by Calculated Risk on 9/11/2024 08:54:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned when services less rent of shelter was up around 8% year-over-year.  This declined and is now up 4.3% YoY.

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through August 2024.

Services were up 4.8% YoY as of August 2024, down from 4.9% YoY in July.

Services less rent of shelter was up 4.3% YoY in August, down from 4.6% YoY in July.

The second graph shows that goods prices started to increase year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Durables were at -4.2% YoY as of August 2024, down from -4.1% YoY in July.

Commodities less food and energy commodities were at -1.7% YoY in August, unchanged from -1.7% YoY in July.

Here is a graph of the year-over-year change in shelter from the CPI report (through August) and housing from the PCE report (through July)

Shelter was up 5.2% year-over-year in August, up from 5.0% in July. Housing (PCE) was up 5.3% YoY in July, down from 5.3% in June (rounded).

The BLS noted: "The index for shelter rose 0.5 percent in August and was the main factor in the all items increase."

This is still catching up with private data.

Core CPI ex-shelter was up 1.7% YoY in August, down from 1.8% in July.

by Calculated Risk on 9/11/2024 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis, the same increase as in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.5 percent before seasonal adjustment.

The index for shelter rose 0.5 percent in August and was the main factor in the all items increase. The food index increased 0.1 percent in August, after rising 0.2 percent in July. The index for food away from home rose 0.3 percent over the month, while the index for food at home was unchanged. The energy index fell 0.8 percent over the month, after being unchanged the preceding month.

The index for all items less food and energy rose 0.3 percent in August, after rising 0.2 percent the preceding month. Indexes which increased in August include shelter, airline fares, motor vehicle insurance, education, and apparel. The indexes for used cars and trucks, household furnishings and operations, medical care, communication, and recreation were among those that decreased over the month.

The all items index rose 2.5 percent for the 12 months ending August, the smallest 12-month increase since February 2021. The all items less food and energy index rose 3.2 percent over the last 12 months. The energy index decreased 4.0 percent for the 12 months ending August. The food index increased 2.1 percent over the last year.
emphasis added

The change in CPI was at expectation and core CPI slightly above expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 9/11/2024 07:00:00 AM

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

Mortgage applications increased 1.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 6, 2024. This week’s results include an adjustment for the Labor Day Holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week and was 106 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 10 percent compared with the previous week and was 3 percent lower than the same week one year ago.

“Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate decreasing to 6.29 percent, the lowest rate since February 2023. Treasury yields have been responding to data showing a picture of cooling inflation, a slowing job market, and the anticipated first rate cut from the Federal Reserve later this month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “With rates almost a full percentage point lower than a year ago, refinance applications continue to run much higher than last year’s pace. However, there is still somewhat limited refinance potential as many borrowers still have sub-5 percent rates. It is a positive development that there are homeowners who can benefit from a refinance as rates continues to move lower.”

Added Kan, “Purchase applications increased over the week and are edging closer to last year’s levels. Despite the drop in rates, affordability challenges and other factors such as limited inventory might still be hindering purchase decisions.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.29 percent from 6.43 percent, with points decreasing to 0.55 from 0.56 (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 3% year-over-year unadjusted.  

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

Purchase application activity is up about 10% 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 for two years - but has increased recently as mortgage rates declined.

by Calculated Risk on 9/10/2024 07:16:00 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.

• At 8:30 AM, The Consumer Price Index for August from the BLS. The consensus is for a 0.2% increase in CPI, and a 0.2% increase in core CPI.  The consensus is for CPI to be up 2.6% year-over-year (down from 2.9% in July) and core CPI to be up 3.2% YoY (unchanged from 3.2% in July).

by Calculated Risk on 9/10/2024 03:54:00 PM

Notes: This CoreLogic House Price Index report is for July. The recent Case-Shiller index release was for June. The CoreLogic HPI is a three-month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic: Annual US Home Price Growth Dips Below 5% as Summer Brings Notable Cooling to the Housing Market

• U.S. home prices posted a 4.3% year-over-year gain in July, with no states posting double-digit gains.

• Home prices showed no gains in July compared with the month before – the first July since 2010 that home prices didn’t increase outside the 2022 declines following a surge in mortgage rates

• By August, home prices are forecast to rise only 0.2% as the summer slowdown continues.

• Miami once again took the lead as the metro with the greatest price growth among the top 10 largest metros
...
U.S. year-over-year home price gains inched down, reaching 4.3% in July, falling further from the previous month’s 4.7% and resting below 5% for the third consecutive month. On a month-over-month basis, home prices decreased by 0.01% in July 2024 compared with June 2024. We will likely see home prices continue to slide for the remainder of the year as sales across the country slow. Although July marked the 150th consecutive month of annual growth, monthly home price growth is starting to slip, and annual forecasts are showing smaller anticipated gains. By August, home prices are forecast to rise only 0.2%, and next year, prices will inch up by 2.2%.

Much of this sluggishness can be attributed to high mortgage interest rates that are continuing to challenge the housing market. As buyers remain cautious, sales remain low. However, the highly anticipated rate cuts from the Federal Reserve this fall may help improve consumer purchase sentiment for the housing market.

“Housing demand continued to buckle under the pressure of high mortgage rates and unaffordable home prices, leading to a considerable slowing of home price gains during the summer. July’s prices were essentially flat from the month before, which was notably cooler than the average gain of 0.4% recorded between June and July in years prior to the pandemic and especially during the pandemic,” said Dr. Selma Hepp chief economist for CoreLogic. “The question for home prices going forward is whether the upcoming rate cut from the Fed and expected continuation of falling mortgage rates will be sufficient to motivate potential homebuyers who may start to fear cooling labor market and continued uncertainty of a soft landing, along with anticipation around the presidential election. And while lower mortgage rates are a boost to affordability and are likely to help buyer demand, the usual fall housing market slowdown is upon us and is likely to contain any significant surge in activity.”
emphasis added

This was a smaller YoY increase than reported for May, and down from the 5.8% YoY increase reported at the beginning of 2024.

by Calculated Risk on 9/10/2024 01:52:00 PM

Here is another monthly update on lumber prices.

SPECIAL NOTE: The CME group discontinued the Random Length Lumber Futures contract on May 16, 2023.  I switched to a physically-delivered Lumber Futures contract that was started in August 2022. 

Unfortunately, this impacts long term price comparisons since the new contract was priced about 24% higher than the old random length contract for the period when both contracts were available.

This graph shows CME random length framing futures through last August (blue), and the new physically-delivered Lumber Futures (LBR) contract starting in August 2022 (Red).

LBR is currently at $505 per 1000 board feet, up slightly from a year ago.

Click on graph for larger image.

There is somewhat of a seasonal demand for lumber, and lumber prices frequently peak in the first half of the year.

We didn't see a significant runup in the Spring period of 2023 or 2024 due to the housing slowdown.  

by Calculated Risk on 9/10/2024 11:22:00 AM

From Dodge Data Analytics: Dodge Momentum Index Rises 3% in August

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, increased 2.9% in August to 220.4 (2000=100) from the revised July reading of 214.2. Over the month, commercial planning expanded 1.9% and institutional planning improved 5.7%.

“Owners and developers continued to prime the planning queue in August, ahead of next year’s anticipated stronger market conditions,” stated Sarah Martin, associate director of forecasting at Dodge Construction Network. “With the Fed’s September rate cut all but finalized, the influence of selective lending standards and inflation should moderate next year, alongside a modest upgrade to consumer demand. As a result, stronger planning activity was widespread in August, with most nonresidential sectors seeing growth.”

Commercial planning saw another month of broad-based improvements. After slowing down in recent years, warehouse projects have gained momentum over the last three months. Hotels and retail planning have been steadily expanding as well. Data centers continued to dominate large project activity, but the rate at which planning projects entered the queue in August moderated after several months of very strong growth. On the institutional side, healthcare was the primary driver of this past month’s expansion, followed by recreational planning. In August, the DMI was 31% higher than in August of 2023. The commercial segment was up 42% from year-ago levels, while the institutional segment was up 8% over the same period.
...
The DMI is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 220.4 in August, up from 214.2 the previous month.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests a slowdown in 2024 and early 2025, but a pickup in mid-2025.  

Commercial construction is typically a lagging economic indicator.

by Calculated Risk on 9/10/2024 08:22:00 AM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: House Price Growth Slows, Inventory Surges in Florida and Texas

Brief excerpt:

The local data I track is indicating that Florida and Texas inventory is above normal, whereas inventory is still low in most of the country.

• Every major market has more inventory for sale that at the same time last year, with the largest improvements in the state of Florida, along with individual markets, including Denver, Seattle, and parts of Texas

• More than 1 in 5 markets are now back to, or above, 2017-2019 inventory levels, with markets like Lakeland, Austin, San Antonio, Denver, and Palm Bay all having at least 25% more homes for sale than typical for this time of year

by Calculated Risk on 9/09/2024 07:13:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Holding Near Long-Term Lows to Start New Week

The average lender's top tier 30yr fixed rate fell to the lowest level since April 2023 last week. That's down more than 1.25% over the past 5 months. ... Today brought a significantly smaller improvement, but an improvement on a long-term low technically makes another long-term low.[30 year fixed 6.55%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for August.

• At 8:00 AM, Corelogic House Price index for July

by Calculated Risk on 9/09/2024 11:30:00 AM

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

A brief excerpt:

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

This is the first look at several early reporting local markets in August. 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 August were mostly for contracts signed in June and July when 30-year mortgage rates averaged 6.92% and 6.85%, respectively (Freddie Mac PMMS).
...
In August, sales in these markets were up 6.6% YoY. Last month, in July, these same markets were up 5.8% year-over-year Not Seasonally Adjusted (NSA).

Important: There was one fewer working day in August 2024 compared to August 2023 (22 vs 23), so seasonally adjusted sales up be up more than NSA sales. Last month, in July 2024, there were two more working days compared to July 2023 (22 vs 20), so seasonally adjusted sales were 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.