by Calculated Risk on 10/28/2024 11:02:00 AM

Today, in the Calculated Risk Real Estate Newsletter: A Proposal to Address the Housing Crisis

Brief excerpt:

Economist Adam Ozimek and John Lettieri (CEO, Economic Innovation Group) have a new proposal to address the housing crisis in the United States: How the next president can solve America’s housing crisis

U.S. housing costs are out of control. The median home for sale was rarely more than four times the median household income throughout the 1980s and 1990s. But by 2022, it had risen to nearly six times. Renters have not fared better. In 1980, around one third of renters were cost burdened, meaning they spent 30 percent or more of their income on housing. Fully half of renters are cost burdened today. 

The main reason housing is too expensive is that we don’t build nearly enough of it.

There is much more in the article.

by Calculated Risk on 10/28/2024 08:11:00 AM

Altos reports that active single-family inventory was down 0.2% week-over-week. Inventory is now up 49.4% 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 31.2% compared to the same week in 2023 (last week it was up 33.4%), and down 20.2% compared to the same week in 2019 (last week it was down 21.0%). 

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 25th, inventory was at 738 thousand (7-day average), compared to 739 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 10/27/2024 06:17:00 PM

Weekend:
• Schedule for Week of October 27, 2024

Monday:
• 10:30 AM ET, Dallas Fed Survey of Manufacturing Activity for October.  This is the last regional Fed survey for October.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 24 and DOW futures are up 134 (fair value).

Oil prices were down over the last week with WTI futures at $71.78 per barrel and Brent at $76.05 per barrel. A year ago, WTI was at $86, and Brent was at $91 - so WTI oil prices are down about 16% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.08 per gallon. A year ago, prices were at $3.48 per gallon, so gasoline prices are down $0.40 year-over-year.

by Calculated Risk on 10/27/2024 10:15:00 AM

Employment in October will be negatively impacted by Hurricane Milton and the Boeing strike.

Here is the CES Strike report for October released on Friday.

This shows a total of 44,000 workers on strike in October.

The impact of Hurricane Milton is less clear.  Fed Governor Waller recently commented: 

[U]nfortunately, it won't be easy to interpret the October jobs report to be released just before the next FOMC meeting. This report will most likely show a significant but temporary loss of jobs from the two recent hurricanes and the strike at Boeing. I expect these factors may reduce employment growth by more than 100,000 this month, and there may be a small effect on the unemployment rate, but I'm not sure it will be that visible.

by Calculated Risk on 10/26/2024 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• New Home Sales Increase to 738,000 Annual Rate in September

• NAR: Existing-Home Sales Decreased to 3.84 million SAAR in September, New Cycle Low

• Lawler: Update on the “Neutral” Rate and Early Read on September Existing Home Sales

• NMHC on Apartments: "Looser market conditions for the ninth consecutive quarter"

• California Home Sales Up 5% SA YoY 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 10/26/2024 08:11:00 AM

Boo!

The key reports this week are the advance estimate of Q3 GDP and the October employment report.

Other key indicators include Personal Income and Outlays and PCE prices for September, the Case-Shiller house prices for August, October ISM manufacturing and services indexes, and October vehicle sales.

----- Monday, October 28th -----
10:30 AM: Dallas Fed Survey of Manufacturing Activity for October.  This is the last regional Fed survey for October.

----- Tuesday, October 29th -----
9:00 AM ET: S&P/Case-Shiller House Price Index for August.  The consensus is for the Composite 20 index to be up 6.0% year-over-year.

This graph shows the year-over-year change in the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

9:00 AM: FHFA House Price Index for August. This was originally a GSE only repeat sales, however there is also an expanded index.

10:00 AM: Job Openings and Labor Turnover Survey for September from the BLS.

This graph shows job openings (black line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings increased in August to 8.04 million from 7.71 million in July.

The number of job openings (black) were down 14% year-over-year. Quits were down 14% year-over-year.

10:00 AM: The Q3 Housing Vacancies and Homeownership report from the Census Bureau.

----- Wednesday, October 30th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for October. This report is for private payrolls only (no government).  The consensus is for 108,000 jobs added, down from 143,000 in September.

8:30 AM: Gross Domestic Product, 3rd quarter 2024 (advance estimate). The consensus is that real GDP increased 3.0% annualized in Q3, unchanged from 3.0% in Q2.

10:00 AM: Pending Home Sales Index for September. The consensus is 1.0% decrease in the index.

----- Thursday, October 31st -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 230 thousand initial claims, up from 227 thousand last week.

8:30 AM ET: Personal Income and Outlays for September. The consensus is for a 0.4% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.3%. PCE prices are expected to be up 2.1% YoY, and core PCE prices up 2.6% YoY.

9:45 AM: Chicago Purchasing Managers Index for October. The consensus is for a reading of 46.0, down from 46.6 in September.

----- Friday, November 1st -----
8:30 AM: Employment Report for October.   The consensus is for 120,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

There were 254,000 jobs added in September, and the unemployment rate was at 4.1%.

This graph shows the jobs added per month since January 2021.

10:00 AM: ISM Manufacturing Index for October.  The consensus is for 47.6, up from 47.2. 

10:00 AM: Construction Spending for September.  The consensus is for no change in spending.

All day: Light vehicle sales for October.

The consensus is for sales of 15.8 million SAAR, unchanged from 15.8 million SAAR in September (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the current sales rate.

by Calculated Risk on 10/25/2024 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	958	1,042	≤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 - only about 50% higher than the lows of last May - suggesting weekly deaths will continue to decline.

by Calculated Risk on 10/25/2024 01:27:00 PM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for September 2024. Over the past three months, the indexes increased in 34 states, decreased in 10 states, and remained stable in six, for a three-month diffusion index of 48. Additionally, in the past month, the indexes increased in 36 states, decreased in seven states, and remained stable in seven, for a one-month diffusion index of 58. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 0.7 percent over the past three months and 0.3 percent in September.
emphasis added

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on map for larger image.

Here is a map of the three-month change in the Philly Fed state coincident indicators. This map was all red during the worst of the Pandemic and also at the worst of the Great Recession.

The map is mostly positive or unchanged on a three-month basis.

Source: Philly Fed.

And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. 

This graph includes states with minor increases (the Philly Fed lists as unchanged).

In September, 39 states had increasing activity including minor increases.

by Calculated Risk on 10/25/2024 10:38:00 AM

The BEA will release the advance estimate of Q3 GDP next week. The consensus estimate is GDP increased at a 3.0% real annual rate in Q3, the same rate as in Q2.

From BofA:

Our 3Q GDP tracking estimate was unchanged this week. We expect the advance 3Q GDP estimate to print at 3.0% q/q saar, unchanged from 2Q. ... Underlying demand in the US economy continues to impress as we expect final sales to grow by 3.2% q/q saar, up from 2.9% in 2Q. [Oct 25th estimate]
emphasis added

From Goldman:

Today’s reading on core capital goods shipments was lower than our previous assumption; we lowered our Q3 GDP tracking estimate by 0.1pp to +3.1% (quarter-over-quarter annualized). [Oct 25th 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 3.3 percent on October 25, down from 3.4 percent on October 18. After recent releases from the US Census Bureau and the National Association of Realtors, the nowcast of third-quarter real gross private domestic investment growth decreased from 3.2 percent to 2.7 percent. [Oct 25th estimate]

by Calculated Risk on 10/25/2024 08:22:00 AM

From STR: U.S. hotel results for week ending 19 October

The U.S. hotel industry reported positive year-over-year comparisons, according to CoStar’s latest data through 19 October. ...

13-19 October 2024 (percentage change from comparable week in 2023):

• Occupancy: 70.1% (+1.6)
• Average daily rate (ADR): US$169.85 (+2.5%)
• Revenue per available room (RevPAR): US$119.01 (+4.2%)
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2024, blue is the median, and dashed light blue is for 2023.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is above both last year and the median rate for the period 2000 through 2023 (Blue).

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

The 4-week average of the occupancy rate is near the peak for the fall business travel season, and then will decline during the holidays.