by Calculated Risk on 6/17/2024 07:00:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Back Above 7% to Start New Week

Mortgage rates moved modestly higher to start the new week. With the average top tier 30yr fixed rate just under 7% on Friday, this meant a move to just over 7% today. [30 year fixed 7.05%]
emphasis added

Tuesday:
• At 8:30 AM: Retail sales for May is scheduled to be released.  The consensus is for a 0.3% increase in retail sales.

• At 9:15 AM: The Fed will release Industrial Production and Capacity Utilization for May. The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 78.6%.

by Calculated Risk on 6/17/2024 02:15:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Comparing the Current Housing Market to the 1978 to 1982 period

A brief excerpt:

In March 2022, I wrote: Housing: Don't Compare the Current Housing Boom to the Bubble and Bust

It is natural to compare the current housing boom to the mid-00s housing bubble. The bubble and subsequent bust are part of our collective memories. And graphs of nominal house prices and price-to-rent ratios look eerily similar to the housing bubble.

However, there are significant differences. First, lending has been reasonably solid during the current boom, whereas in the mid-00s, underwriting standards were almost non-existent (“fog a mirror, get a loan”). And demographics are much more favorable today than in the mid-00s.

And I suggested we compare the current situation to the 1978 to 1982 period, and I discussed a few similarities between the periods (no comparison is perfect):

1. Demographics were similar

2. House prices increased rapidly.

3. Inflation picked up

4. The Fed raised rates to bring down inflation.

5. House payments increased sharply

Here is a review and a discussion of what this means for house prices.

There is much more in the article.

by Calculated Risk on 6/17/2024 10:57:00 AM

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12-month average.

Click on graph for larger image.

On a rolling 12-month basis, inbound traffic decreased 0.4% in May compared to the rolling 12 months ending in April.   Outbound traffic decreased 0.1% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in the Winter depending on the timing of the Chinese New Year.  

Imports were down 5% YoY in May, and exports were down 1% YoY.    

In general, it appears port traffic is returning to the pre-pandemic patterns.

by Calculated Risk on 6/17/2024 08:11:00 AM

Altos reports that active single-family inventory was up 1.5% week-over-week. Inventory is now up 25.6% from the February bottom, and at the highest level since July 2020.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of June 14th, inventory was at 621 thousand (7-day average), compared to 612 thousand the prior week.   

Inventory is still far below pre-pandemic levels. 

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

The red line is for 2024.  The black line is for 2019.  Note that inventory is up 82% from the record low for the same week in 2021, but still well below normal levels.

Inventory was up 37.3% compared to the same week in 2023 (last week it was up 37.8%), and down 34.2% compared to the same week in 2019 (last week it was down 34.2%). 

Inventory should be above 2020 levels for the same week sometime in July.

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels is slowly closing.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 6/16/2024 09:07:00 PM

Weekend:
• Schedule for Week of June 16, 2024

Monday:
• At 8:30 AM ET, The New York Fed Empire State manufacturing survey for June. The consensus is for a reading of -13.0, up from -15.6.

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

Oil prices were up over the last week with WTI futures at $78.45 per barrel and Brent at $82.62 per barrel. A year ago, WTI was at $72, and Brent was at $77 - so WTI oil prices are up about 8% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.43 per gallon. A year ago, prices were at $3.55 per gallon, so gasoline prices are down $0.12 year-over-year.

by Calculated Risk on 6/16/2024 08:21:00 AM

Note: I've received a number of requests lately to post this again, so here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, Fed Chair, or any other marker.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter, George H.W. Bush and Trump only served one term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble and left during the bursting of the housing bubble. Mr. Obama (dark blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (dark red) took office.

There was a recession towards the end of President G.H.W. Bush (light purple) term, and Mr. Clinton (light blue) served for eight years without a recession.   And there was a pandemic related recession in 2020.

First, here is a table for private sector jobs. The previous top two private sector terms were both under President Clinton.  

1

Term	Private Sector Jobs Added (000s)
Biden	14,096
Clinton 1	10,876
Clinton 2	10,094
Obama 2	9,926
Reagan 2	9,351
Carter	9,039
Reagan 1	5,363
Obama 1	1,907
GHW Bush	1,507
GW Bush 2	443
GW Bush 1	-820
Trump	-2,192
1After 40 months.

Click on graph for larger image.

The first graph is for private employment only.

Private sector employment increased by 9,039,000 under President Carter (dashed green), by 14,714,000 under President Reagan (dark red), 1,507,000 under President G.H.W. Bush (light purple), 20,970,000 under President Clinton (light blue), lost 377,000 under President G.W. Bush, and gained 11,833,000 under President Obama (dark dashed blue).  During Trump's term (Orange), the economy lost 2,135,000 private sector jobs.

In the first 40 months of President Biden's term (Blue), the economy has added 14,096,000 private sector jobs, with the initial growth as the economy recovered from the pandemic.

 A big difference between the presidencies has been public sector employment.  Note: the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, 2010 and 2020. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).  However, the public sector declined significantly while Mr. Obama was in office (down 263,000 jobs).  During Trump's term, the economy lost 528,000 public sector jobs.

In the first 40 months of President Biden's term, the economy has added 1,531,000 public sector jobs (about 92% of public job growth has been for state and local governments, and about 55% for education).

And a table for public sector jobs. Public sector jobs increased have increased the most during Biden's term, just ahead of the number during Reagan's 2nd term.  Public sector jobs declined the most during Obama's first term.

Term	Public Sector Jobs Added (000s)
Biden	1,5311
Reagan 2	1,438
Carter	1,304
Clinton 2	1,242
GHW Bush	1,127
GW Bush 1	900
GW Bush 2	844
Clinton 1	692
Obama 2	447
Reagan 1	-24
Trump	-528
Obama 1	-710
1After 40 months.

by Calculated Risk on 6/15/2024 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Q1 Update: Delinquencies, Foreclosures and REO

• Part 1: Current State of the Housing Market; Overview for mid-June 2024

• Part 2: Current State of the Housing Market; Overview for mid-June 2024

• 3rd Look at Local Housing Markets in May

• 2nd Look at Local Housing Markets in May

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

by Calculated Risk on 6/15/2024 08:11:00 AM

The key reports this week are May Retail Sales, Housing Starts and Existing Home Sales.

For manufacturing, Industrial Production, and the NY and Philly Fed manufacturing surveys, will be released this week.

----- Monday, June 17th -----
8:30 AM: The New York Fed Empire State manufacturing survey for June. The consensus is for a reading of -13.0, up from -15.6.

----- Tuesday, June 18th -----
8:30 AM: Retail sales for May is scheduled to be released.  The consensus is for a 0.3% increase in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). 

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for May.

This graph shows industrial production since 1967.

The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 78.6%.

----- Wednesday, June 19th -----
All US markets will be closed in observance of Juneteenth National Independence Day

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM: The June NAHB homebuilder survey. The consensus is for a reading of 46, up from 45 last month. Any number above 50 indicates that more builders view sales conditions as poor than good.
----- Thursday, June 20th -----
8:30 AM ET: Housing Starts for May.

This graph shows single and total housing starts since 1968.

The consensus is for 1.380 million SAAR, up from 1.360 million SAAR in April.

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 240 thousand initial claims, down from 242 thousand last week.

8:30 AM: the Philly Fed manufacturing survey for June. The consensus is for a reading of 4.5, unchanged from 4.5 last month.

----- Friday, June 21st -----
10:00 AM: Existing Home Sales for May from the National Association of Realtors (NAR). The consensus is for 4.10 million SAAR, down from 4.14 million.

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

by Calculated Risk on 6/14/2024 07:23:00 PM

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

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So I'm no longer tracking hospitalizations, however hospitalizations were at a pandemic low three weeks ago.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week✅	311	314	≤3501
1my goals to stop weekly posts, 🚩 Increasing number weekly for Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported.

Weekly deaths have declined from the recent peak of 2,561 and are now below the previous pandemic low of 491 last July.  

And here is a graph I'm following concerning COVID in wastewater as of June 6th:

This appears to be a leading indicator for COVID hospitalizations and deaths.

COVID in wastewater is increasing - especially in the West - and this suggest deaths might increase again. 

by Calculated Risk on 6/14/2024 02:01:00 PM

From BofA:

Since last week,1Q GDP tracking is down from 1.6% q/q saar to 1.5% q/q saar and 2Q GDP tracking is up two-tenths to 1.8%. [June 14th estimate]
emphasis added

From Goldman:

Our 2024Q2 GDP growth tracking estimate is now down to 2.1% (vs. the Atlanta Fed at 3.1%) and our 2024 Q4/Q4 GDP growth forecast is now down to 2% but still above consensus. [June 10th estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2024 is 3.1 percent on June 7, up from 2.6 percent on June 6. [June 7th estimate]