by Calculated Risk on 10/05/2023 01:26:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Moody's: "Apartment Market Softens, Office Evolution Continues, and Retail On Shaky Ground"

A brief excerpt:

From Moody’s:

The national office vacancy rate climbed to 19.2% in Q3 2023, rising from Q2’s 18.9% and rapidly approaching the historic peak of 19.3% set in 1991. The office landscape has struggled in 2023, though market performance is more mixed with property-specific nuances. With rising vacancies, the national office market experienced another quarter of relatively stagnant rent growth. ...

Moody’s Analytics reported that the office vacancy rate was at 19.2% in Q3 2023, up from 18.9% in Q2 2023, and up from 18.5% in Q3 2022. This is just below the record high of 19.3% during the S&L crisis.

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

by Calculated Risk on 10/05/2023 12:30:00 PM

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report from Hannah Jones: Weekly Housing Trends View — Data Week Ending Sep 30, 2023

• Active inventory declined, with for-sale homes lagging behind year ago levels by 2.6%.

During the past week, we observed the 15th successive weekly drop in the number of homes available for sale relative to the previous year. However, this decline showed another improvement compared to the previous week’s -3.7% figure.

• New listings–a measure of sellers putting homes up for sale–were down by just 1.2% from one year ago.

Over the past 65 weeks, we’ve consistently seen a decline in the number of newly listed homes compared to the same period one year ago. However, the difference narrowed to the smallest gap in the 65 week stretch.

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

Inventory was down 1.2% year-over-year - this was the fifteenth consecutive week with a YoY decrease following 58 consecutive weeks with a YoY increase in inventory.  

The YoY declines in inventory have been getting smaller recently but will likely stay down YoY for the remainder of 2023 since inventory was increasing late into the year last year.

New listings really collapsed a year ago, so the YoY comparison is easier now - and new listings are still historically very low.

by Calculated Risk on 10/05/2023 08:45:00 AM

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $58.3 billion in August, down $6.4 billion from $64.7 billion in July, revised.

August exports were $256.0 billion, $4.1 billion more than July exports. August imports were $314.3 billion, $2.3 billion less than July imports.
emphasis added

Click on graph for larger image.

Exports increased and imports decreased in August.

Exports are down 2% year-over-year; imports are down 4% year-over-year.

Both imports and exports decreased sharply due to COVID-19 and then bounced back - and both have been decreasing recently.

The second graph shows the U.S. trade deficit, with and without petroleum.

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.

Note that net, exports of petroleum products are positive and have picked up.

The trade deficit with China decreased to $26.0 billion from $37.5 billion a year ago.

by Calculated Risk on 10/05/2023 08:30:00 AM

The DOL reported:

In the week ending September 30, the advance figure for seasonally adjusted initial claims was 207,000, an increase of 2,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 204,000 to 205,000. The 4-week moving average was 208,750, a decrease of 2,500 from the previous week's revised average. The previous week's average was revised up by 250 from 211,000 to 211,250.
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 208,750.

The previous week was revised up.

Weekly claims were close to the consensus forecast.

by Calculated Risk on 10/04/2023 08:00:00 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 208 thousand initial claims, up from 204 thousand last week.

• Also at 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.

by Calculated Risk on 10/04/2023 07:11:00 PM

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

August was a solid month with more than 3.3M visitors as weekend occupancy was largely on par with last year while midweek saw notable gains supported in part by a strengthening convention segment that included recurring shows such as ASD Market Week as well the Summer 2023 Las Vegas Market show at World Market Center which fell in August this year vs. July in 2022.

Overall hotel occupancy reached 80.3% for the month (+3.5 pts YoY) as Weekend occupancy came in at 89.7% (‐0.4 pts YoY), and Midweek occupancy reached 77.0%, surpassing last August by 4.8 pts.

ADR growth continued in August, approaching $159, +7.0% YoY while RevPAR exceeded $127, +11.9% 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 up 4.0% compared to last August.

Visitor traffic was down 7.2% compared to the same month in 2019.

The second graph shows convention traffic.

Convention traffic was up 64.3% compared to August 2022, and down 1.6% compared to August 2019.

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

by Calculated Risk on 10/04/2023 03:45:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: The Second Half “Bear Steepener”: Higher for Longer, a Higher R*, and A Rising Term Premium

A brief excerpt:

NOTE: This is technical and related to these earlier notes (and mortgage rates):

August 18th: Lawler: Is The “Natural” Rate of Interest Back to Pre-Financial Crisis Levels?

August 15th: The "New Normal" Mortgage Rate Range

From housing economist Tom Lawler:

Below is a chart showing the Treasury yield curve from 1 to 30 years yesterday compared to the end of each of the previous four months.
...
As the graph and table show, the one-year Treasury yield hasn’t moved much since   middle of the year, while the 10- and 30-year Treasury yields have increased by over 100 basis points.  While the yield curve is still very inverted by historical standards, it is a far cry from the “uber-inversion” of earlier in the year.

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

by Calculated Risk on 10/04/2023 02:09:00 PM

Workers on strike during the reference week are not counted as employed in the BLS employment report. Every month, on the Friday before the release of the employment report, the BLS releases the CES Strike Report showing the number of workers on strike during the reference period.

Click on chart for larger image.

In September, 17,700 workers were on strike, mostly the now settled writers' strike.    Ended strikes give a boost to the employment report (this was a few thousand in September).

This number will be closely watched in October with the UAW strike.  The Kaiser strike (75,000 workers) is scheduled for just 3 days and will not impact the October employment report.

Note that the reference week for October is next week.

A good example of the impact of a strike on the employment report is the AT&T strike in 1983 when 675,000 workers were on strike in August 1983.  The BLS reported job losses of over 300 thousand in August, and then a gain of over 1.1 million in September when the workers returned.

The Strike Report will be important to check on Friday, October 28th.

by Calculated Risk on 10/04/2023 12:39:00 PM

The BEA released their estimate of vehicle sales for September today.

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the September 2023 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new record high of 570 thousand SAAR in April 2019.

Click on graph for larger image.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 308 thousand SAAR in May 2020.  

Heavy truck sales were at 513 thousand SAAR in September, down from 544 thousand in August, and up 5% from 490 thousand SAAR in September 2022.  

Usually, heavy truck sales decline sharply prior to a recession.   Sales were solid in September.

As I noted yesterday, Vehicles Sales increase to 15.67 million SAAR in September; Up 15% YoY

The second graph shows light vehicle sales since the BEA started keeping data in 1967.  Vehicle sales were at 15.67 million SAAR in September, up from 15.34 million in August, and up 14% from 13.50 million in Seeptember 2022.

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.

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

(Posted with permission). The ISM® Services index was at 53.6%, down from 54.5% last month. The employment index decreased to 53.4%, from 54.7%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 53.6%; September 2023 Services ISM® Report On Business®

Economic activity in the services sector expanded in September for the ninth consecutive month as the Services PMI® registered 53.6 percent, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The sector has grown in 39 of the last 40 months, with the lone contraction in December 2022.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In September, the Services PMI® registered 53.6 percent, 0.9 percentage point lower than August’s reading of 54.5 percent. The composite index indicated growth in September for the ninth consecutive month after a reading of 49.2 percent in December 2022, which was the first contraction since June 2020 (45.4 percent). The Business Activity Index registered 58.8 percent, a 1.5-percentage point increase compared to the reading of 57.3 percent in August. The New Orders Index expanded in September for the ninth consecutive month after contracting in December for the first time since May 2020; the figure of 51.8 percent is 5.7 percentage points lower than the August reading of 57.5 percent.
emphasis added

The PMI was at expectations.