by Calculated Risk on 11/05/2024 07:23:00 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.

by Calculated Risk on 11/05/2024 02:19:00 PM

Notes: This CoreLogic House Price Index report is for September. The recent Case-Shiller index release was for August. The CoreLogic HPI is a three-month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic: Annual Home Price Slowdown Continues in September

• On an annual basis, home prices rose by 3.4% in September, the slowest growth rate in over a year, and are projected to slow to 2.3% by the same time next year.

• Miami continued to post the highest gain of tracked U.S. metro areas, at 6.8%, followed closely by Chicago at 6.7%.

• Rhode Island reported the highest annual growth rate of all states at 9%.

• Twenty-seven states reached new home price highs in September.
...
U.S. home price growth continued to cool, slowing to a 3.4% year-over-year in September. Compared to with the month prior, home prices rebounded to post a very slight uptick (0.02%) following months of modest monthly declines. Taken together, home price levels have been relatively flat since late summer. Besides the uncertainty regarding the U.S. election and mortgage rate volatility, the mixed signals around the current state of the U.S. economy may be dampening demand and price appreciation. According to the latest numbers from the U.S. Bureau of Labor Statistics, the economy added just 12,000 jobs in October 2024, the fewest in almost four years. On the other hand, the most recent consumer spending data showed solid continued spending and an upbeat consumer outlook.

“Like much of the housing market at the moment, home prices remained relatively flat coming into the fall,” said CoreLogic Chief Economist Selma Hepp. “Despite some improved affordability from lower mortgage rates during August, homebuyers mostly kept on the sidelines and decided to wait out the mortgage rate drop for a potentially better opportunity next year, when the current volatility, uncertainty surrounding the election’s outcome, and the impact on longer-term rates may be slightly clearer. And while the mortgage rate and economic outlook is full of questions, home prices are likely to maintain their leveled path until early next year when buyers return to the housing market.”
emphasis added

This was a smaller YoY increase than reported for August, and down from the 5.8% YoY increase reported at the beginning of 2024.

This map is from the report.

Nationally, home prices increased by 3.4% year over year in September. One state posted an annual home price decline. The states with the highest increases year over year were Rhode Island (9%) and New Jersey (up by 8.6%).

Hawaii was the only state to record a year-over-year home price loss (-0.4%).

by Calculated Risk on 11/05/2024 12:20:00 PM

Today, in the Real Estate Newsletter: In Q2, almost 20% of Units Started Built-for-Rent were Single Family

Brief excerpt:

Along with the monthly housing starts report for September released last month, the Census Bureau also released Housing Units Started by Purpose and Design through Q2 2024.

The first graph shows the number of single family and multi-family units started with the intent to rent. This data is quarterly and Not Seasonally Adjusted (NSA). Although the majority of units built-for-rent’ are still multi-family (blue), there has been a significant pickup in single family units started built-for-rent (red).

In 2020, there were 44,000 single family units started with the intent to rent. In 2023, that number almost doubled to 77,000 units. There were 23,000 single family units started in Q2 2024 built-for-rent, up from 21,000 in Q2 2023.

For multi-family, there were 83,000 units started to rent in Q2 2024, down almost 40% from 136,000 in Q2 2023.

A total of 106,000 units were started built-for-rent in Q2, with 19% single family units.

There is much more in the newsletter.

by Calculated Risk on 11/05/2024 10:00:00 AM

(Posted with permission). The ISM® Services index was at 56.0%, up from 54.9% last month. The employment index increased to 53.0%, from 48.1%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 56% October 2024 Services ISM® Report On Business®

Economic activity in the services sector expanded for the fourth consecutive month in October, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 56 percent, which is the highest reading since July 2022 and indicates sector expansion for the 50th time in 53 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In October, the Services PMI® registered 56 percent, 1.1 percentage points higher than September’s figure of 54.9 percent. The reading in October marked the eighth time the composite index has been in expansion territory this year. The Business Activity Index registered 57.2 percent in October, 2.7 percentage points lower than the 59.9 percent recorded in September, indicating a fourth month of expansion after a contraction in June. The New Orders Index decreased to 57.4 percent in October, 2 percentage points lower than September’s figure of 59.4 percent. The Employment Index landed in expansion territory for its third time in four months; the reading of 53 percent is a 4.9-percentage point increase compared to the 48.1 percent recorded in September.
emphasis added

The PMI was well above expectations.

by Calculated Risk on 11/05/2024 08:30:00 AM

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 $84.4 billion in September, up $13.6 billion from $70.8 billion in August, revised.

September exports were $267.9 billion, $3.2 billion less than August exports. September imports were $352.3 billion, $10.3 billion more than August imports
emphasis added

Click on graph for larger image.

Exports decreased and imports increased in September.

Exports are up 2.4% year-over-year; imports are up 8.8% 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 $31.8 billion from $28.4 billion a year ago.

It is possible some importers are trying to beat potential tariffs.

by Calculated Risk on 11/04/2024 06:38:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Week Slightly Lower as Election Volatility Works Both Ways

Love it or hate it, election-related volatility has been having a big impact on the bond market and, thus, mortgage rates.
...
Mortgage rates didn't react in an extreme fashion, but the average lender moved back down toward 7% for a top tier conventional 30yr fixed scenario. The same scenario was closer to 7.125% late last week. [30 year fixed 7.05%]
emphasis added

Tuesday:
• U.S. Election

• At 8:30 AM ET, Trade Balance report for September from the Census Bureau.  The consensus is for the deficit to be $73.5 billion in September, from $70.4 billion in August.

• At 10:00 AM, the ISM Services Index for October.  The consensus is for a decrease to 53.3 from 54.9.

by Calculated Risk on 11/04/2024 02:06:00 PM

This was released on Friday. From the Census Bureau reported that overall construction spending decreased:

Construction spending during September 2024 was estimated at a seasonally adjusted annual rate of $2,148.8 billion, 0.1 percent above the revised August estimate of $2,146.0 billion. The September figure is 4.6 percent above the September 2023 estimate of $2,055.2 billion.
emphasis added

Private spending was unchanged and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,653.6 billion, virtually unchanged from the revised August estimate of $1,653.2 billion. ...

In September, the estimated seasonally adjusted annual rate of public construction spending was $495.2 billion, 0.5 percent above the revised August estimate of $492.9 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential (red) spending is 6.8% below the peak in 2022.

Non-residential (blue) spending is 0.8% below the peak in June 2024.

Public construction spending is at the peak.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 4.1%. Non-residential spending is up 3.5% year-over-year. Public spending is up 7.0% year-over-year.

This was close to consensus expectations of no change in spending. 

by Calculated Risk on 11/04/2024 10:51:00 AM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: "Annual home price growth cooled for the seventh consecutive month"

Brief excerpt:

One of the key metrics to watch for mortgage stress is early-stage delinquencies. These are borrowers that are delinquent within 6 months of origination. This was one of the obvious warning signs during the housing bubble.

There has been a steady increase in early-stage delinquencies for VA loans.

• Early-stage delinquencies – borrowers already past due six months after origination – have been gradually rising as well, most notably among VA originations

• Overall, 1.7% of 2024 vintage originations have been delinquent six months after origination, the highest share for any vintage since 2008 – outside of pandemic-era payment shocks

Note that national mortgage performance is being impacted by the hurricanes.

There is much more in the newsletter.

by Calculated Risk on 11/04/2024 08:11:00 AM

Altos reports that active single-family inventory was unchanged week-over-week.

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 29.8% compared to the same week in 2023 (last week it was up 30.8%), and down 19.4% compared to the same week in 2019 (last week it was down 20.7%). 

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

This second inventory graph is courtesy of Altos Research.

As of Nov 1st, inventory was at 736 thousand (7-day average), compared to 736 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 11/03/2024 08:19:00 PM

Weekend:
• Schedule for Week of November 3, 2024

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 8 and DOW futures are down 168 (fair value).

Oil prices were down over the last week with WTI futures at $69.49 per barrel and Brent at $71.10 per barrel. A year ago, WTI was at $81, and Brent was at $88 - so WTI oil prices are down about 14% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.06 per gallon. A year ago, prices were at $3.40 per gallon, so gasoline prices are down $0.34 year-over-year.