by Calculated Risk on 10/18/2024 09:10:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Housing Starts Decreased to 1.354 million Annual Rate in September

A brief excerpt:

Total housing starts in September were slightly above expectations and starts in July and August were revised up. A solid report.

The third graph shows the month-to-month comparison for total starts between 2023 (blue) and 2024 (red).

Total starts were down 0.7% in September compared to September 2023.  The YoY decrease in September total starts was due weakness in multi-family starts.

Single family starts have been up year-over-year in 13 of the last 15 months, whereas multi-family has been up year-over-year in only 1 of last 15 months. Year-to-date (YTD), total starts are down 3.4% compared to the same period in 2023. Single family starts are up 10.1% YTD, and multi-family down 30.6% YTD.

There is much more in the article.

by Calculated Risk on 10/18/2024 08:30:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,354,000. This is 0.5 percent below the revised August estimate of 1,361,000 and is 0.7 percent below the September 2023 rate of 1,363,000. Single-family housing starts in September were at a rate of 1,027,000; this is 2.7 percent above the revised August figure of 1,000,000. The September rate for units in buildings with five units or more was 317,000.

Building Permits:
Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,428,000. This is 2.9 percent below the revised August rate of 1,470,000 and is 5.7 percent below the September 2023 rate of 1,515,000. Single-family authorizations in September were at a rate of 970,000; this is 0.3 percent above the revised August figure of 967,000. Authorizations of units in buildings with five units or more were at a rate of 398,000 in September.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts since 2000.

Multi-family starts (blue, 2+ units) decreased in September compared to August.   Multi-family starts were down 16.2% year-over-year.

Single-family starts (red) increased in September and were up 5.5% year-over-year.

The second graph shows single and multi-family housing starts since 1968.

This shows the huge collapse following the housing bubble, and then the eventual recovery - and the recent collapse and recovery in single-family starts.

Total housing starts in September were slightly above expectations and starts in July and August were revised up.  

I'll have more later …

by Calculated Risk on 10/17/2024 07:51:00 PM

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

Thursday:
• At 8:30 AM ET, Housing Starts for September. The consensus is for 1.350 million SAAR, down from 1.356 million SAAR.

by Calculated Risk on 10/17/2024 04:01:00 PM

Earlier from the Fed: Industrial Production and Capacity Utilization

Industrial production (IP) decreased 0.3 percent in September after advancing 0.3 percent in August. A strike at a major producer of civilian aircraft held down total IP growth by an estimated 0.3 percent in September, and the effects of two hurricanes subtracted an estimated 0.3 percent. For the third quarter as a whole, industrial production declined at an annual rate of 0.6 percent. Manufacturing output moved down 0.4 percent in September, and the index for mining fell 0.6 percent. The index for utilities gained 0.7 percent. At 102.6 percent of its 2017 average, total industrial production in September was 0.6 percent below its year-earlier level. Capacity utilization edged down to 77.5 percent in September, a rate that is 2.2 percentage points below its long-run (1972–2023) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and above the level in February 2020 (pre-pandemic).

Capacity utilization at 77.5% is 2.2% below the average from 1972 to 2022.  This was below consensus expectations.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production decreased to 102.6. This is above the pre-pandemic level.

Industrial production was below consensus expectations.

by Calculated Risk on 10/17/2024 12:57:00 PM

Today, in the Calculated Risk Real Estate Newsletter: 3rd 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 third 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 down 6.0% YoY. Last month, in August, these same markets were down 5.2% 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.
...
Last year, the NAR reported sales in September 2023 at 3.98 million SAAR.  This data suggests that the September existing home sales report will show a year-over-year decline.  The cycle low was 3.85 million SAAR in October 2023.  A new cycle low is possible.
...
More local markets to come!

There is much more in the article.

by Calculated Risk on 10/17/2024 10:00:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 43, up from 41 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Edges Higher Despite Affordability Headwinds

With inflation gradually easing and builders anticipating mortgage rates will moderate in coming months, builder sentiment moved higher for a second consecutive month despite challenging affordability conditions.

Builder confidence in the market for newly built single-family homes was 43 in October, up two points from a reading of 41 in September, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.

“While housing affordability remains low, builders are feeling more optimistic about 2025 market conditions,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “The wild card for the outlook remains the election, and with housing policy a top tier issue for candidates, policymakers should be focused on supply-side solutions to the housing crisis.”

“Despite the beginning of the Fed’s easing cycle, many prospective home buyers remain on the sideline waiting for lower interest rates,” said NAHB Chief Economist Robert Dietz. “We are forecasting uneven declines for mortgage interest rates in the coming quarters, which will improve housing demand but place stress on building lot supplies due to tight lending conditions for development and construction loans.”

The latest HMI survey also revealed that the share of builders cutting prices held steady at 32% in October, the same rate as last month. Meanwhile, the average price reduction returned to the long-term trend of 6% after dropping to 5% in September. The use of sales incentives was 62% in October, slightly up from 61% in September.
...
All three HMI indices were up in October. The index charting current sales conditions rose two points to 47, the component measuring sales expectations in the next six months increased four points to 57 and the gauge charting traffic of prospective buyers posted a two-point gain to 29.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased two points to 51, the Midwest moved two points higher to 41, the South held steady at 41 and the West increased three points to 41.
emphasis added

Click on graph for larger image.

This graph shows the NAHB index since Jan 1985.

This was slightly above the consensus forecast.

by Calculated Risk on 10/17/2024 08:45:00 AM

The DOL reported:

In the week ending October 12, the advance figure for seasonally adjusted initial claims was 241,000, a decrease of 19,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 258,000 to 260,000. The 4-week moving average was 236,250, an increase of 4,750 from the previous week's revised average. The previous week's average was revised up by 500 from 231,000 to 231,500.
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 236,250.

The previous week was revised up.

Weekly claims were below the consensus forecast. 

The increase over the last two weeks is partially hurricane related.

by Calculated Risk on 10/17/2024 08:38:00 AM

On a monthly basis, retail sales increased 0.4% from August to September (seasonally adjusted), and sales were up 1.7 percent from September 2023.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for September 2024, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $714.4 billion, an increase of 0.4 percent from the previous month, and up 1.7 percent from September 2023. ... The July 2024 to August 2024 percent change was unrevised from up 0.1 percent.
emphasis added

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline was up 0.6% in August.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by 2.9% on a YoY basis.

The change in sales in September was above expectations, and sales in July and August were revised up, combined.

by Calculated Risk on 10/16/2024 07:37:00 PM

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

Thursday:
• At 8:30 AM ET, Retail sales for September will be released.  The consensus is for a 0.2% increase in retail sales.

• Also at 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for 265 thousand initial claims, up from 258 thousand last week.

• Also at 8:30 AM, the Philly Fed manufacturing survey for October. The consensus is for a reading of 3.0, up from 1.7.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for September. The consensus is for a 0.1% decrease in Industrial Production, and for Capacity Utilization to decrease to 77.9%.

• At 10:00 AM, The October NAHB homebuilder survey. The consensus is for a reading of 42, up from 41 in September. Any number below 50 indicates that more builders view sales conditions as poor than good.

by Calculated Risk on 10/16/2024 02:49:00 PM

The following graph shows real GDP quarterly (blue, annualized), and the year-over-year change in GDP (red).

Click on graph for larger image.

The pandemic slump and subsequent economic recovery are cutoff and marked.  

In general, this is the rate of growth that we should expect, see: Demographics and GDP: 2% is the new 4%