by Calculated Risk on 10/02/2023 10:53:00 AM

Today, in the Calculated Risk Real Estate Newsletter: ICE (Black Knight) Mortgage Monitor: "Home Prices Set Yet Another Record in August"

A brief excerpt:

Some interesting data on mortgage rates. Note the higher mortgage rates for the 2023 vintage - still a small portion of the overall market. A large portion of active mortgages are in the 2020-2022 vintages.

• Given all the talk about near-term prepayment risk – and quick-turn refinance incentive – among recent originations, we thought it prudent to see how much refinance volume may make its way into the market should 30-year rates begin to ease

• As loans seasoned between two and ten years tend to have rates lower than 5%, we explore the distribution of current interest rates among recent originations to help quantify where any pockets of opportunity may exist

• Mortgages originated over the past 18 months are evenly distributed across rate bands ranging from the mid-3% range up through the high 6% range, meaning that rate/term refinance volumes would return gradually should rates improve

• Relatively few loans (~600K as of August month end) have interest rates at or above 7%, such that it would take rates markedly lower than they are today to spur any meaningful refinance incentive

• While 600K may sound significant, historically an average month yields 430K refinances, if every homeowner with a first lien rate of 7% or higher were to refinance it would only result in 1.5 months of ‘normal’ volume

• Another 1.9M loans have rates between 6% and 7%, which would produce moderate opportunity, but rates would need to come down to the mid- to low-5% range to put all of those borrowers in the money, and even that would only be enough for a few months of sustained volume
emphasis added

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

by Calculated Risk on 10/02/2023 10:19:00 AM

From the Census Bureau reported that overall construction spending increased:

Construction spending during August 2023 was estimated at a seasonally adjusted annual rate of $1,983.5 billion, 0.5 percent above the revised July estimate of $1,973.7 billion. The August figure is 7.4 percent above the August 2022 estimate of $1,847.3 billion.
emphasis added

Both private and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,551.8 billion, 0.5 percent above the revised July estimate of $1,544.6 billion. ...

In August, the estimated seasonally adjusted annual rate of public construction spending was $431.6 billion, 0.6 percent above the revised July estimate of $429.1 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential (red) spending is 9.3% below the recent peak.

Non-residential (blue) spending is at a new peak.

Public construction spending is also at a new peak.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is down 3.1%. Non-residential spending is up 19.7% year-over-year. Public spending is up 14.1% year-over-year.

This was at consensus expectations for 0.5% increase in spending. Construction spending for the previous two months was revised down slightly, combined.

by Calculated Risk on 10/02/2023 10:00:00 AM

(Posted with permission). The ISM manufacturing index indicated contraction. The PMI® was at 49.0% in September, up from 47.6% in August. The employment index was at 51.2%, up from 48.5% the previous month, and the new orders index was at 49.2%, up from 46.8%.

From ISM: Manufacturing PMI® at 49% September 2023 Manufacturing ISM® Report On Business®

conomic activity in the manufacturing sector contracted in September for the 11th consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The Manufacturing PMI® registered 49 percent in September, 1.4 percentage points higher than the 47.6 percent recorded in August. The overall economy expanded weakly after nine months of contraction following a 30-month period of expansion. (A Manufacturing PMI® above 48.7 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index remained in contraction territory at 49.2 percent, 2.4 percentage points higher than the figure of 46.8 percent recorded in August. The Production Index reading of 52.5 percent is a 2.5-percentage point increase compared to August’s figure of 50 percent. The Prices Index registered 43.8 percent, down 4.6 percentage points compared to the reading of 48.4 percent in August. The Backlog of Orders Index registered 42.4 percent, 1.7 percentage points lower than the August reading of 44.1 percent. The Employment Index registered 51.2 percent, up 2.7 percentage points from the 48.5 percent reported in August.
emphasis added

This suggests manufacturing contracted in September.  This was above the consensus forecast.  Note that the price index was at 43.8% (falling prices).

by Calculated Risk on 10/02/2023 08:12:00 AM

Altos reports that active single-family inventory was up 1.3% week-over-week.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of September 29th, inventory was at 535 thousand (7-day average), compared to 528 thousand the prior week.   

Year-to-date, inventory is up 9.0%.  And inventory is up 31.9% from the seasonal bottom 24 weeks ago.

The second graph shows the seasonal pattern for active single-family inventory since 2015.

The red line is for 2023.  The black line is for 2019.  Note that inventory is up from the record low for the same week in 2021, but below last year and still well below normal levels.

Inventory was down 4.7% compared to the same week in 2022 (last week it was down 5.2%), and down 43.9% compared to the same week in 2019 (last week down 44.7%). 

In 2022, inventory didn't peak until late October, and it appears likely same week inventory will be below 2022 levels for the remainder of the year - depending on when inventory finally peaks this year!

It also seems likely that inventory will be close to or above 2020 levels (dark blue line) by the end of the year.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 10/01/2023 07:06:00 PM

Weekend:
• Schedule for Week of October 1, 2023

Monday:
• At 10:00 AM ET, ISM Manufacturing Index for September. The consensus is for a reading of 47.8, up from 47.6 in August. 

• Also at 10:00 AM Construction Spending for August. The consensus is for a 0.5% increase.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures are up 16 and DOW futures are up 110 (fair value).

Oil prices were mixed over the last week with WTI futures at $90.79 per barrel and Brent at $92.20 per barrel. A year ago, WTI was at $80, and Brent was at $89 - so WTI oil prices are up about 14% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.79 per gallon. A year ago, prices were at $3.77 per gallon, so gasoline prices are up $0.02 year-over-year.

by Calculated Risk on 10/01/2023 10:11:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Increased in August to New High; Up 4.0% Year-over-year

A brief excerpt:

On a year-over-year basis, the National FMHPI was up 4.0% in August, from up 3.0% YoY in July.  The YoY increase peaked at 19.1% in July 2021, and for this cycle, bottomed at up 0.9% in May 2023. ...

In August, 11 states and D.C. were below their previous peaks, Seasonally Adjusted. The largest seasonally adjusted declines from the recent peak were in Utah (-3.8%), Arizona (-3.4%), Hawaii (-3.4%), Idaho (-3.2%), and Nevada (-2.8%).

For cities (Core-based Statistical Areas, CBSA), here are the 30 cities with the largest declines from the peak, seasonally adjusted. Austin continues to be the worst performing city.
...
I’ll have an update on the House Price Battle Royale: Low Inventory vs Affordability soon.

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

by Calculated Risk on 9/30/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• New Home Sales decrease to 675,000 Annual Rate in August

• Case-Shiller: National House Price Index Up 1.0% year-over-year in July; New all-time High

• Inflation Adjusted House Prices 3.4% Below Peak

• Asking Rents Down 1.2% Year-over-year

• Fannie and Freddie: Single-Family Mortgage Delinquency Rate Declined, Multi-Family Increased in August

• Final Look at Local Housing Markets in August

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/

by Calculated Risk on 9/30/2023 08:11:00 AM

The key report scheduled for this week is the September employment report on Friday.

Other key indicators include the September ISM Manufacturing and Services indices, September auto sales and the August trade deficit.

----- Monday, October 2nd -----
10:00 AM: ISM Manufacturing Index for September. The consensus is for a reading of 47.8, up from 47.6 in August. 

10:00 AM: Construction Spending for August. The consensus is for a 0.5% increase.

----- Tuesday, October 3rd -----
8:00 AM ET: Corelogic House Price index for August.

10:00 AM: Job Openings and Labor Turnover Survey for August 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 July to 8.83 million from 9.17 million in June.

The number of job openings (yellow) were down 22% year-over-year. Quits were down 12% year-over-year.

All day: Light vehicle sales for September.

The consensus is for sales of 15.4 million SAAR, up from 15.0 million SAAR in August (Seasonally Adjusted Annual Rate).

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

----- Wednesday, October 4th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for September. This report is for private payrolls only (no government). The consensus is for 150,000 jobs added, down from 177,000 in August.

10:00 AM: the ISM Services Index for September.

----- Thursday, October 5th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 208 thousand initial claims, up from 204 thousand last week.

8:30 AM: Trade Balance report for August from the Census Bureau.  The consensus is for the deficit to be $65.1 billion in August, from $65.0 billion in July.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

----- Friday, October 6th -----
8:30 AM: Employment Report for September.   The consensus is for 150,000 jobs added, and for the unemployment rate to decrease to 3.7%.

There were 187,000 jobs added in August, and the unemployment rate was at 3.8%.

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

by Calculated Risk on 9/29/2023 07:20:00 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.

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

Recently hospitalizations have tripled from a low of 5,150 in June 2023.  Hospitalizations are increasing, but far below the peak of 150,000 in January 2022.

COVID Metrics
	Now	Week Ago	Goal
Hospitalized2🚩	16,196	16,139	≤3,0001
Deaths per Week2🚩	1,132	1,088	≤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.

Weekly deaths have more than doubled from a low of 469 in early July.  Weekly deaths are increasing, but far below the weekly peak of 26,000 in January 2021.

by Calculated Risk on 9/29/2023 03:44:00 PM

From BofA:

Overall, the data flow since our last weekly lowered our 3Q US GDP tracking estimate by a tenth to 2.8%. [Sept 29th estimate]
emphasis added

From Goldman:

The foreign trade details of this morning’s report were stronger than our previous assumptions, and we boosted our Q3 GDP tracking estimate by 0.3pp to +3.5% (qoq ar). We left our domestic final sales growth forecast unchanged on a rounded basis at +2.6%. [Sept 29th 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 4.9 percent on September 29, unchanged from September 27 after rounding. After recent releases from the US Bureau of Economic Analysis and US Census Bureau, increases in the model’s nowcasts of the contributions of personal consumption expenditures and net exports to GDP growth were offset by a downward revision in the nowcast of real gross private domestic investment growth. [Sept 29th estimate]