by Calculated Risk on 10/21/2024 01:59:00 PM

After the election in November 2016, I wrote The Future is still Bright! and The Cupboard is Full. I pointed out that there were many tailwinds for the economy (heading into 2017) and that most of Mr. Trump's proposals probably wouldn't happen like repealing the ACA or deporting 10+ million people. However, as expected, Trump did cut taxes on high income earners.

I also noted in 2016: "The general rule is don't invest based on your political views, however it is also important to look at the impact of specific policies."

For the upcoming election, most key economists and analysts (Goldman Sachs, Moody's and more) believe the economy will perform better under Harris than Trump.  I agree.  If Harris is elected, the economy will mostly continue on the current path and the US economy is the envy of the world (a better recovery from the pandemic than most other countries).  There is always more to do, but the US has done better than most.

However, I doubt I will be as sanguine as I was in 2016 if Mr. Trump is elected again.  

Although Trump is lazy and incoherent regarding policy (everything is always 2 weeks away - aka "Free beer tomorrow"), he is making many of the same promises again (repeal ACA, deport 20+ million people, cut taxes on the wealthy, raise taxes on lower- and middle-income earners via tariffs).  Some of those promises might happen and have a negative impact on the economy.

I'll write more on the economic outlook after the election.

by Calculated Risk on 10/21/2024 11:00:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: NMHC on Apartments: "Looser market conditions for the ninth consecutive quarter"

Excerpt:

From the NMHC: Though the Apartment Market Continues to Loosen, Deal Flow Increases for Third Consecutive Quarter as Debt and Equity Conditions Improve

Apartment market conditions showed signs of improvement in the National Multifamily Housing Council’s (NMHC’s) October 2024 Quarterly Survey of Apartment Market Conditions. All but the Market Tightness (37) index indicated more favorable conditions this quarter, with Sales Volume (67), Equity Financing (63) and Debt Financing (77) all coming in above the breakeven level (50)
...
• The Market Tightness Index came in at 37 this quarter – below the breakeven level of 50 – indicating looser market conditions for the ninth consecutive quarter. While close to half of respondents (46%) thought market conditions were unchanged relative to three months ago, 40% of respondents thought markets have become looser, up from 27% in July. Fifteen percent of respondents reported tighter markets than three months ago.

This index has been an excellent leading indicator for rents and vacancy rates, and this suggests higher vacancy rates and a further weakness in asking rents. This is the ninth consecutive quarter with looser conditions than the previous quarter.

There is much more in the article.

by Calculated Risk on 10/21/2024 08:11:00 AM

Altos reports that active single-family inventory was up 1.0% week-over-week. Inventory is now up 49.7% from the February seasonal bottom.  

The first graph shows the seasonal pattern for active single-family inventory since 2015.

Click on graph for larger image.

The red line is for 2024.  The black line is for 2019.  

Inventory was up 33.4% compared to the same week in 2023 (last week it was up 34.0%), and down 21.0% compared to the same week in 2019 (last week it was down 22.6%). 

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels is closing.

This second inventory graph is courtesy of Altos Research.

As of October 18th, inventory was at 739 thousand (7-day average), compared to 732 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 10/20/2024 06:20:00 PM

Weekend:
• Schedule for Week of October 20, 2024

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 4 and DOW futures are up 12 (fair value).

Oil prices were down over the last week with WTI futures at $69.22 per barrel and Brent at $73.06 per barrel. A year ago, WTI was at $89, and Brent was at $96 - so WTI oil prices are down about 22% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.13 per gallon. A year ago, prices were at $3.52 per gallon, so gasoline prices are down $0.39 year-over-year.

by Calculated Risk on 10/20/2024 09:50:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Update on the “Neutral” Rate and Early Read on September Existing Home Sales

A brief excerpt:

From housing economist Tom Lawler:

Early Read on Existing Home Sales in September

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 3.83 million in September, down 0.8% from August’s preliminary pace and down 3.8% from last September’s seasonally adjusted pace.

Local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by about 3.9% from a year earlier.

CR Note on September sales: The National Association of Realtors (NAR) is scheduled to release September Existing Home Sales on Wednesday, October 23rd at 10 AM ET. The consensus is for 3.89 million SAAR, up from 3.86 million in August. The cycle low was 3.85 million SAAR in October 2023.

Update on the “Neutral” Rate

Executive Summary: Estimates of the “neutral” real interest rate are all over the map.  Based on an assessment of various measures, my best is that the neutral real interest rate in the US is between 1 ¾% to 2%.  One of course needs to add inflation/inflation expectations to that range.  If/when the Fed were to achieve its 2% inflation target, then the neutral nominal interest rate would be 3 ¾% to 4%.

There is much more in the article.

by Calculated Risk on 10/19/2024 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Housing Starts Decreased to 1.354 million Annual Rate in September

• Part 2: Current State of the Housing Market; Overview for mid-October 2024

• 3rd Look at Local Housing Markets in September

• Lawler: Changes in Various Interest Rates Since the FOMC Cut Its Target Fed Funds Rate by 50 Basis Points

• 2nd Look at Local Housing Markets in September

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

by Calculated Risk on 10/19/2024 08:11:00 AM

The key economic reports this week are September New and Existing Home sales.

For manufacturing, the Richmond and Kansas City Fed manufacturing surveys will be released this week.

----- Monday, October 21st -----
No major economic releases scheduled.

----- Tuesday, October 22nd -----
10:00 AM: Richmond Fed Survey of Manufacturing Activity for October.

10:00 AM: State Employment and Unemployment (Monthly) for September 2024

----- Wednesday, October 23rd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM: Existing Home Sales for September from the National Association of Realtors (NAR). The consensus is for 3.89 million SAAR, up from 3.86 million in August.

The graph shows existing home sales from 1994 through the report last month.

During the day: The AIA/Deltek's Architecture Billings Index for September (a leading indicator for commercial real estate).

2:00 PM: the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, October 24th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 247 thousand initial claims, up from 241 thousand last week.

8:30 AM ET: Chicago Fed National Activity Index for September. This is a composite index of other data.

10:00 AM: New Home Sales for September from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the sales rate for last month.

The consensus is for 710 thousand SAAR, down from 716 thousand in August.

11:00 AM: Kansas City Fed Survey of Manufacturing Activity for October.

----- Friday, October 25th -----
10:00 AM: University of Michigan's Consumer sentiment index (Final for October). The consensus is for a reading of 69.0.

by Calculated Risk on 10/18/2024 07:11:00 PM

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

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So I'm no longer tracking hospitalizations.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week	997	1,186	≤3501
1my goals to stop weekly posts, 🚩 Increasing number weekly for Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported.

Although weekly deaths met the original goal to stop posting, I'm continuing to post now that deaths are above the goal again.  

Weekly deaths are triple the low of 302 in early June but are now declining and will likely continue to decline based on wastewater sampling.

And here is a graph I'm following concerning COVID in wastewater as of October 10th:

This appears to be a leading indicator for COVID hospitalizations and deaths.

COVID in wastewater is declining - less than double the lows of last May - suggesting weekly deaths will continue to decline.

by Calculated Risk on 10/18/2024 03:49:00 PM

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12-month average.

Click on graph for larger image.

On a rolling 12-month basis, inbound traffic increased 1.2% in September compared to the rolling 12 months ending in August.   Outbound traffic decreased 0.7% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in the Winter depending on the timing of the Chinese New Year.  

Imports were up 14% YoY in September, and exports were down 9% YoY.    

This was a very strong August and September for imports as retailers prepare for holiday shopping - and possibly to beat any increase in tariffs. 

It is also possible some importers shifted traffic to the West Coast ports to avoid the possible strike (now settled).

by Calculated Risk on 10/18/2024 12:54:00 PM

From BofA:

Since our last weekly publication, our 3Q GDP tracking estimate increased by four-tenths to 3.0% q/q saar. [Oct 18th estimate]
emphasis added

From Goldman:

On net, we lowered our Q3 GDP tracking estimate by 0.1pp to +3.1% (quarter-over-quarter annualized). [Oct 17th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2024 is 3.4 percent on October 18, unchanged from October 17 after rounding. After this morning's housing starts report from the US Census Bureau, the nowcast of third-quarter real residential investment growth increased from -10.1 percent to -9.8 percent. [Oct 18th estimate]