RSS Feed by Calculated Risk on 7/30/2024 10:00:00 AM
Tuesday, July 30, 2024
BLS: Job Openings "Unchanged" at 8.2 million in June
From the BLS: Job Openings and Labor Turnover Summary
The number of job openings was unchanged at 8.2 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. Over the month, both the number of hires and total separations were little changed at 5.3 million and 5.1 million, respectively. Within separations, quits (3.3 million) and layoffs and discharges (1.5 million) changed little.The following graph shows job openings (black line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.
emphasis added
This series started in December 2000.
Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for June; the employment report this Friday will be for July.
Click on graph for larger image.Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.
The spike in layoffs and discharges in March 2020 is labeled, but off the chart to better show the usual data.
Jobs openings decreased in June to 8.18 million from 8.23 million in May.
The number of job openings (black) were down 10% year-over-year.
Quits were down 12% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").
Case-Shiller: National House Price Index Up 5.9% year-over-year in May
by Calculated Risk on 7/30/2024 09:00:00 AM
S&P/Case-Shiller released the monthly Home Price Indices for May ("May" is a 3-month average of March, April and May closing prices).
This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.
From S&P S&P CoreLogic Case-Shiller Index Again Breaks Previous Month's All-Time High for May 2024
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.9% annual gain for May, down from a 6.4% annual gain in the previous month. The 10-City Composite saw an annual increase of 7.7%, down from an 8.1% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 6.8%, dropping from a 7.3% increase in the previous month. New York reported the highest annual gain among the 20 cities with a 9.4% increase in May, followed by San Diego and Las Vegas with increases of 9.1% and 8.6%, respectively. Portland once again held the lowest rank for the smallest year-over-year growth, notching a 1.0% annual increase in May.
...
The U.S. National Index, the 20-City Composite, and the 10-City Composite upward trends continued to decelerate from last month, with pre-seasonality adjustment increases of 0.9%, 1.0%, and 1.0%, respectively.
After seasonal adjustment, the U.S. National Index posted the same month-over-month change of 0.3% as last month, while the 20-City and 10-City Composite reported a monthly change of 0.3% and 0.4%, respectively.
“While annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging,” says Brian D. Luke, Head of Commodities, Real & Digital Assets. “Our home price index has appreciated 4.1% year-to-date, the fastest start in two years. Covering the six-month period dating to when mortgage rates peaked, our national index has risen the past four months, erasing the stall experienced late last year. Collectively, all 20 markets covered continue to trade in a homogeneous pattern. Coming into the 2024 presidential election, traditional red states are in a dead heat with blue states, both averaging 5.9% gains annually.
“The Big Apple returned to the top of the leader boards, toppling San Diego from its six-month perch. New York’s 9.4% annual return outpaced San Diego and Las Vegas, by 0.3% and 0.7%, respectively. All 20 markets observed annual gains for the last six months. The last time we saw that long a streak was when all markets rose for three years consecutively during the COVID housing boom. This rally pales in comparison in both duration and annual gains, with above trend growth of 6.2%. The waiting game for the possibility of favorable changes in lending rates continues to be costly for potential buyers as home prices march forward.”
emphasis added
Click on graph for larger image. The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).
The Composite 10 index was up 0.4% in May (SA). The Composite 20 index was up 0.3% (SA) in May.
The National index was up 0.3% (SA) in May.
The second graph shows the year-over-year change in all three indices.The Composite 10 SA was up 7.7% year-over-year. The Composite 20 SA was up 6.8% year-over-year.
The National index SA was up 5.9% year-over-year.
Annual price changes were close to expectations. I'll have more later.
Monday, July 29, 2024
Tuesday: Case-Shiller House Prices, Job Openings
by Calculated Risk on 7/29/2024 08:15:00 PM
From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Week at 6 Month Lows
Although the range has been very narrow for the past few weeks, average mortgage rates nonetheless fell to the lowest levels in more than 6 months. Top tier conventional 30yr fixed scenarios are well into the high 6's now, with our proprietary daily average at 6.81, matching the levels seen on July 15th and 18th.Tuesday:
...
The rest of the week is most likely to be determined by economic reports as well as the reaction to Wednesday's Fed announcement. The Fed is not expected to cut rates at this meeting, but some investors will be looking for clues about a September rate cut, currently seen as a near certainty. [30 year fixed 6.81%]
emphasis added
• At 9:00 AM ET, S&P/Case-Shiller House Price Index for May. The consensus is for a 6.0% year-over-year increase in the Comp 20 index for May.
• Also at 9:00 AM, FHFA House Price Index for May. This was originally a GSE only repeat sales, however there is also an expanded index.
• At 10:00 AM ET: Job Openings and Labor Turnover Survey for June from the BLS.
Fannie and Freddie: Single Family Serious Delinquency Rate Mostly Unchanged in June, Multi-family Increased
by Calculated Risk on 7/29/2024 05:05:00 PM
Today, in the Calculated Risk Real Estate Newsletter: Fannie and Freddie: Single Family Serious Delinquency Rate Mostly Unchanged in June, Multi-family Increased
Brief excerpt:
Single-family serious delinquencies were mostly unchanged in June, and multi-family serious delinquencies increased again.
...
Freddie Mac reports that the multi-family delinquencies rate increased to 0.38% in June, up from 0.36% in April, but down from the recent peak of 0.44% in January.
This graph shows the Freddie multi-family serious delinquency rate since 2012. Rates were still high in 2012 following the housing bust and financial crisis.
The multi-family rate increased following the pandemic and has increased recently as rent growth has slowed, vacancy rates have increased, and borrowing rates have increased sharply. The rate surged higher in January and then declined in February and March but has been increasing again. This will be something to watch as more apartments come on the market.
There is much more in the article.
Final Look at Local Housing Markets in June and a Look Ahead to July Sales
by Calculated Risk on 7/29/2024 09:58:00 AM
Today, in the Calculated Risk Real Estate Newsletter: Final Look at Local Housing Markets in June and a Look Ahead to July Sales
A brief excerpt:
In June, sales in these markets were down 13.1% YoY. Last month, in May, these same markets were down 0.1% year-over-year Not Seasonally Adjusted (NSA).There is much more in the article.
...
This was a year-over-year decrease NSA for these markets. However, there were two fewer working days in June 2024 compared to June 2023 (19 vs 21), so seasonally adjusted sales were much higher than the NSA data suggests. Note that the NAR reported sales NSA were down 13.4% YoY in June, almost the same as this local data!
July sales will be mostly for contracts signed in May and June, and mortgage rates decreased slightly to an average of 6.92% in June, down from 7.06% in May. My early expectation is we will see existing home sales at or above the same level in July as compared to June, on a seasonally adjusted annual rate basis (SAAR).
Note for next month (July sales): There were two more working days in July 2024 compared to July 2023 (22 vs 20), so seasonally adjusted sales will be much lower than the NSA data suggests.
Housing July 29th Weekly Update: Inventory up 1.3% Week-over-week, Up 39.4% Year-over-year
by Calculated Risk on 7/29/2024 08:11:00 AM
Altos reports that active single-family inventory was up 1.3% week-over-week. Inventory is now up 37.1% from the February seasonal bottom.
Click on graph for larger image.This inventory graph is courtesy of Altos Research.
As of July 26th, inventory was at 677 thousand (7-day average), compared to 668 thousand the prior week.
This is the highest level of inventory since June 2020; however, inventory is still far below pre-pandemic levels.
The red line is for 2024. The black line is for 2019.
Inventory was up 39.4% compared to the same week in 2023 (last week it was up 39.1%), and down 29.4% compared to the same week in 2019 (last week it was down 30.3%).
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.
Sunday, July 28, 2024
Sunday Night Futures
by Calculated Risk on 7/28/2024 06:16:00 PM
Weekend:
• Schedule for Week of July 28, 2024
• FOMC Preview: No Change to Fed Funds Rate
Monday:
• At 10:30 AM ET, Dallas Fed Survey of Manufacturing Activity for July.
From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 5 and DOW futures are up 52 (fair value).
Oil prices were lower over the last week with WTI futures at $77.16 per barrel and Brent at $81.13 per barrel. A year ago, WTI was at $81, and Brent was at $84 - so WTI oil prices are down about 5% year-over-year.
Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.48 per gallon. A year ago, prices were at $3.71 per gallon, so gasoline prices are down $0.23 year-over-year.
FOMC Preview: No Change to Fed Funds Rate
by Calculated Risk on 7/28/2024 08:11:00 AM
Most analysts expect there will be no change to the federal funds rate at the meeting this week keeping the target range at 5‑1/4 to 5-1/2 percent. It is likely the FOMC will hint at a possible September rate cut.
Currently market participants expect the next Fed move to be a 25 bp cut announced at the September FOMC meeting. Market participants are also pricing in a 2nd rate cut at the November meeting, and a 3rd rate cut in December.
From Goldman Sachs:
Since the last projections were released, economic growth has been close to expectations, the unemployment rate is slightly higher, and inflation lower than expected (although there are some "base effects" that might push PCE inflation up a little later this year).
1 Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.
The unemployment rate was at 4.1% in June. This is close to the high end of the June projections.
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.
As of June 2024, PCE inflation increased 2.5 percent year-over-year (YoY). This is at the low end of the June projections.
PCE core inflation increased 2.6 percent YoY in June. This is lower than the June FOMC projections for Q4.
Encouraging inflation news and a further rise in the unemployment rate have pushed Fed officials closer to cutting. The FOMC is set to hold steady next week but is likely to revise its statement to hint that a cut at the following meeting in September has become more likely.
Specifically, we expect the FOMC to revise its statement to say that the unemployment rate has “risen slightly but remains low,” that there has been “further progress” (dropping “modest”) toward the 2% inflation goal, that the risks to the two sides of the mandate “are in” (not “have moved toward”) better balance, and—most importantly—that it now needs only “somewhat” greater confidence in the inflation outlook in order to start lowering interest rates.
emphasis added
From BofA:
The June personal income and outlays report was another tick of the box. Inflation is back on track towards the 2% target even if base effects will lift the y/y rate in 2H. Therefore, the likelihood a rate cuts continues to increase. That said, solid spending and strong GDP growth means the Fed can be patient and await more data. We remain comfortable with our forecast that cuts will start in December, but upcoming inflation and employment data could tip the scale to an earlier cut. Focus now shifts to July data.
Projections will NOT be released at this meeting. For review, here are the June projections.
The BEA's advance estimate for Q2 GDP showed real growth at 2.8% annualized, following 1.4% annualized real growth in Q1. That puts real growth in the first half at 2.1%; at the midpoint of the June FOMC projections.
| GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1 | ||||
|---|---|---|---|---|
| Projection Date | 2024 | 2025 | 2026 | |
| June 2024 | 1.9 to 2.3 | 1.8 to 2.2 | 1.8 to 2.1 | |
| Mar 2024 | 2.0 to 2.4 | 1.9 to 2.3 | 1.8 to 2.1 | |
The unemployment rate was at 4.1% in June. This is close to the high end of the June projections.
| Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2 | ||||
|---|---|---|---|---|
| Projection Date | 2024 | 2025 | 2026 | |
| June 2024 | 3.9 to 4.2 | 3.9 to 4.3 | 3.9 to 4.3 | |
| Mar 2024 | 3.9 to 4.1 | 3.9 to 4.2 | 3.9 to 4.3 | |
As of June 2024, PCE inflation increased 2.5 percent year-over-year (YoY). This is at the low end of the June projections.
| Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1 | ||||
|---|---|---|---|---|
| Projection Date | 2024 | 2025 | 2026 | |
| June 2024 | 2.5 to 2.9 | 2.2 to 2.4 | 2.0 to 2.1 | |
| Mar 2024 | 2.3 to 2.7 | 2.1 to 2.2 | 2.0 to 2.1 | |
PCE core inflation increased 2.6 percent YoY in June. This is lower than the June FOMC projections for Q4.
| Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1 | ||||
|---|---|---|---|---|
| Projection Date | 2024 | 2025 | 2026 | |
| June 2024 | 2.8 to 3.0 | 2.3 to 2.4 | 2.0 to 2.1 | |
| Mar 2024 | 2.5 to 2.8 | 2.1 to 2.3 | 2.0 to 2.1 | |
Saturday, July 27, 2024
Real Estate Newsletter Articles this Week: Existing-Home Sales Decreased to 3.89 million SAAR in June
by Calculated Risk on 7/27/2024 02:11:00 PM
At the Calculated Risk Real Estate Newsletter this week:
Click on graph for larger image.
• NAR: Existing-Home Sales Decreased to 3.89 million SAAR in June
• New Home Sales Decrease to 617,000 Annual Rate in June
• Watch Months-of-Supply!
• NMHC: "Apartment Market Conditions Continue to Loosen"
• "Snow Belt to Sun Belt Migration: End of an Era?"
This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.
Schedule for Week of July 28, 2024
by Calculated Risk on 7/27/2024 08:11:00 AM
The key report this week is the July employment report.
Other key reports include Case-Shiller house prices for May, ISM manufacturing index and July vehicle sales.
The FOMC meets this week and no change to the Fed Funds rate is expected.
10:30 AM: Dallas Fed Survey of Manufacturing Activity for July.
9:00 AM: S&P/Case-Shiller House Price Index for May.This graph shows the year-over-year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).
The consensus is for a 6.0% year-over-year increase in the Comp 20 index for May.
9:00 AM: FHFA House Price Index for May. This was originally a GSE only repeat sales, however there is also an expanded index.
10:00 AM ET: Job Openings and Labor Turnover Survey for June from the BLS. This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.
Jobs openings increased in May to 8.14 million from 7.92 million in April.
The number of job openings (yellow) were down 13% year-over-year and Quits were down 14% year-over-year.
10:00 AM: the Q2 2024 Housing Vacancies and Homeownership from the Census Bureau.
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.
8:15 AM: The ADP Employment Report for June. This report is for private payrolls only (no government). The consensus is for 168,000 payroll jobs added in June, up from 150,000 in May.
9:45 AM: Chicago Purchasing Managers Index for July.
10:00 AM: Pending Home Sales Index for June. The consensus is for a 1.5% increase in the index.
2:00 PM: FOMC Meeting Announcement. No change to the Fed Funds rate is expected.
2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 230 thousand initial claims, down from 235 thousand last week.
10:00 AM: ISM Manufacturing Index for July. The consensus is for the ISM to be at 49.0, up from 48.5 in June.
10:00 AM: Construction Spending for June. The consensus is for a 0.2% increase in construction spending.
Late: Light vehicle sales for July from the BEA. The consensus is for light vehicle sales to be 16.2 million SAAR in July, up from 15.3 million in June (Seasonally Adjusted Annual Rate).This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the sales rate for last month.
8:30 AM: Employment Report for July. The consensus is for 175,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.There were 206,000 jobs added in June, and the unemployment rate was at 4.1%.
This graph shows the jobs added per month since January 2021.
