by Calculated Risk on 8/08/2024 10:53:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Atlanta Fed: Home Ownership Affordability Monitor

A brief excerpt:

Here is another measure of affordability that readers might find useful from the Atlanta Fed: Home Ownership Affordability Monitor

Here is a graph of affordability (higher is more affordable), and of the year-over-year change in affordability through May 2024. By this measure, houses are essentially the least affordable since the Atlanta Fed started tracking affordability (October 2023 was slightly less affordable than May 2024). Note that the Atlanta Fed projects income.

There is much more in the article.

by Calculated Risk on 8/08/2024 08:30:00 AM

The DOL reported:

In the week ending August 3, the advance figure for seasonally adjusted initial claims was 233,000, a decrease of 17,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 249,000 to 250,000. The 4-week moving average was 240,750, an increase of 2,500 from the previous week's revised average. The previous week's average was revised up by 250 from 238,000 to 238,250.
emphasis added

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 240,750.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 8/07/2024 07:11:00 PM

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

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 240 thousand initial claims, down from 249 thousand last week.

by Calculated Risk on 8/07/2024 03:01:00 PM

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

Las Vegas hosted nearly 3.5M visitors in June, beating last June by 1.8%.

Estimated convention attendance neared 420k but with a YoY decrease of ‐7.9% tied to some show rotation cycles, including the absence of the SHRM conference (20k attendees) that was held in Las Vegas last year but elsewhere this June, and the scheduling difference of the Las Vegas Licensing Expo (25k attendees) that fell in May this year vs. June in 2023.

Overall hotel occupancy reached 85.2% (down 0.3 pts), with YoY gains in Weekend occupancy (91.3%, up 1.1 pts) while Midweek occupancy (82.6%), was down ‐0.9 pts vs. last June. ADR of roughly $176 exceeded last year by 6.4%, and RevPAR approached $150, up 6.0% YoY.
emphasis added

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 1.8% compared to last June.  Visitor traffic was down 3.2% compared to June 2019.

Year-to-date visitor traffic is down 0.2% compared to 2019.

The second graph shows convention traffic.

Convention traffic was down 7.9% compared to June 2023, and down 18.4% compared to June 2019.  

Year-to-date convention traffic is down 10.1% compared to 2019.

by Calculated Risk on 8/07/2024 11:44:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in July

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to July 2019 for each local market (some 2019 data is not available).

This is the first look at several early reporting local markets in July. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in July were mostly for contracts signed in May and June when 30-year mortgage rates averaged 7.06% and 6.92%, respectively (Freddie Mac PMMS).
...
In July, sales in these markets were up 4.6% YoY. Last month, in June, these same markets were down 6.7% year-over-year Not Seasonally Adjusted (NSA).

Important: 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.

Sales in all of these markets are down significantly compared to July 2019.
...
This was just a several early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 8/07/2024 10:10:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Increased in July

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were higher in July compared to June. The Manheim Used Vehicle Value Index (MUVVI) rose to 201.6, a decline of 4.8% from a year ago. The seasonal adjustment to the index amplified the impact on the month, resulting in values that rose 2.8% month over month. The non-adjusted price in July increased by 0.6% compared to June, moving the unadjusted average price down 5.9% year over year.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices increased in July (seasonally adjusted) and were down 4.8% year-over-year (YoY).

by Calculated Risk on 8/07/2024 07:00:00 AM

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

Mortgage applications increased 6.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 2, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 6.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week. The Refinance Index increased 16 percent from the previous week and was 59 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 0.3 percent compared with the previous week and was 11 percent lower than the same week one year ago.

“Mortgage rates decreased across the board last week and mortgage application volume reached its highest level since January of this year. The 30-year fixed rate fell to 6.55 percent, reaching its lowest level since May 2023, following doveish communication from the Federal Reserve and a weak jobs report, which added to increased concerns of an economy slowing more rapidly than expected,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result of lower rates, refinance applications increased across all loan types, particularly for VA loans, and were almost 60 percent higher than it was at this time last year and were at its highest level in two years.”

Added Kan, “Despite the downward movement in rates, purchase activity only saw small gains, with an increase in conventional purchase applications offset by decreases in government purchase applications. For-sale inventory is beginning to increase gradually in some parts of the country and homebuyers might be biding their time to enter the market given the prospect of lower rates.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.55 percent from 6.82 percent, with points decreasing to 0.58 from 0.62 (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 11% year-over-year unadjusted.  

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

Purchase application activity is up about 7% from the lows in late October 2023, but still 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 some increases recently.

by Calculated Risk on 8/06/2024 07:27:00 PM

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

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

by Calculated Risk on 8/06/2024 12:58:00 PM

Today, in the Calculated Risk Real Estate Newsletter: How Much will the Fannie & Freddie Conforming Loan Limit Change for 2025?

A brief excerpt:

With house prices up mid-single digits over the last year, an interesting question is: How much will the Fannie & Freddie conforming loan limits (CLL) change for 2025? And how much will the FHA insured loan limits change?

First, there are different loan limits for various geographical areas. There are also different loan limits depending on the number of units (from 1 to 4 units). For example, currently the CLL is $766,550 for one-unit properties in low-cost areas. For high-cost areas like Los Angeles County, the CLL is $1,149,825 for one-unit properties (50% higher than the baseline CLL).
...
This graph shows the CLL since 1979. The CLL was unchanged from 2006 though 2016.

We need the house price data through September 2024 to calculate the conforming loan limit for 2025. This quarterly data will be released in late November.​
...
Based on the current year-over-year house price change (through May), the CLL would be close to $810,000 in 2025. For high-cost areas like Los Angeles, the limit could increase to over $1.2 million. However, the year-over-year (YoY) increase in house prices has been slowing, and it is likely the increase will be less than 5.7%.

There is much more in the article.

by Calculated Risk on 8/06/2024 11:00:00 AM

From the NY Fed: Household Debt Increased Moderately in Q2 2024; Auto and Credit Card Delinquency Rates Remain Elevated

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The report shows total household debt increased by $109 billion (0.6%) in Q2 2024, to $17.80 trillion. The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel. It includes a one-page summary of key takeaways and their supporting data points.

The New York Fed also issued an accompanying Liberty Street Economics blog post examining growing balances of home equity lines of credit (HELOC).

“The volume of mortgage originations remained low, primarily due to subdued refinancing activity.” said Andrew Haughwout, Director of Household and Public Policy Research at the New York Fed. “Homeowners continued to increase HELOC balances as an alternative way to extract home equity.”

Mortgage balances rose by $77 billion from the previous quarter and reached $12.52 trillion at the end of June. HELOC balances increased by $4 billion, representing the ninth consecutive quarterly increase since Q1 2022, and stood at $380 billion. This is a $63 billion increase from the series low reached in Q3 2021. Credit card balances increased by $27 billion to $1.14 trillion. Auto loan balances saw a $10 billion increase and stood at $1.63 trillion. Other balances, which include retail cards and other consumer loans, were effectively flat, with a $1 billion increase.

Mortgage originations continued increasing at about the same pace seen in the previous four quarters and stood at $374 billion. Aggregate limits on credit card accounts increased modestly by $69 billion, representing a 1.4% increase from the previous quarter. Limits on HELOC increased by $3 billion, the ninth consecutive quarterly increase.

Aggregate delinquency rates were unchanged from the previous quarter, with 3.2% of outstanding debt in some stage of delinquency. Delinquency transition rates for credit cards, auto loans, and mortgages increased slightly.
emphasis added

Click on graph for larger image.

Here are three graphs from the report:

The first graph shows household debt increased in Q2.  Household debt previously peaked in 2008 and bottomed in Q3 2013. Unlike following the great recession, there wasn't a decline in debt during the pandemic.

From the NY Fed:

Aggregate household debt balances increased by $109 billion in the second quarter of 2024, a 0.6% rise from 2024Q1. Balances now stand at $17.80 trillion and have increased by $3.7 trillion since the end of 2019, just before the pandemic recession.

The second graph shows the percent of debt in delinquency.

The overall delinquency rate was mostly unchanged in Q2.  From the NY Fed:

Aggregate delinquency rates were unchanged from the first quarter of 2024. As of June, 3.2% of outstanding debt was in some stage of delinquency. ... Delinquency transition rates for credit cards, auto loans, and mortgages increased slightly. Over the last year, approximately 9.1% of credit card balances and 8.0% of auto loan balances transitioned into delinquency. Early delinquency transition rates for mortgages increased by 0.1 percentage point yet remain low by historic standards.

The third graph shows Mortgage Originations by Credit Score.

From the NY Fed:

Credit quality of newly originated loans was steady, with 3.9% of mortgages and 16.7% of auto loans originated to borrowers with credit scores under 620, a slight increase from the first quarter. The median credit score for newly originated mortgages rose slightly to 772, while the median credit score of newly originated auto loans was 719, five points lower than the historic high reached in 2024Q1.

There is much more in the report.