by Calculated Risk on 8/20/2023 06:27:00 PM

Weekend:
• Schedule for Week of August 20, 2023

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures are up 3 and DOW futures are up 15 (fair value).

Oil prices were down over the last week with WTI futures at $81.25 per barrel and Brent at $84.80 per barrel. A year ago, WTI was at $94, and Brent was at $96 - so WTI oil prices are down about 13% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.84 per gallon. A year ago, prices were at $3.83 per gallon, so gasoline prices are down $0.03 per gallon year-over-year.

by Calculated Risk on 8/20/2023 08:17:00 AM

The BLS reported on August 10th:

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.6 percent over the last 12 months to an index level of 299.899 (1982-84=100). For the month, the index increased 0.2 percent prior to seasonal adjustment.

CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U and is not seasonally adjusted (NSA).

• In 2022, the Q3 average of CPI-W was 291.901.

The 2022 Q3 average was the highest Q3 average, so we only have to compare Q3 this year to last year.

Click on graph for larger image.

This graph shows CPI-W since January 2000. The red lines are the Q3 average of CPI-W for each year.

Note: The year labeled is for the calculation, and the adjustment is effective for December of that year (received by beneficiaries in January of the following year).

CPI-W was up 2.6% year-over-year in July, and although this is early - we need the data for August and September - my early guess is COLA will probably be close to 3% this year, the smallest increase since 1.3% in 2021.

Note that CPI-W was slightly negative month-over-month in August of 2022, so it is likely there will be a larger year-over-year increase in CPI-W next month than in July, hence my 3% early guess.

Contribution and Benefit Base

The contribution base will be adjusted using the National Average Wage Index. This is based on a one-year lag. The National Average Wage Index is not available for 2022 yet, wages increased solidly in 2022. If wages increased 5% in 2022, then the contribution base next year will increase to around $168,200 in 2024, from the current $160,200.

Remember - this is an early look. What matters is average CPI-W, NSA, for all three months in Q3 (July, August and September).

by Calculated Risk on 8/19/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• July Housing Starts: Record Number of Multi-Family Housing Units Under Construction

• The "New Normal" Mortgage Rate Range

• Part 2: Current State of the Housing Market; Overview for mid-August

• Lawler: Early Read on Existing Home Sales in July; 3rd Look at Local Housing Markets in July; California Sales Down 9% YoY

• Lawler: Is The “Natural” Rate of Interest Back to Pre-Financial Crisis Levels?

• CoreLogic: US Home Investor Share Remained High in Early Summer 2023

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

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

Most content is available for free (and no Ads), but please subscribe!

by Calculated Risk on 8/19/2023 08:11:00 AM

The key reports this week are July New and Existing Home sales.

For manufacturing, the August Richmond and Kansas City Fed surveys will be released.

Fed Chair Jerome Powell will speak on the "Economic Outlook" at the Jackson Hole Symposium on Friday.

The BLS will release the preliminary employment benchmark revision on Wednesday.

----- Monday, August 21st -----
No major economic releases scheduled.

----- Tuesday, August 22nd -----
10:00 AM: Existing Home Sales for July from the National Association of Realtors (NAR). The consensus is for 4.15 million SAAR, down from 4.16 million last month.

The graph shows existing home sales from 1994 through the report last month.

Housing economist Tom Lawler expects the NAR to report sales of 4.06 million SAAR for July.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for August.

----- Wednesday, August 23rd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM: New Home Sales for July from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the sales rate for last month.

The consensus is for 701 thousand SAAR, up from 697 thousand in June.

10:00 AM: the Bureau of Labor Statistics (BLS) will release the 2023 Preliminary Benchmark Revision to Establishment Survey Data.

During the day: The AIA's Architecture Billings Index for July (a leading indicator for commercial real estate).

----- Thursday, August 24th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 244 thousand initial claims, up from 239 thousand last week.

8:30 AM ET: Chicago Fed National Activity Index for July. This is a composite index of other data.

8:30 AM: Durable Goods Orders for July from the Census Bureau. The consensus is for a 4.0% decrease in durable goods orders.

11:00 AM: the Kansas City Fed manufacturing survey for August.

----- Friday, August 25th -----
10:00 AM: University of Michigan's Consumer sentiment index (Final for August). The consensus is for a reading of 71.2.

10:05 AM: Speech, Fed Chair Jerome Powell, Economic Outlook, At the Jackson Hole Economic Policy Symposium

by Calculated Risk on 8/18/2023 08:01:00 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).  

Recently hospitalizations have been increasing from a low of 5,146.

COVID Metrics
	Now	Week Ago	Goal
Hospitalized2🚩	8,011	6,858	≤3,0001
Deaths per Week2	457	479	≤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.

The last few months have seen a positive trend.

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

Lawler: Is The “Natural” Rate of Interest Back to Pre-Financial Crisis Levels?

by Calculated Risk on 8/18/2023 10:16:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Is The “Natural” Rate of Interest Back to Pre-Financial Crisis Levels?

A brief excerpt:

Here is a graph showing the HLW and LM estimates of r-star from 1990 through the first quarter of 2023.

Note that both of these estimates show a sharp decline in r-star right around the same time as the beginning of the financial crisis that led to the worst recession since the Great Depression.  For folks who didn’t live through this period, it was a period of great fear, and there were serious concerns that the financial system might collapse.  There were unprecedented actions taken by the government, but fear remained at elevated levels for years.  These fears were not just limited to the US:  in Europe multiple countries either faced banking crises, sovereign debt crises, or both and there were unprecedented actions taken by governments/central banks but fear remained for many years as well.  And it was during those “fear years” that estimated levels of r-star remained at extremely low levels.  Discrete changes like those observed were not related to longer-term trends such as demographics.

Note that in the last several years of last decade r-star estimates had begun to move gradually higher from the incredibly low levels (more so in the LM model than the HLW model) as fear began to recede, but then the pandemic hit, bringing more fear and uncertainty, though fortunately for a much shorter period than during the Great Recession/financial crisis/sovereign debt crisis.

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

Q3 GDP Tracking: Moving Up

by Calculated Risk on 8/18/2023 08:53:00 AM

From BofA:

Overall, the data flow since our last report pushed up our 3Q US GDP tracking estimate from the official forecast of 2.0% q/q saar (seasonally adjusted annual rate) to 2.7% q/q saar. [Aug 18th estimate]
emphasis added

From Goldman:

July utilities output and auto production were stronger than our previous assumptions, and we boosted our Q3 GDP tracking estimate by 0.2pp to +2.4% (qoq ar). We also raised our domestic final sales growth forecast by five tenths to +2.6%. [Aug 16th estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 5.8 percent on August 16, up from 5.0 percent on August 15. After this morning's housing starts report from the US Census Bureau and industrial production report from the Federal Reserve Board of Governors, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth increased from 4.4 percent and 8.8 percent, respectively, to 4.8 percent and 11.4 percent. [Aug 16 estimate]

Thursday, August 17, 2023

Lawler: Early Read on Existing Home Sales in July

by Calculated Risk on 8/17/2023 04:46:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Early Read on Existing Home Sales in July; 3rd Look at Local Housing Markets in July; California Sales Down 9% YoY

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 4.06 million in July, down 1.0% from June’s preliminary pace and down 16.8% from last July’s seasonally adjusted pace.

Local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by about 1.9% from last July.

And a table of July sales.

In July, sales in these markets were down 14.2%. In June, these same markets were down 16.1% YoY Not Seasonally Adjusted (NSA).

This is a smaller YoY decline NSA than in June for these markets. Note that there were the same number of selling days each year in July 2022 and July 2023.

A key factor in the smaller YoY decline was that sales were steadily declining last year due to higher mortgage rates - and sales in July on a seasonally adjusted annual rate (SAAR) basis will likely be close to 4.06 million.

More local markets to come!

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

Hotels: Occupancy Rate Unchanged Year-over-year

by Calculated Risk on 8/17/2023 04:25:00 PM

From STR: U.S. hotel results for week ending 12 August

U.S. hotel performance declined from the previous week but showed mostly positive comparisons year over year, according to CoStar’s latest data through 12 August. ...

6-12 August 2023 (percentage change from comparable week in 2022):

• Occupancy: 68.3% (flat)
• Average daily rate (ADR): US$156.47 (+2.0%)
• Revenue per available room (RevPAR): US$106.89 (+2.0%)
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 below 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 has peaked for the year.

Realtor.com Reports Weekly Active Inventory Down 8% YoY; New Listings Down 8% YoY

by Calculated Risk on 8/17/2023 01:37:00 PM

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report from Sabrina Speianu: Weekly Housing Trends View — Data Week Ending Aug 12, 2023

• Active inventory declined, with for-sale homes lagging behind year ago levels by 8.6%.

This past week marked the 8th consecutive decline in the number of homes actively for sale compared to the prior year, however the gap narrowed slightly compared to the previous week’s -9.1% figure. The existing home sales pace has been roughly consistent at a low level in recent months, suggesting home shoppers are looking. But the continued drag from existing homeowners choosing to stay put is holding back overall inventory. We expect a dip of 5% for 2023 overall compared to 2022.

• New listings–a measure of sellers putting homes up for sale–were down again this week, by 8.1% from one year ago.

For 58 weeks, there have been fewer newly listed homes compared to the same time one year ago. However, this gap has been shrinking as we start to compare against low new listings in the latter months of 2022. This week’s data shows a 5.9 percentage point improvement over last week as the market slowly trends in a more buyer-friendly direction. While it’s likely that we might see more new listings this fall than the previous year, inventory will continue to remain constrained as listings are still more than 20% below typical pre-pandemic levels seen this time of year.

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

Inventory was down 8.6% year-over-year - this was the eighth consecutive week with a YoY decrease following 58 consecutive weeks with a YoY increase in inventory.  

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 by this measure this year.