by Calculated Risk on 5/27/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• New Home Sales at 683,000 Annual Rate in April

• Two Key Housing Themes: Low Inventory and Few Distressed Sales

• Total Housing Completions will Likely Decrease Slightly in 2023; The Mix will Change

• Fannie and Freddie Serious Delinquencies in April: Single Family Declined, Multi-Family Increased

• Final Look at Local Housing Markets in April

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

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by Calculated Risk on 5/27/2023 08:11:00 AM

The key report scheduled for this week is the May employment report.

Other key reports include the March Case-Shiller house prices, May ISM Manufacturing and May Vehicle Sales.

----- Monday, May 29th -----
All US markets will be closed in observance of Memorial Day.

----- Tuesday, May 30th -----
9:00 AM: S&P/Case-Shiller House Price Index for March.

This graph shows the year-over-year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

9:00 AM: FHFA House Price Index for March 2022. This was originally a GSE only repeat sales, however there is also an expanded index.

10:00 AM: Dallas Fed Survey of Manufacturing Activity for May.

----- Wednesday, May 31st -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

9:45 AM: Chicago Purchasing Managers Index for May.

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

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

Jobs openings decreased in March to 9.6 million from 10.0 million in February. The number of job openings (black) were down 20% year-over-year.

2:00 PM: the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, June 1st -----
8:15 AM: The ADP Employment Report for May. This report is for private payrolls only (no government). The consensus is for 160,000 payroll jobs added in May, down from 296,000 in April.

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 234 thousand initial claims, up from 229 thousand last week.

All day: Light vehicle sales for May. The consensus is for light vehicle sales to be 14.5 million SAAR in May, up from 14.3 million in April (Seasonally Adjusted Annual Rate).

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

10:00 AM: ISM Manufacturing Index for May. The consensus is for the ISM to be at 47.0, down from 47.1 in April.

10:00 AM: Construction Spending for April. The consensus is for a 0.2% increase in construction spending.

----- Friday, June 2nd -----
8:30 AM: Employment Report for May.   The consensus is for 180,000 jobs added, and for the unemployment rate to increase to 3.5%.

There were 253,000 jobs added in April, and the unemployment rate was at 3.4%.

This graph shows the jobs added per month since January 2021.

by Calculated Risk on 5/26/2023 09:01:00 PM

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

Due to changes at the CDC, weekly cases are no longer updated.

After the first few weeks, the pandemic low for weekly deaths had been the week of July 7, 2021, at 1,690 deaths (until recently).  

For COVID hospitalizations, the previous low was 9,821 (until four weeks ago).

COVID Metrics
	Now	Week Ago	Goal
Hospitalized2	7,465	8,249	≤3,0001
Deaths per Week2	778	949	≤3501
1my goals to stop weekly posts, 2Weekly for Currently Hospitalized, and Deaths 🚩 Increasing number weekly for Hospitalized and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported.

For deaths, I'm currently using 3 weeks ago for "now", since the most recent two weeks will be revised significantly.

by Calculated Risk on 5/26/2023 01:08:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Fannie and Freddie Serious Delinquencies in April: Single Family Declined, Multi-Family Increased

Brief excerpt:

Single-family serious delinquencies continued to decline in April, however, multi-family serious delinquencies are now increasing.
...
Freddie Mac reports that multi-family delinquencies increased to 0.19% in April, up from 0.08% in April 2022..

This graph shows the Freddie multi-family serious delinquency rate since 2012. Rates were still high in 2012 following the housing bust and financial crisis.

The multi-family rate increased following the pandemic and has increased recently as rent growth has slowed, vacancy rates have increased, and interest rates have increased sharply. This will be something to watch as rents soften.

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by Calculated Risk on 5/26/2023 11:58:00 AM

From BofA:

Overall, today's higher than expected personal income and outlays and durable goods print along with the wider than expected advance goods trade deficit decreased our 2Q US GDP tracking from 1.1% q/q saar to 0.9% q/q saar. [May 26th estimate]
emphasis added

From Goldman:

Personal income increased as expected and personal spending increased by more than expected in April. ... Both headline and core durable goods orders increased against consensus expectations for declines. The goods trade deficit widened significantly more than expected in April, driven by a large decline in exports and a more modest rise in imports. We boosted our Q2 GDP tracking estimate by one tenth to +2.1% (qoq ar). [May 26th estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2023 is 1.9 percent on May 26, down from 2.9 percent on May 17. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the National Association of Realtors, decreases in the nowcasts of second-quarter real net exports and second-quarter real gross private domestic investment growth were partially offset by increases in the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real government spending growth. [May 26th estimate]

by Calculated Risk on 5/26/2023 08:58:00 AM

Here is a graph of the year-over-year change in shelter from the CPI report and housing from the PCE report this morning, both through April 2023.

CPI Shelter was up 8.1% year-over-year in April, down from 8.2% in March. 

Housing (PCE) was up 8.4% YoY in April, up from 8.3% in March.

Since asking rents are soft and Year-over-year Rent Growth Continues to Decelerate this means both CPI and PCE measures are currently overstating actual inflation.

by Calculated Risk on 5/26/2023 08:40:00 AM

The BEA released the Personal Income and Outlays report for April:

Personal income increased $80.1 billion (0.4 percent at a monthly rate) in April, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $79.4 billion (0.4 percent) and personal consumption expenditures (PCE) increased $151.7 billion (0.8 percent).

The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.4 percent. Real DPI increased less than 0.1 percent in April and Real PCE increased 0.5 percent; goods increased 0.8 percent and services increased 0.3 percent.
emphasis added

The April PCE price index increased 4.4 percent year-over-year (YoY), up from 4.2 percent YoY in March, and down from the recent peak of 7.0 percent in June 2022.

The PCE price index, excluding food and energy, increased 4.7 percent YoY, up from 4.6 percent in March, and down from the recent peak of 5.4 percent in February 2022.

The following graph shows real Personal Consumption Expenditures (PCE) through April 2023 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was at expectations, and PCE was above expectations.

Inflation was above expectations.

by Calculated Risk on 5/25/2023 08:39:00 PM

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

Friday:
• At 8:30 AM ET, Personal Income and Outlays, April 2023. The consensus is for a 0.4% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.3%.  PCE prices are expected to be up 4.3% YoY, and core PCE prices up 4.6% YoY.

• Also at 8:30 AM, Durable Goods Orders for April from the Census Bureau. The consensus is for a 1.1% decrease in durable goods orders.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Final for May). The consensus is for a reading of 57.7.

by Calculated Risk on 5/25/2023 04:05:00 PM

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report from chief economist Danielle Hale: Weekly Housing Trends View — Data Week Ending May 20, 2023

• Active inventory growth slowed again, with for-sale homes up just 20% above one year ago. The number of homes for sale was higher than this time last year, but not by as much as we’ve seen in recent weeks. As we have discussed, further slowing is likely ahead. One key way that this has played out is by pushing some home shoppers to consider buying a newly built home.
...
• New listings–a measure of sellers putting homes up for sale–were down again this week, by 26% from one year ago. The number of newly listed homes has been lower than the same time the previous year for the past 46 weeks. This week tied last week’s drop. With roughly two thirds of existing homeowners holding onto a mortgage more than 2 percentage points below current mortgage rates, it’s easy to see why new listings lag behind.

Here is a graph of the year-over-year change in inventory according to realtor.com. 

Inventory is still up year-over-year - from record lows - however, the YoY increase has slowed sharply recently.  

This was the smallest YoY increase since June 2022.

The recent trend suggests active inventory could be down YoY in June!

by Calculated Risk on 5/25/2023 02:02:00 PM

From WardsAuto: May U.S. Light-Vehicle Sales Set for Biggest Volume Gain in 2023 (pay content).  Brief excerpt:

Rising inventory, combined with pent-up demand, is keeping growth going mostly by holding the long list of economic- and price-related headwinds at bay, but there is potential for demand to sharply drop at the end of the month – and in June - if an agreement on the U.S. debt ceiling remains elusive and further spooks consumers.
emphasis added

Note: When writing "biggest volume gain", Wards is referring to the year-over-year gain since sales were especially weak in May 2022.

Click on graph for larger image.

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

The Wards forecast of 15.3 million SAAR, would be down 3.9% from last month, and up 21.6% 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.