local data coming in May for activity in April!

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

by Calculated Risk on 4/24/2023 08:30:00 AM

Altos reports that active single-family inventory was up 2.1% week-over-week. Maybe inventory has finally bottomed seasonally.  This is the highest inventory level since the week ending March 17th.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of April 21st, inventory was at 414 thousand (7-day average), compared to 405 thousand the prior week.   

Year-to-date, inventory is down 15.6%.

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 52.5% compared to the same week in 2022 (last week it was up 51.6%), and down 52.1% compared to the same week in 2019 (last week down 52.4%). 

A key will be when inventory starts increasing in 2023 - maybe this is the beginning.  If this is the seasonal bottom, it is late in the year (similar timing as 2021).

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 4/23/2023 06:43:00 PM

Weekend:
• Schedule for Week of April 23, 2023

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

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

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 6 and DOW futures are down 44 (fair value).

Oil prices were down over the last week with WTI futures at $77.87 per barrel and Brent at $81.66 per barrel. A year ago, WTI was at $103, and Brent was at $105 - so WTI oil prices are down about 24% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.64 per gallon. A year ago, prices were at $4.09 per gallon, so gasoline prices are down $0.45 per gallon year-over-year.

by Calculated Risk on 4/23/2023 10:37:00 AM

Last week, in the CalculatedRisk Real Estate Newsletter on March existing home sales, NAR: Existing-Home Sales Decreased to 4.44 million SAAR in March; Median Prices Declined 0.9% YoY, I noted that median prices were down year-over-year (median prices are distorted by the mix).

Seasonally prices typically peak in June (closed sales are mostly for contracts signed in April and May).

And seasonally prices usually bottom the following January (contracts signed in November and December). 

The recent surge in prices started mid-year 2020 and ran through Q1 2022 when mortgage rates started increasing significantly.

Here is a table of the seasonal percentage increases from January to March, and from March to June (the usual seasonal peak) over the last several years. The third row is the total percentage increase from January to June.

The last row shows the seasonal decline from June to December.  Note: In 2019, prices only declined 3.8% in the 2nd half of the year as mortgage rates declined into the mid-3s (pre-pandemic low was 3.5% on a 30-year mortgage according to Freddie MAC PMMS).  

In 2020, prices continued to increase in the 2nd half of the year and didn't peak seasonally until October.  And prices only declined slightly in the 2nd half of 2021.

	2018	2019	2020	2021	2022	2023
Jan to Mar	3.7%	4.1%	5.4%	7.5%	7.1%	4.0%
Mar to Jun	9.6%	9.9%	4.9%	12.4%	9.1%	NA
Total Jan to Jun	13.7%	14.4%	10.6%	20.8%	16.8%	NA
Jun to Dec	-7.0%	-3.8%	5.0%	-2.2%	-11.4%	NA

The 2023 increase in median prices from January to March was about the same as in 2018 and 2019.

Normally we'd expect median prices to increase 9% to 10% over the next three months, before declining in the 2nd half of the year.  The seasonal pattern will be interesting this year.