by Calculated Risk on 10/24/2024 07:50:00 PM

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

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

by Calculated Risk on 10/24/2024 05:23:00 PM

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For September, Realtor.com reported inventory was up 34.0% YoY, but still down 23.2% compared to the 2017 to 2019 same month levels. 

 Now - on a weekly basis - inventory is up 28.7% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending Oct. 19, 2024

• Active inventory increased, with for-sale homes 28.7% above year-ago levels.

For the 50th consecutive week dating back to November 2023, the number of listings for sale has grown year-over-year. This week’s growth was lower than last week’s, the fifth week of slowing growth, and the lowest annual change since April. Much of the inventory build up is due to more seller activity than buyer activity, but the number of active listings has stabilized over the last few weeks, suggesting buyer activity could be starting to keep up.

• New listings–a measure of sellers putting homes up for sale-increased 4.7% this week compared to one year ago.

The number of new listings has bounced back from last week’s dip, which is partly influenced by Hurricane Milton, and has returned to its upward trend. However, recent fluctuations in mortgage rates may discourage sellers from listing their homes.

Here is a graph of the year-over-year change in inventory according to realtor.com. 

Inventory was up year-over-year for the 50th consecutive week.  

However, inventory is still historically low.

New listings remain below typical pre-pandemic levels.

by Calculated Risk on 10/24/2024 02:33:00 PM

From ICE: ICE First Look at Mortgage Performance: September Sees Prepayments at Two-Year High, Slowly Rising Mortgage Delinquencies

• The national delinquency rate rose 14 basis points to 3.48% in September, up 4.3% from August and 5.7% year over year

• September marked the fourth consecutive year-over-year rise in mortgage delinquencies, the longest such stretch since early 2018 outside of the initial impact of the COVID pandemic

• A 5.9% bump brought serious delinquencies (90+ days past due but not yet in active foreclosure) to a 16-month high and delivered a second consecutive month of year-over-year increases

• 30-day delinquencies hit a three-month high and 60-days were at the highest since January 2021; foreclosure activity remained muted, with both starts and sales/completions down in September

• The number of loans in active foreclosure was up marginally (+0.4%) month over month but down 12.5% from this time last year and still 34% below pre-pandemic levels

• Prepayment activity rose to a level not seen since August 2022; a +2.5% increase from the month prior and up +43.2% from last September
emphasis added

Click on graph for larger image.

Here is a table from ICE.

by Calculated Risk on 10/24/2024 10:54:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Increase to 738,000 Annual Rate in September

Brief excerpt:

The Census Bureau reported New Home Sales in September were at a seasonally adjusted annual rate (SAAR) of 738 thousand. The previous three months were revised down.
...
The next graph shows new home sales for 2023 and 2024 by month (Seasonally Adjusted Annual Rate). Sales in September 2024 were up 6.3% from September 2023.

New home sales, seasonally adjusted, have increased year-over-year in 17 of the last 18 months.

Note that this is the opposite of Existing Home sales that have been down year-over-year for thirty-seven consecutive months!

There is much more in the article.

by Calculated Risk on 10/24/2024 10:00:00 AM

The Census Bureau reports New Home Sales in September were at a seasonally adjusted annual rate (SAAR) of 738 thousand.

The previous three months were revised down.

Sales of new single-family houses in September 2024 were at a seasonally adjusted annual rate of 738,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.1 percent above the revised August rate of 709,000 and is 6.3 percent above the September 2023 estimate of 694,000.
emphasis added

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

New home sales were close to pre-pandemic levels.

The second graph shows New Home Months of Supply.

The months of supply decreased in September to 7.6 months from 7.9 months in August.

The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 2020.

This is well above the top of the normal range (about 4 to 6 months of supply is normal).

"The seasonally-adjusted estimate of new houses for sale at the end of September was 470,000. This represents a supply of 7.6 months at the current sales rate. "

Sales were above expectations of 710 thousand SAAR, however, sales for the three previous months were revised down. I'll have more later today.

by Calculated Risk on 10/24/2024 08:30:00 AM

The DOL reported:

In the week ending October 19, the advance figure for seasonally adjusted initial claims was 227,000, a decrease of 15,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 241,000 to 242,000. The 4-week moving average was 238,500, an increase of 2,000 from the previous week's revised average. The previous week's average was revised up by 250 from 236,250 to 236,500.
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 238,500.

The previous week was revised up.

Weekly claims were below the consensus forecast. 

The recent increase was partially hurricane related.

by Calculated Risk on 10/23/2024 07:29:00 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 247 thousand initial claims, up from 241 thousand last week.

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

• At 10:00 AM, New Home Sales for September from the Census Bureau. The consensus is for 710 thousand SAAR, down from 716 thousand in August.

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

by Calculated Risk on 10/23/2024 05:44:00 PM

From WardsAuto: October U.S. Light-Vehicle Sales Forecast to Start Q4 with Small Gain (pay content).  Brief excerpt:

The fourth quarter is forecast to total 4.13 million units, 6.0% above year-ago’s 3.89 million, which was tamped down because of labor-related strikes at three automakers that pared inventory
emphasis added

Click on graph for larger image.

This graph shows actual sales from the BEA (Blue), and Wards forecast for October (Red).

On a seasonally adjusted annual rate basis, the Wards forecast of 15.9 million SAAR, would be up 0.8% from last month, and up 3.6% from a year ago.

by Calculated Risk on 10/23/2024 02:48:00 PM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Architecture firm billings worsened in September

The AIA/Deltek Architecture Billings Index (ABI) score was 45.7 for the month, as the majority of firms continued to report declining billings.

Despite recently announced rate cuts by the Federal Reserve, clients are still cautious about future projects. Inquiries into potential new projects continued to increase, but the pace has slowed since the beginning of the year. And the value of newly signed design contracts at firms decreased for the sixth consecutive month in September, although the pace of that decline has moderated somewhat over the last few months. However, firms continue to report average backlogs of 6.4 months, which remains above pre-pandemic historical averages and is a good indicator of existing work in the pipeline, even if new work coming in has slowed.

Conditions remained soft across the country as well in September. Billings were softest at firms located in the West for the third consecutive month, followed by firms located in the Midwest. Business conditions may be close to turning positive at firms located in the South, though, where they only declined slightly this month. By firm specialization, firms with a multifamily residential specialization saw billings soften further in September, while billings also remained fairly weak at firms with a commercial/industrial specialization. Although billings continued to decline at firms with an institutional specialization as well, the pace of that decline remained more modest than at firms of other specializations, which has been the case since the beginning of the summer.
...
The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients.
emphasis added

• Northeast (46.4); Midwest (45.0); South (49.5); West (42.6)

• Sector index breakdown: commercial/industrial (44.2); institutional (48.5); multifamily residential (41.7)

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 45.7 in September, unchanged from 45.7 in August.  Anything below 50 indicates a decrease in demand for architects' services.

This index has indicated contraction for 23 of the last 24 months.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment into 2025.

Note that multi-family billing turned down in August 2022 and has been negative for twenty-six consecutive months (with revisions).   This suggests we will see a further weakness in multi-family starts.

by Calculated Risk on 10/23/2024 02:00:00 PM

Fed's Beige Book

On balance, economic activity was little changed in nearly all Districts since early September, though two Districts reported modest growth. Most Districts reported declining manufacturing activity. Activity in the banking sector was generally steady to up slightly, and loan demand was mixed, with some Districts noting an improvement in the outlook due to the decline in interest rates. Reports on consumer spending were mixed, with some Districts noting shifts in the composition of purchases, mostly toward less expensive alternatives. Housing market activity has generally held up: inventory continued to expand in much of the nation, and home values largely held steady or rose slightly. Still, uncertainty about the path of mortgage rates kept some buyers on the sidelines, and the lack of affordable housing remained a persistent problem in many communities. Commercial real estate markets were generally flat, although data center and infrastructure projects boosted activity in a few Districts. The short-lived dockworkers strike caused only minor temporary disruptions. Hurricane damage impacted crops and prompted pauses in business activity and tourism in the Southeast. Agricultural activity was flat to down modestly, with some crop prices remaining unprofitably low. Energy activity was also unchanged or down modestly, and lower energy prices reportedly compressed producers’ margins. Despite elevated uncertainty, contacts were somewhat more optimistic about the longer-term outlook.

Labor Markets

On balance, employment increased slightly during this reporting period, with more than half of the Districts reporting slight or modest growth and the remaining Districts reporting little or no change. Many Districts reported low worker turnover, and layoffs reportedly remained limited. Demand for workers eased somewhat, with hiring focused primarily on replacement rather than growth. Worker availability improved, as many contacts reported it had become easier to find the workers they need.

Prices

Inflation continued to moderate with selling prices reportedly increasing at a slight or modest pace in most Districts.
emphasis added