by Calculated Risk on 4/27/2023 08:32:00 AM

The DOL reported:

In the week ending April 22, the advance figure for seasonally adjusted initial claims was 230,000, a decrease of 16,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 245,000 to 246,000. The 4-week moving average was 236,000, a decrease of 4,000 from the previous week's revised average. The previous week's average was revised up by 250 from 239,750 to 240,000.
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 decreased to 236,000.

The previous week was revised up.

Weekly claims were below the consensus forecast.

by Calculated Risk on 4/26/2023 08:55:00 PM

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

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 250 thousand initial claims, up from 245 thousand last week.

• Also at 8:30 AM, Gross Domestic Product, 1st quarter 2023 (Advance estimate). The consensus is that real GDP increased 2.0% annualized in Q1, down from 2.6% in Q4.

• At 10:00 AM, Pending Home Sales Index for March. The consensus is for a 1.0% increase in the index.

• At 11:00 AM, the Kansas City Fed manufacturing survey for April. This is the last of regional manufacturing surveys for April.

by Calculated Risk on 4/26/2023 01:37:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate in March was 0.62%, down from 0.65% February. Freddie's rate is down year-over-year from 0.92% in March 2022.

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; this is almost back to that level.

Note that multi-family delinquencies have been increasing and were at 0.13% in March, up from 0.08% in March 2022.

by Calculated Risk on 4/26/2023 10:17:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 4.6% Below Peak; Price-to-rent index is 8.4% below recent peak

Excerpt:

It has been 17 years since the bubble peak. In the January Case-Shiller house price index released on Tuesday, the seasonally adjusted National Index (SA), was reported as being 61% above the bubble peak in 2006. However, in real terms, the National index (SA) is about 11% above the bubble peak (and historically there has been an upward slope to real house prices).  The composite 20, in real terms, is at the bubble peak.

The inflation adjusted indexes have declined for nine consecutive months in real terms.

People usually graph nominal house prices, but it is also important to look at prices in real terms.  As an example, if a house price was $200,000 in January 2000, the price would be almost $340,000 today adjusted for inflation (70% increase).  That is why the second graph below is important - this shows "real" prices.

The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index.

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

by Calculated Risk on 4/26/2023 07:00:00 AM

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

Mortgage applications increased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 21, 2023.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 5 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 51 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 6 percent compared with the previous week and was 28 percent lower than the same week one year ago.

“Both conventional and government home purchase applications increased last week. However, activity was still nearly 28 percent below last year’s pace, as high mortgage rates and low supply have slowed the market this year, even as home-price growth has decelerated in many markets across the country,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications also increased last week but remained at half of last year’s levels. Although incoming data points to a slowdown in the U.S. economy, markets continue to expect that the Fed will raise short-term rates at its next meeting, which have pushed Treasury yields somewhat higher. As a result of the higher yields, mortgage rates increased for the second straight week to their highest level in over a month, with the 30-year fixed rate now at 6.55 percent.”
..
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.55 percent from 6.43 percent, with points remaining at 0.63 (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 MBA mortgage purchase index.

According to the MBA, purchase activity is down 28% year-over-year unadjusted.  

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

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index declined sharply in 2022.

by Calculated Risk on 4/25/2023 09:01:00 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 8:30 AM, Durable Goods Orders for March from the Census Bureau. The consensus is for a 0.9% increase in durable goods orders.

by Calculated Risk on 4/25/2023 02:07:00 PM

Note: I like using Las Vegas as a measure of recovery for both leisure (visitors) and business (conventions). Vegas is Back!

From the Las Vegas Visitor Authority: March 2023 Las Vegas Visitor Statistics

Benefitting from a mix of headliners and events from NASCAR to Taylor Swift to several college basketball tournaments, paired with a robust convention month that included the triennial CONEXPO‐CON/AGG tradeshow and its 140k+ attendees, Las Vegas visitation neared 3.7M in Mar 2023, up +9.6% YoY and nearly matching Mar 2019.

Overall hotel occupancy exceeded 88% for the month, +7.7 pts YoY. Achieving impressive levels by both pre and post‐pandemic standards, Weekend occupancy reached 94.5% for the month (+2.4 pts YoY) while conventions helped propel Midweek occupancy to 85.8%, +9.2 pts YoY.

Overall ADR exceeded $213, breaking the record from just a few months ago (Oct 2022, $208) and surpassing Mar 2022 and Mar 2019 by +30.7% and +59.2%, respectively. RevPAR also broke records, reaching $188, +43.2% YoY and +53.6% over Mar 2019

Click on graph for larger image.

The first graph shows visitor traffic for 2019 (Black), 2020 (light blue), 2021 (purple), 2022 (orange), and 2023 (red).

Visitor traffic was down 1.1% compared to the same month in 2019.

Visitor traffic was up 9.6% compared to last March.

The second graph shows convention traffic.

Convention traffic was up 39.6% compared to March 2019, and up 56.0% compared to March 2022.

Note: There was almost no convention traffic from April 2020 through May 2021.

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.
...
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/