by Calculated Risk on 6/29/2023 03:45:00 PM

From STR: STR: U.S. hotel results for week ending 24 June

U.S. hotel performance remained mostly flat from the previous week, and year-over-year comparisons remained mixed, according to STR‘s latest data through 24 June.

18-24 June 2023 (percentage change from comparable week in 2022):

• Occupancy: 71.4% (-1.0%)
• Average daily rate (ADR): US$159.00 (+0.9%)
• Revenue per available room (RevPAR): US$113.58 (-0.1%)
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2023, black is 2020, blue is the median, and dashed light blue is for 2022.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is at the median rate for the period 2000 through 2022 (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.

The 4-week average of the occupancy rate will increase during the summer travel season.

by Calculated Risk on 6/29/2023 12:43:00 PM

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report from economist Danielle Hale: Weekly Housing Trends View — Data Week Ending June 24, 2023

• Active inventory growth stalled completely, with for-sale homes lagging behind year ago levels for the first time in 59 weeks. As mortgage rates surged in 2022, buyers saw costs soar, and a large number of shoppers reoriented their housing plans. The time it took to sell a home lengthened and the number of homes for sale piled up. Flash forward a little more than a year, and this week, the number of homes actively for sale slipped compared to a year ago. The decline was slight–it actually rounds to zero–but it is notable in that it highlights a key reason why despite high costs home prices have not budged much.

• New listings–a measure of sellers putting homes up for sale–were down again this week, by 29% from one year ago. The number of newly listed homes has been lower than the same time the previous year for the past 51 weeks–nearly a whole year. And this week’s data shows an even larger gap.

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

Inventory is down 0.3% year-over-year - this was the first YoY decrease in 59 weeks (since May 2022).  

Inventory is still up from the record lows in the 2nd half of 2021 and early 2022, and it is unlikely we will see new record lows this year.

by Calculated Risk on 6/29/2023 10:04:00 AM

From the NAR: Pending Home Sales Shrunk 2.7% in May

Pending home sales shrunk 2.7% in May from the previous month, according to the National Association of REALTORS®. Three U.S. regions posted monthly losses, while sales in the Northeast surged. All four regions saw year-over-year declines in transactions.

“Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing,” said NAR Chief Economist Lawrence Yun, “The lack of housing inventory continues to prevent housing demand from being fully realized.”

The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – dropped 2.7% to 76.5 in May. Year over year, pending transactions fell by 22.2%. An index of 100 is equal to the level of contract activity in 2001.
...
The Northeast PHSI climbed 12.9% from last month to 66.7, a decrease of 21.9% from May 2022. The Midwest index dropped 5.3% to 74.4 in May, down 23.5% from one year ago.

The South PHSI decreased 4.4% to 94.4 in May, reducing 19.6% from the prior year. The West index lessened 6.1% in May to 58.4, falling 26.6% from May 2022.
emphasis added

This is way below expectations of a 0.3% decrease for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in June and July.

by Calculated Risk on 6/29/2023 08:38:00 AM

The DOL reported:

In the week ending June 24, the advance figure for seasonally adjusted initial claims was 239,000, a decrease of 26,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 264,000 to 265,000. The 4-week moving average was 257,500, an increase of 1,500 from the previous week's revised average. This is the highest level for this average since November 13, 2021 when it was 260,000. The previous week's average was revised up by 250 from 255,750 to 256,000.
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 increased to 257,500.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 6/29/2023 08:34:00 AM

From the BEA: Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, First Quarter 2023

Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the first quarter of 2023, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.6 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.3 percent. The updated estimates primarily reflected upward revisions to exports and consumer spending that were partly offset by downward revisions to nonresidential fixed investment and federal government spending. Imports, which are a subtraction in the calculation of GDP, were revised down (refer to "Updates to GDP").

The increase in real GDP in the first quarter reflected increases in consumer spending, exports, state and local government spending, federal government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment. Imports increased .
emphasis added

Here is a Comparison of Third and Second Estimates. PCE growth was revised up from 3.8% to 4.2%. Residential investment was revised up from -5.4% to -4.0%.

by Calculated Risk on 6/28/2023 08:15:00 PM

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

Thursday:
• At 2:30 AM ET, Discussion, Fed Chair Jerome Powell, Dialogue with Bank of Spain Governor Pablo Hernández de Cos, At the Banco de España Fourth Conference on Financial Stability, Madrid, Spain

• At 8:30 AM, The initial weekly unemployment claims report will be released.  The consensus is for 266 thousand initial claims, up from 264 thousand last week.

• Also at 8:30 AM, Gross Domestic Product, 1st quarter 2023 (Third estimate). The consensus is that real GDP increased 1.4% annualized in Q1, up from the second estimate of a 1.3% increase.

• At 10:00 AM, Pending Home Sales Index for May. The consensus is for a 0.3% decrease in the index.

by Calculated Risk on 6/28/2023 02:55:00 PM

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

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

Supported by strong demand along with multiple weekend music festivals including the Lovers & Friends festival, Sick New World festival and the recurring Electric Daisy Carnival (EDC) event, Las Vegas hosted approx. 3.5M visitors, 1.5% ahead of last May.

Overall hotel occupancy reached 84.4% for the month (+1.8 pts YoY). Weekend occupancy was healthy at 93.2%, +1.3 pts YoY, and Midweek occupancy approached 81%, surpassing last May by 2.0 pts.

Overall ADR exceeded $183, +4.3% from May 2022 while RevPAR neared $155, +6.6% YoY

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 5.2% compared to the same month in 2019.

Visitor traffic was up 1.5% compared to last May.

The second graph shows convention traffic.

Convention traffic was down 12.8% compared to May 2019, and up 16.1% compared to May 2022.

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

by Calculated Risk on 6/28/2023 11:11:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 3.8% Below Peak; Price-to-rent index is 8.4% below recent peak

Excerpt:

It has been over 17 years since the bubble peak. In the April Case-Shiller house price index released yesterday, the seasonally adjusted National Index (SA), was reported as being 62% 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 1% above the bubble peak.

The inflation adjusted indexes increased in real terms in April using CPI ex-shelter.

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 $341,000 today adjusted for inflation (70.5% 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. The last graph shows the 5-year real return based on the Case-Shiller National Index.

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

by Calculated Risk on 6/28/2023 09:59:00 AM

Fed Chair Jerome Powell is participating in a panel discussion today at the European Central Bank (ECB) Forum on Central Banking 2023 in Sintra, Portugal.

From Jeff Cox at CNBC: Powell says more ‘restriction’ is coming, including possibility of hikes at consecutive meetings. Excerpt:

“We believe there’s more restriction coming,” Powell said during a monetary policy session in Sintra, Portugal. “What’s really driving it ... is a very strong labor market.”
...
“I wouldn’t take, you know, moving at consecutive meetings off the table,” he said during an exchange moderated by CNBC’s Sara Eisen

by Calculated Risk on 6/28/2023 07:00:00 AM

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

Mortgage applications increased 3.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 23, 2023. This week’s results include an adjustment for Juneteenth holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 8 percent compared with the previous week. The Refinance Index increased 3 percent from the previous week and was 32 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index decreased 8 percent compared with the previous week and was 21 percent lower than the same week one year ago.

“Mortgage rate changes varied across loan types last week, with the 30-year fixed rate increasing slightly to 6.75 percent. The spread between the jumbo and conforming rates widened to 16 basis points, the third week in a row that the jumbo rate was higher than the conforming rate. To put this into perspective, from May 2022 to May 2023, the jumbo rate averaged around 30 basis points less than the conforming rate,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications increased for the third consecutive week to the highest level of activity since early May but remained more than 20 percent lower than year ago levels. New home sales have been driving purchase activity in recent months as buyers look for options beyond the existing-home market. Existing-home sales continued to be held back by a lack of for-sale inventory as many potential sellers are holding on to their lower-rate mortgages.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.75 percent from 6.73 percent, with points remaining at 0.64 (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 21% year-over-year unadjusted.  

Red is a four-week average (blue is weekly).  This is at the highest level since early May - but close to the lowest level since the mid-'90s!

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.