by Calculated Risk on 10/10/2024 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 August and July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.4 percent before seasonal adjustment.

The index for shelter rose 0.2 percent in September, and the index for food increased 0.4 percent. Together, these two indexes contributed over 75 percent of the monthly all items increase. The food at home index increased 0.4 percent in September and the food away from home index rose 0.3 percent over the month. The energy index fell 1.9 percent over the month, after declining 0.8 percent the preceding month.

The index for all items less food and energy rose 0.3 percent in September, as it did the preceding month. Indexes which increased in September include shelter, motor vehicle insurance, medical care, apparel, and airline fares. The indexes for recreation and communication were among those that decreased over the month.

The all items index rose 2.4 percent for the 12 months ending September, the smallest 12-month increase since February 2021. The all items less food and energy index rose 3.3 percent over the last 12 months. The energy index decreased 6.8 percent for the 12 months ending September. The food index increased 2.3 percent over the last year.
emphasis added

The change in CPI was 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 10/09/2024 07:43:00 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 228 thousand initial claims, up from 225 thousand last week.

• Also at 8:30 AM, The Consumer Price Index for September from the BLS. The consensus is for a 0.1% increase in CPI, and a 0.2% increase in core CPI.  The consensus is for CPI to be up 2.3% year-over-year and core CPI to be up 3.2% YoY.

by Calculated Risk on 10/09/2024 03:35:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

Year-to-date total carloads in 2024 through September were down 3.3% (285,871 carloads) from last year and down 3.0% from the first nine months of 2022. So far in 2024, total carloads fell on a year over-year basis every month except August. ... Year-to-date U.S. intermodal in 2024 through September was 10.2 million units, up 9.5% (882,064 units) over last year and the fourth highest January-September total ever.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows the six-week average for carloads for the last 3 years.  Total carloads were down 0.5% in September YoY.

Carloads excluding coal were more promising: they were up 2.9% in Q3 2024 over Q3 2023, suggesting continued appetite for rail transportation. Excluding coal, total carloads were 1.4% (86,782 carloads) higher in the first nine months of 2024 than in the same period in 2023.

And on Intermodal:

U.S. intermodal originations in September 2024 were up 10.7% (108,257 containers and trailers) over September 2023, marking more than a year of consecutive year-over-year gains. In Q3 2024, intermodal was up 11.0% over Q3 2023, the biggest year-over-year percentage gain for a quarter since Q2 2021. Total intermodal originations averaged 274,500 in Q3 2024. Only 2018 had a better third quarter for total intermodal.

Note: rail traffic was weak even before the pandemic. As AAR noted: "Trade tensions and declining mfrg. output lead to lower rail volumes" in 2019.

by Calculated Risk on 10/09/2024 02:00:00 PM

From the Fed: Minutes of the Federal Open Market Committee. Excerpt:

With regard to the outlook for inflation, almost all participants indicated they had gained greater confidence that inflation was moving sustainably toward 2 percent. Participants cited various factors that were likely to put continuing downward pressure on inflation. These included a further modest slowing in real GDP growth, in part due to the Committee's restrictive monetary policy stance; well-anchored inflation expectations; waning pricing power; increases in productivity; and a softening in world commodity prices. Several participants noted that nominal wage growth was continuing to slow, with a few participants citing signs that it was set to decline further. These signs included lower rates of increases in cyclically sensitive wages and data indicating that job switchers were no longer receiving a wage premium over other employees. A couple of participants remarked that, with wages being a relatively large portion of business costs in the services sector, that sector's disinflation process would be particularly assisted by slower nominal wage growth. In addition, several participants observed that, with supply and demand in the labor market roughly in balance, wage increases were unlikely to be a source of general inflation pressures in the near future. With regard to housing services prices, some participants suggested that a more rapid disinflationary trend might emerge fairly soon, reflecting the slower pace of rent increases faced by new tenants. Participants emphasized that inflation remained somewhat elevated and that they were strongly committed to returning inflation to the Committee's 2 percent objective.
...
In their consideration of monetary policy at this meeting, participants noted that inflation had made further progress toward the Committee's objective but remained somewhat elevated. Almost all participants expressed greater confidence that inflation was moving sustainably toward 2 percent. Participants also observed that recent indicators suggested that economic activity had continued to expand at a solid pace, job gains had slowed, and the unemployment rate had moved up but remained low. Almost all participants judged that the risks to achieving the Committee's employment and inflation goals were roughly in balance. In light of the progress on inflation and the balance of risks, all participants agreed that it was appropriate to ease the stance of monetary policy. Given the significant progress made since the Committee first set its target range for the federal funds rate at 5-1/4 to 5-1/2 percent, a substantial majority of participants supported lowering the target range for the federal funds rate by 50 basis points to 4-3/4 to 5 percent. These participants generally observed that such a recalibration of the stance of monetary policy would begin to bring it into better alignment with recent indicators of inflation and the labor market. They also emphasized that such a move would help sustain the strength in the economy and the labor market while continuing to promote progress on inflation, and would reflect the balance of risks. Some participants noted that there had been a plausible case for a 25 basis point rate cut at the previous meeting and that data over the intermeeting period had provided further evidence that inflation was on a sustainable path toward 2 percent while the labor market continued to cool. However, noting that inflation was still somewhat elevated while economic growth remained solid and unemployment remained low, some participants observed that they would have preferred a 25 basis point reduction of the target range at this meeting, and a few others indicated that they could have supported such a decision. Several participants noted that a 25 basis point reduction would be in line with a gradual path of policy normalization that would allow policymakers time to assess the degree of policy restrictiveness as the economy evolved. A few participants also added that a 25 basis point move could signal a more predictable path of policy normalization. A few participants remarked that the overall path of policy normalization, rather than the specific amount of initial easing at this meeting, would be more important in determining the degree of policy restriction. Participants judged that it was appropriate to continue the process of reducing the Federal Reserve's securities holdings.
emphasis added

by Calculated Risk on 10/09/2024 11:23:00 AM

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

A brief excerpt:

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

This is the first look at several early reporting local markets in September. 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 September were mostly for contracts signed in July and August when 30-year mortgage rates averaged 6.85% and 6.50%, respectively (Freddie Mac PMMS).
...
In September, sales in these markets were unchanged YoY. Last month, in August, these same markets were down 2.3% year-over-year Not Seasonally Adjusted (NSA).

Important: There were the same number of working days in September 2024 (20) as in September 2023 (20). So, the year-over-year change in the headline SA data will be similar to the NSA data. Last month there was one fewer working day in August 2024 compared to August 2023 (22 vs 23), so seasonally adjusted sales were down less than NSA sales.

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

There is much more in the article.

by Calculated Risk on 10/09/2024 07:00:00 AM

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

Mortgage applications decreased 5.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 4, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 9 percent from the previous week and was 159 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 0.1 percent compared with the previous week and was 8 percent higher than the same week one year ago.

“In the wake of stronger economic data last week, including the September jobs report, mortgage rates moved higher, with the 30-year fixed rate rising to 6.36 percent – the highest since August,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Conventional loan refinances, which tend to have larger balances than government loans and hence are more responsive for a given change in mortgage rates, fell to a greater extent over the week. Purchase application volume was little changed over the week and was 8 percent above last year’s level.”

Added Fratantoni, “As we have highlighted before, the decision to buy a home is impacted by many factors, not just the level of mortgage rates. The largest constraint for many prospective homebuyers over the past year had been the lack of inventory. Now, there are more homes available in many markets across the country, and with mortgage rates still low compared to recent history, at least some potential homebuyers are moving ahead.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.36 percent from 6.14 percent, with points increasing to 0.62 from 0.61 (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 up 8% year-over-year unadjusted. 

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

Purchase application activity is up about 19% from the lows in late October 2023, but still about 1% below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index increased significantly recently as mortgage rates declined but decreased slightly over the last two weeks with as rates increased.

by Calculated Risk on 10/08/2024 08:42:00 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 2:00 PM, FOMC Minutes, Minutes Meeting of September 17-18, 2024

by Calculated Risk on 10/08/2024 08:36:00 PM

Note: the power was out in my neighborhood due to a large fallen tree.  So, this is late ...

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $70.4 billion in August, down $8.5 billion from $78.9 billion in July, revised.

August exports were $271.8 billion, $5.3 billion more than July exports. August imports were $342.2 billion, $3.2 billion less than July imports.
emphasis added

Click on graph for larger image.

Exports increased and imports decreased in August.

Exports are up 5.1% year-over-year; imports are up 7.6% year-over-year.

Both imports and exports decreased sharply due to COVID-19 and then bounced back - imports and exports have generally increased recently.

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China increased to $27.9 billion from $25.9 billion a year ago.

by Calculated Risk on 10/07/2024 07:17:00 PM

From Matthew Graham at Mortgage News Daily: Highest Mortgage Rates in 2 Months

It's been a strange and frustrating couple of weeks for anyone who mistakenly believed that mortgage rates would move lower after the Fed rate cut. ... Bottom line, markets got locked into the belief that data would slowly deteriorate (with a lot of weight being given to the last few jobs reports) only to see the most recent jobs report say "not so fast!" There's a bit of a re-set happening at the moment. We can't know exactly how big it will be until we get through more econ data. [30 year fixed 6.62%]
emphasis added

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

• At 8:30 AM, Trade Balance report for August from the Census Bureau.  The consensus is for the deficit to be $71.4 billion in August, from $78.8 billion in July.

by Calculated Risk on 10/07/2024 11:42:00 AM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: Insurance Costs "Spike", Especially in Florida

Brief excerpt:

The largest insurance increases are in Florida (for obvious reasons - stay safe this week with Hurricane Milton).

• While monthly principal, interest, and property tax obligations are up an average 15-17% since the beginning of 2020, the average monthly property insurance payment is up a whopping 52% over that same period

• In New Orleans, as well as Florida markets such as Deltona, Jacksonville and Cape Coral, monthly property insurance payments increased more than 80%

• Premiums also surged in areas with rising home values, including Utah; Boise, Idaho; and Midwest/Eastern Slope markets like Omaha, Denver and Colorado Springs, which have faced increased risks from tornados and hail damage

“Annual price growth slowed to +3.0%”

There is much more in the newsletter.