by Calculated Risk on 11/06/2023 10:14:00 AM

Today, in the Calculated Risk Real Estate Newsletter: ICE (Black Knight) Mortgage Monitor: "It’s fair to expect prices to weaken later in 2023"

A brief excerpt:

Some interesting data on negative equity and limited equity.

• As of September, 383K (0.7% of) mortgage holders were underwater on their homes – less than half the share prior to the pandemic and in the early 2000s before the Global Financial Crisis

• Likewise, the number of borrowers in limited-equity positions remains historically low, with 1.9M (4.2% of) mortgage holders having less than 10% equity in their homes

• Austin – where home prices remain more than 14% off 2022 peaks – is in the worst position of all markets, with 2.1% of mortgage holders underwater, followed by Las Vegas (1.7%) and Phoenix (1.6%)

• San Jose – despite its home-price struggles last year – and Los Angeles have the lowest negative equity rates at 0.1%

• Overall, the weighted-average combined loan-to-value ratio for all mortgaged homes in the U.S. is 45%, among the strongest we’ve seen, dating back more than 20 years, outside of Feb.-Aug. 2022 at the peak of home prices
emphasis added

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

by Calculated Risk on 11/06/2023 08:11:00 AM

Altos reports that active single-family inventory was up 0.8% week-over-week.  This is the latest in the year that inventory was still increasing!

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of November 3rd, inventory was at 567 thousand (7-day average), compared to 563 thousand the prior week.   

Year-to-date, inventory is up 15.5%.  And inventory is up 39.6% from the seasonal bottom 29 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 1.5% compared to the same week in 2022 (last week it was down 2.7%), and down 37.1% compared to the same week in 2019 (last week down 39.4%). 

In 2022, inventory peaked at the end of October (the latest in the year inventory had peaked until this year). I now expect inventory to be up YoY soon.

Inventory is now 4.4% above the same week in 2020 levels (dark blue line).

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 11/05/2023 06:15:00 PM

Weekend:
• Schedule for Week of November 5, 2023

Monday:
• At 2:00 PM, Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) for October.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures are up 5 and DOW futures are up 40 (fair value).

Oil prices were down over the last week with WTI futures at $80.51 per barrel and Brent at $84.89 per barrel. A year ago, WTI was at $93, and Brent was at $100 - so WTI oil prices were down 13% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.37 per gallon. A year ago, prices were at $3.79 per gallon, so gasoline prices are down $0.42 year-over-year.

by Calculated Risk on 11/05/2023 08:21:00 AM

From STR: U.S. hotel results for week ending 28 October

U.S. hotel performance decreased from the previous week but showed positive year-over-year comparisons, according to CoStar’s latest data through 28 October.

22-28 October 2023 (percentage change from comparable week in 2022):

• Occupancy: 66.0% (+0.7%)
• Average daily rate (ADR): US$160.89 (+3.9%)
• Revenue per available room (RevPAR): US$106.16 (+4.6%)
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 tracking close to last year, and above 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 decline seasonally for the next couple of months. 

by Calculated Risk on 11/04/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• Case-Shiller: National House Price Index Up 2.6% year-over-year in August; New all-time High

• Inflation Adjusted House Prices 3.1% Below Peak

• Freddie Mac House Price Index Increased in September to New High; Up 5.2% Year-over-year

• Asking Rents Down 1.2% Year-over-year

• Lawler: Single-Family Rent Results Invitation Homes, and AMH (American Homes 4 Rent)

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 11/04/2023 08:11:00 AM

This will be a light week for economic data.

----- Monday, November 6th -----
2:00 PM: Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) for October.

----- Tuesday, November 7th -----
8:00 AM ET: Corelogic House Price index for September.

8:30 AM: Trade Balance report for September from the Census Bureau.  The consensus is for the deficit to be $60.3 billion in September, from $58.3 billion in August.

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.

11:00 AM: NY Fed: Q3 Quarterly Report on Household Debt and Credit

----- Wednesday, November 8th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, November 9th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 221 thousand initial claims, up from 217 thousand last week.

----- Friday, November 10th -----
Veterans Day Holiday: Most banks will be closed in observance of Veterans Day. The stock market will be open.

10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for November).

by Calculated Risk on 11/03/2023 07:53:00 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.

Hospitalizations have more than doubled from a low of 5,150 in June 2023, but have declined over the last few weeks.

Hospitalizations are far below the peak of 150,000 in January 2022.

COVID Metrics
	Now	Week Ago	Goal
Hospitalized2	12,953	13,264	≤3,0001
Deaths per Week2	1,143	1,262	≤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 but have declined recently.  Weekly deaths are far below the weekly peak of 26,000 in January 2021.

by Calculated Risk on 11/03/2023 04:54:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

Combined originated carloads and intermodal units on U.S. railroads averaged 499,331 per week in October 2023, the most for any month since June 2021 — a span of 28 months. Part of the increase relates to intermodal seasonality and concerns over Panama Canal capacity, but part also reflects an economy that remains resilient.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows the six-week average of U.S. Carloads in 2021, 2022 and 2022:

Total originated carloads on U.S. railroads (not including the U.S. operations of Canadian and Mexican railroads) were down 0.3% (2,921 carloads) in October 2023 from October 2022, their fourth decline in the past five months. Total carloads averaged 230,398 per week in October 2023. That’s down fractionally from 230,429 in September 2023 but otherwise is the highest in a year​.

The second graph shows the six-week average (not monthly) of U.S. intermodal in 2021, 2022 and 2023: (using intermodal or shipping containers):

It’s too soon to say intermodal is back, but October’s numbers are encouraging. U.S. railroads averaged 268,933 intermodal originations per week in October 2023, up 2.2% over October 2022. That’s the second straight year-over-year gain (September was 0.7%) following 18 straight declines. It’s also the biggest weekly average for intermodal since May 2022.

by Calculated Risk on 11/03/2023 02:52:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Single-Family Rent Results

A brief excerpt:

[H]ere are the latest rent trends just reported from two of the largest publicly traded firms in the single-family rental industry:  Invitation Homes, and AMH (American Homes 4 Rent).  The rent trends are for “same store/same properties.”

Note that while rental growth rates have clearly decelerated at both firms since 2022, the slowdown in rent growth has been nowhere near as large as that in the rent indexes shown above.

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

by Calculated Risk on 11/03/2023 12:39:00 PM

The BEA released their estimate of vehicle sales for October.

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the October 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 475 thousand SAAR in October, down from 502 thousand in September, and mostly unchanged from 476 thousand SAAR in October 2022.  

Usually, heavy truck sales decline sharply prior to a recession.   The recent decline is something to watch.

As I noted earlier this week, Vehicles Sales decrease to 15.5 million SAAR in October; Up 6% YoY

The second graph shows light vehicle sales since the BEA started keeping data in 1967.  Vehicle sales were at 15.50 million SAAR in October, down from 15.68 million in September, and up 6% from 14.68 million in October 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.