by Calculated Risk on 5/18/2023 10:13:00 AM

From the NAR: Existing-Home Sales Faded 3.4% in April

Existing-home sales decreased in April, according to the National Association of REALTORS®. All four major U.S. regions registered month-over-month and year-over-year sales declines.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – slid 3.4% from March to a seasonally adjusted annual rate of 4.28 million in April. Year-over-year, sales slumped 23.2% (down from 5.57 million in April 2022).
...
Total housing inventory registered at the end of April was 1.04 million units, up 7.2% from March and 1.0% from one year ago (1.03 million). Unsold inventory sits at a 2.9-month supply at the current sales pace, up from 2.6 months in March and 2.2 months in April 2022.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1994.

Sales in April (4.28 million SAAR) were down 3.4% from the previous month and were 23.2% below the April 2022 sales rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.04 million in April from 0.97 million in March.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 1.0% year-over-year (blue) in April compared to April 2022.

Months of supply (red) increased to 2.9 months in April from 2.6 months in March.

This was slightly below the consensus forecast. I'll have more later. 

by Calculated Risk on 5/18/2023 08:33:00 AM

The DOL reported:

In the week ending May 13, the advance figure for seasonally adjusted initial claims was 242,000, a decrease of 22,000 from the previous week's unrevised level of 264,000. The 4-week moving average was 244,250, a decrease of 1,000 from the previous week's unrevised average of 245,250.
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 decreased to 244,250.

The previous week was unrevised.

Weekly claims were below the consensus forecast.

by Calculated Risk on 5/17/2023 08:52:00 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 253 thousand initial claims, down from 264 thousand last week.

• Aslo at 8:30 AM, the Philly Fed manufacturing survey for May. The consensus is for a reading of -21.1, up from -31.3.

• At 10:00 AM, Existing Home Sales for April from the National Association of Realtors (NAR). The consensus is for 4.30 million SAAR, down from 4.44 million.

by Calculated Risk on 5/17/2023 06:01:00 PM

Today, in the Calculated Risk Real Estate Newsletter: 4th Look at Local Housing Markets in April

A brief excerpt:

Yesterday, housing economist Tom Lawler noted:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.33 million in April, down 2.5% from March’s preliminary pace and down 22.3% from last April’s seasonally adjusted pace.

The National Association of Realtors (NAR) is scheduled to release April existing home sales on Thursday, May 18, 2023, at 10:00 AM ET. The consensus is for 4.30 million SAAR.
...
In April, sales in these markets were down 24.7%. In March, these same markets were down 19.4% YoY Not Seasonally Adjusted (NSA).

This is a larger YoY decline NSA in April than in March for these markets, however there was one less selling day in April this year. This data suggests the April existing home sales report will show another significant YoY decline, and the 20th consecutive month with a YoY decline in sales.

Several more local markets to come next week!

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

by Calculated Risk on 5/17/2023 09:35:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: April Housing Starts: Near Record Multi-Family Under Construction

Excerpt:

The fourth graph shows housing starts under construction, Seasonally Adjusted (SA).

Red is single family units. Currently there are 698 thousand single family units (red) under construction (SA). This was down in April compared to March, and 133 thousand below the recent peak in May 2022. Single family units under construction have peaked since single family starts declined sharply. The number of single-family homes under construction will decline further in coming months.

Blue is for 2+ units. Currently there are 977 thousand multi-family units under construction.  This is the highest level since September 1973! This is close to the all-time record of 994 thousand in 1973 (being built for the baby-boom generation). For multi-family, construction delays are a significant factor. The completion of these units should help with rent pressure.

Combined, there are 1.675 million units under construction, just 35 thousand below the all-time record of 1.710 million set in October 2022.

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

by Calculated Risk on 5/17/2023 08:38:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately‐owned housing starts in April were at a seasonally adjusted annual rate of 1,401,000. This is 2.2 percent above the revised March estimate of 1,371,000, but is 22.3 percent below the April 2022 rate of 1,803,000. Single‐family housing starts in April were at a rate of 846,000; this is 1.6 percent above the revised March figure of 833,000. The April rate for units in buildings with five units or more was 542,000.

Building Permits:
Privately‐owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,416,000. This is 1.5 percent below the revised March rate of 1,437,000 and is 21.1 percent below the April 2022 rate of 1,795,000. Single‐family authorizations in April were at a rate of 855,000; this is 3.1 percent above the revised March figure of 829,000. Authorizations of units in buildings with five units or more were at a rate of 502,000 in April.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (blue, 2+ units) increased in April compared to March.   Multi-family starts were down 12.2% year-over-year in April. 

Single-family starts (red) increased in April and were down 27.9% year-over-year.

The second graph shows single and multi-family housing starts since 1968.

This shows the huge collapse following the housing bubble, and then the eventual recovery - and the recent collapse in single-family starts.

Total housing starts in April were slightly above expectations, however, starts in February and March were revised down, combined.

I'll have more later …

by Calculated Risk on 5/17/2023 07:00:00 AM

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

Mortgage applications decreased 5.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 12, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 43 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4.8 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 26 percent lower than the same week one year ago.

“Mortgage rates increased last week even as Treasury yields were essentially flat, with the spread between the two rates widening to 310 basis points. Mortgage application activity slowed, as most mortgage rates in the survey increased, with the 30-year fixed rate jumping nine basis points to its highest level in two months at 6.57 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications decreased 5 percent to its slowest pace in a month, as buyers remain wary of this rate volatility, but also as for-sale inventory in many parts of the country remains scarce.

Added Kan, “Refinance applications accounted for 27 percent of all applications and dropped almost 8 percent last week. Most borrowers have lower rates on their mortgages, and those who are in the market are extremely rate sensitive.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.57 percent from 6.48 percent, with points remaining at 0.61 (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 26% 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 - and has mostly flat lined at a low level since then.

by Calculated Risk on 5/16/2023 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, Housing Starts for April. The consensus is for 1.396 million SAAR, down from 1.420 million SAAR in March.

by Calculated Risk on 5/16/2023 01:10:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Early Read on Existing Home Sales in April

A brief excerpt:

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.33 million in April, down 2.5% from March’s preliminary pace and down 22.3% from last April’s seasonally adjusted pace.

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

by Calculated Risk on 5/16/2023 10:13:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 50, up from 45 last month. Any number above 50 indicates that more builders view sales conditions as good than poor.

From the NAHB: Lack of Existing Inventory Boosts Builder Confidence to Key Marker

Limited existing inventory, which has put a renewed emphasis on new construction, resulted in a solid gain for builder confidence in May even as the industry continues to face several challenges, including building material supply chain disruptions and tightening credit conditions for construction loans.

Builder confidence in the market for newly built single-family homes in May rose five points to 50, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This marks the fifth straight month that builder confidence has increased and is the first time that sentiment levels have reached the midpoint mark of 50 since July 2022.

New home construction is taking on an increased role in the marketplace because many home owners with loans well below current mortgage rates are electing to stay put, and this is keeping the supply of existing homes at a very low level. In March, 33% of homes listed for sale were new homes in various stages of construction. That share from 2000-2019 was a 12.7% average. With limited available housing inventory, new construction will continue to be a significant part of prospective buyers’ search in the quarters ahead.

While this is fueling cautious optimism among builders, they continue to face ongoing challenges to meet a growing demand for new construction. These include shortages of transformers and other building materials and tightening credit conditions for residential real estate development and construction brought on by the actions of the Federal Reserve to raise interest rates.
...
All three major HMI indices posted gains in May. The HMI index gauging current sales conditions rose five points to 56, the component charting sales expectations in the next six months increased seven points to 57 and the gauge measuring traffic of prospective buyers increased two points to 33.

Looking at the three-month moving averages for regional HMI scores, the, the Midwest edged up two points to 39, the South increased three points to 52 and the West moved three points higher to 41. The Northeast held steady at 45.
emphasis added

Click on graph for larger image.

This graph shows the NAHB index since Jan 1985.

This was at the consensus forecast. 

The "traffic of prospective buyers" is still well below breakeven at 33 (below 50).