by Calculated Risk on 6/28/2024 11:07:00 AM

From BofA:

Since our last weekly publication, 2Q GDP tracking is down from 1.8% q/q saar to 1.7% q/q saar and 1Q GDP came in at 1.4% in the third print. Here is a rundown of changes to our tracking estimate. [June 28th estimate]
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From Goldman:

We left our Q2 GDP tracking estimate unchanged on net at +1.9% (qoq ar) and lowered our Q2 domestic final sales forecast by 0.4pp to +1.6%. [June 28th 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 2.2 percent on June 28, down from 2.7 percent on June 27. After this morning's personal income and outlays release from the U.S. Bureau of Economic Analysis , the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real gross private domestic investment growth decreased from 2.5 percent and 8.8 percent, respectively, to 1.8 percent and 8.7 percent. [June 28th estimate]

by Calculated Risk on 6/28/2024 08:57:00 AM

Here is a graph of the year-over-year change in shelter from the CPI report and housing from the PCE report this morning, both through May 2024.

CPI Shelter was up 5.4% year-over-year in May, down from 5.5% in April, and down from the cycle peak of 8.2% in March 2023.

Housing (PCE) was up 5.5% YoY in May, down from 5.6% in April, and down from the cycle peak of 8.3% in April 2023.

Since asking rents are mostly flat year-over-year, these measures will slowly continue to decline over the next year.

The second graph shows PCE prices, Core PCE prices and Core ex-housing over the last 3 months (annualized):

Key measures are slightly above the Fed's target on a 3-month basis. Note: There appears to be some residual seasonality distorting PCE prices in Q1, especially in January.

PCE Price Index: 2.4% (3 month annualized)
Core PCE Prices: 2.7%
Core minus Housing: 2.2%

by Calculated Risk on 6/28/2024 08:30:00 AM

The BEA released the Personal Income and Outlays report for May:

Personal income income increased $114.1 billion (0.5 percent at a monthly rate) in May, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI), personal income less personal current taxes, increased $94.0 billion (0.5 percent) and personal consumption expenditures (PCE) increased $47.8 billion (0.2 percent).

The PCE price index decreased less than 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent. Real DPI increased 0.5 percent in May and real PCE increased 0.3 percent; goods increased 0.6 percent and services increased 0.1 percent.
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The May PCE price index increased 2.6 percent year-over-year (YoY), down from 2.7 percent YoY in April, and down from the recent peak of 7.0 percent in June 2022.

The PCE price index, excluding food and energy, increased 2.6 percent YoY, unchanged from 2.8 percent in April, and down from the recent peak of 5.4 percent in February 2022.

The following graph shows real Personal Consumption Expenditures (PCE) through May 2024 (2017 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was above expectations, and PCE was below expectations.

Inflation was below expectations.

Using the two-month method to estimate Q2 real PCE growth, real PCE was increasing at a 1.8% annual rate in Q2 2024. (Using the mid-month method, real PCE was increasing at 1.8%).  This suggests decent PCE growth in Q2.

by Calculated Risk on 6/27/2024 08:34:00 PM

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

Friday:
• At 8:30 AM ET, Personal Income and Outlays, May 2024. The consensus is for a 0.4% increase in personal income, and for a 0.3% increase in personal spending. 

• At 9:45 AM: Chicago Purchasing Managers Index for June.

• At 10:00 AM: University of Michigan's Consumer sentiment index (Final for June).

by Calculated Risk on 6/27/2024 04:32:00 PM

From the Las Vegas Visitor Authority: May 2024 Las Vegas Visitor Statistics

With festivals such as EDC, coupled with convention attendance ahead of last year, May saw the destination host more than 3.6M visitors, showing a healthy 4.6% YoY gain for the month.

Among the churn of rotational shows, Waste Expo returned to Las Vegas in May (14k attendees, last here in May 2022), and the destination hosted the Advanced Clean Transportation (ACT) Expo for the first time (10k+ attendees).

Overall hotel occupancy reached 86.1% (up 1.7 pts), as Weekend occupancy reached 93.4% (up 0.2 pts) and Midweek occupancy reaching 82.5% (up 1.7 pts). ADR exceeded $200 with RevPAR over $172, showing YoY increases of 9.1% and 11.3%, respectively.
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Click on graph for larger image.

The first graph shows visitor traffic for 2019 (Black), 2020 (dark blue), 2021 (light blue), 2022 (light orange), 2023 (dark orange) and 2024 (red).

Visitor traffic was up 4.6% compared to last May.  Visitor traffic was down 0.9% compared to the same month in 2019.

Year-to-date visitor traffic is up 0.4% compared to 2019.

The second graph shows convention traffic.

Convention traffic was up 1.8% compared to May 2023, and down 11.3% compared to May 2019.  

Year-to-date convention traffic is down 8.7% compared to 2019.

by Calculated Risk on 6/27/2024 03:47:00 PM

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For April, Realtor.com reported inventory was up 35.2% YoY, but still down almost 34% compared to April 2017 to 2019 levels. 

 Now - on a weekly basis - inventory is up 36.1% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending June 22, 2024

• Active inventory increased, with for-sale homes 36.1% above year-ago levels.

For the 33rd week in a row, the number of for-sale homes grew compared with one year ago. This past week, the inventory of homes for sale grew by 36.1% compared with last year, essentially the same gap as in recent weeks. While recent inventory growth is substantial compared to a year ago, it highlights just how far inventory had fallen. Even after recent growth, active inventory in May was down more than 30% from typical pre-pandemic levels.

• New listings–a measure of sellers putting homes up for sale–were up this week, by 7.4% from one year ago.

Seller activity is up compared to one year ago, but momentum has waned from recent weeks and earlier this year. Realtor.com analysis shows that 87% of outstanding mortgages have a rate below 6%. If these homeowners sell, they are relinquishing relatively inexpensive debt for today’s roughly 7% mortgage rates, a costly proposition. As rates ease, they will cause less drag on the ‘move or stay’ calculus, and we are likely to see an increase in seller interest.

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

Inventory was up year-over-year for the 32nd consecutive week.  

However, inventory is still historically low.

New listings remain below typical pre-pandemic levels although up year-over-year.

by Calculated Risk on 6/27/2024 12:46:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 2.3% Below Peak

Excerpt:

It has been 18 years since the bubble peak. In the April Case-Shiller house price index released on Tuesday, the seasonally adjusted National Index (SA), was reported as being 73% above the bubble peak in 2006. However, in real terms, the National index (SA) is about 10% above the bubble peak (and historically there has been an upward slope to real house prices).  The composite 20, in real terms, is 1% above the bubble peak.

People usually graph nominal house prices, but it is also important to look at prices in real terms.  As an example, if a house price was $300,000 in January 2010, the price would be $432,000 today adjusted for inflation (44% increase).  That is why the second graph below is important - this shows "real" prices.

The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the Case-Shiller National Index.
...
The second graph shows the same two indexes in real terms (adjusted for inflation using CPI).

In real terms (using CPI), the National index is 2.3% below the recent peak, and the Composite 20 index is 3.0% below the recent peak in 2022. Both indexes were mostly unchanged in April in real terms.

by Calculated Risk on 6/27/2024 10:00:00 AM

From the NAR: Pending Home Sales Dropped 2.1% in May

Pending home sales in May slipped 2.1%, according to the National Association of REALTORS®. The Midwest and South posted monthly losses in transactions while the Northeast and West recorded gains. Year-over-year, all U.S. regions registered reductions.

The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – decreased to 70.8 in May. Year over year, pending transactions were down 6.6%. An index of 100 is equal to the level of contract activity in 2001.

“The market is at an interesting point with rising inventory and lower demand,” said NAR Chief Economist Lawrence Yun. “Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”
...
The Northeast PHSI ascended 1.1% from last month to 63.6, a decline of 2.3% from May 2023. The Midwest index dropped 0.4% to 70.4 in May, down 5.6% from one year ago.

The South PHSI lowered 5.5% to 83.7 in May, falling 10.4% from the prior year. The West index increased 1.4% in May to 56.7, down 2.1% from May 2023.
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This was well below expectations. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in June and July.

by Calculated Risk on 6/27/2024 08:35:00 AM

The DOL reported:

In the week ending June 22, the advance figure for seasonally adjusted initial claims was 233,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 238,000 to 239,000. The 4-week moving average was 236,000, an increase of 3,000 from the previous week's revised average. The previous week's average was revised up by 250 from 232,750 to 233,000.
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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 increased to 236,000.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 6/27/2024 08:30:00 AM

From the BEA: Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, First Quarter 2024

Real gross domestic product (GDP) increased at an annual rate of 1.4 percent in the first quarter of 2024 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2023, real GDP increased 3.4 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.3 percent. The upward revision primarily reflected a downward revision to imports, which are a subtraction in the calculation of GDP, and upward revisions to nonresidential fixed investment and government spending. These revisions were partly offset by a downward revision to consumer spending (refer to "Updates to GDP").

The increase in real GDP primarily reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by a decrease in private inventory investment. Imports increased.
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Here is a Comparison of Third and Second Estimates. PCE growth was revised down from 2.0% to 1.5%. Residential investment was revised up from 15.4% to 16.0%.