by Calculated Risk on 6/19/2024 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 0.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending June 14, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 0.1 percent compared with the previous week. The Refinance Index decreased 0.4 percent from the previous week and was 30 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index decreased 0.1 percent compared with the previous week and was 12 percent lower than the same week one year ago.

“Mortgage rates dropped last week following the latest inflation data and the FOMC meeting, with the 30- year conforming rate dropping to 6.94 percent and reaching its lowest level since the end of March,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Purchase applications increased a small amount for the week, led by applications for conventional loans. Refinance application volume was also down slightly for the week but remains about 30 percent higher than this time last year.”

Added Fratantoni, “Purchase volume is still more than 10 percent behind last year’s pace, but MBA is forecasting a pickup in home sales for the remainder of the year as more inventory is hitting the market.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.94 percent from 7.02 percent, with points decreasing to 0.61 from 0.65 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is down 12% year-over-year unadjusted.  

Red is a four-week average (blue is weekly).  

Purchase application activity is up slightly from the lows in late October 2023, and below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index declined sharply in 2022, and mostly flat lined since then with a slight increase recently.

by Calculated Risk on 6/18/2024 07:27:00 PM

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

Wednesday:
• All US markets will be closed in observance of Juneteenth National Independence Day

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

• At 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.

by Calculated Risk on 6/18/2024 04:26:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Early Read on Existing Home Sales in May

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 4.13 million in May, down 0.2% from April’s preliminary pace and down 2.4% from last May’s seasonally adjusted pace.

There is more in the article.

by Calculated Risk on 6/18/2024 01:28:00 PM

Today, in the Calculated Risk Real Estate Newsletter: 4th Look at Local Housing Markets in May; California Home Sales Down 6% YoY in May

A brief excerpt:

The National Association of Realtors (NAR) is scheduled to release May Existing Home Sales on Friday June 21st at 10 AM ET. The early consensus is for 4.10 million SAAR, down from 4.14 million in April, and down from 4.23 million in May 2023.
...
In May, sales in these markets were down 0.8% YoY. Last month, in April, these same markets were up 7.1% year-over-year Not Seasonally Adjusted (NSA). However, there were two more working days in April 2024 than in April 2023, so seasonally adjusted, sales were down YoY last month.

Sales in all of these markets are down compared to May 2019.
...
This is a small year-over-year decrease NSA for these markets. There were the same number of working days in May 2024 compared to May 2023, so the year-over-year change in the seasonally adjusted sales will be about the same as the NSA data suggests.
...
More local markets to come!

There is much more in the article.

by Calculated Risk on 6/18/2024 09:15:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production rose 0.9 percent in May. Manufacturing output posted a similar gain of 0.9 percent after declining in the previous two months. The index for mining increased 0.3 percent in May, and the index for utilities advanced 1.6 percent. At 103.3 percent of its 2017 average, total industrial production in May was 0.4 percent higher than its year-earlier level. Capacity utilization moved up to 78.7 percent in May, a rate that is 0.9 percentage point below its long-run (1972–2023) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and above the level in February 2020 (pre-pandemic).

Capacity utilization at 78.7% is 0.9% below the average from 1972 to 2022.  This was above consensus expectations.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production increased to 103.3. This is above the pre-pandemic level.

Industrial production was above consensus expectations.

by Calculated Risk on 6/18/2024 08:30:00 AM

On a monthly basis, retail sales were "virtually unchanged" from March to April (seasonally adjusted), and sales were up 3.0 percent from April 2023.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for May 2024, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $703.1 billion, up 0.1 percent from the previous month, and up 2.3 percent above May 2023. ... The March 2024 to April 2024 percent change was revised from virtually unchanged to down 0.2 percent.
emphasis added

Click on graph for larger image.

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

Retail sales ex-gasoline were up 0.3% in May.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by 2.6% on a YoY basis.

The change in sales in May was below expectations, and sales in March and April were revised down.

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.