by Calculated Risk on 11/07/2024 08:12:00 PM

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

Friday:
• At 10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for November).

by Calculated Risk on 11/07/2024 04:01:00 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 26.6% 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 Nov. 2, 2024

• Active inventory increased, with for-sale homes 26.6% above year-ago levels.

For the 52nd consecutive week, the number of listings for sale has grown year-over-year. Inventory has climbed annually for a full calendar year, due in part to slowing buyer activity. This week’s growth was lower than last week’s, the sixth week of slowing growth, and the lowest annual change since late March.

• New listings–a measure of sellers putting homes up for sale–climbed 4.6% this week compared to one year ago.

The number of new listings on the market picked up compared to the same week last year. The recent upward trajectory of mortgage rates could largely discourage sellers from listing their homes as roughly 84% of outstanding mortgages have a rate of 6% or lower. However, mortgage rates are expected to ease in the coming months, which could ‘unlock’ some eager buyers.

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

Inventory was up year-over-year for the 52nd consecutive week.  

However, inventory is still historically low.

New listings remain below typical pre-pandemic levels.

by Calculated Risk on 11/07/2024 02:00:00 PM

Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET.

FOMC Statement:

Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Beth M. Hammack; Philip N. Jefferson; Adriana D. Kugler; and Christopher J. Waller.
emphasis added

by Calculated Risk on 11/07/2024 10:45:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in October

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to October 2019 for each local market (some 2019 data is not available).

This is the first look at several early reporting local markets in October. 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 October were mostly for contracts signed in August and September when 30-year mortgage rates averaged 6.50% and 6.18%, respectively (Freddie Mac PMMS). These were the lowest mortgage rate in 2 years!
...
In October, sales in these markets were up 17.3% YoY. Last month, in September, these same markets were down 0.3% year-over-year Not Seasonally Adjusted (NSA).

Important: There was one more working day in October 2024 (22) as in October 2023 (21). So, the year-over-year increase in the headline SA data will be less than the NSA data indicates. Last month there were the same number of working days in September 2024 compared to September 2023 (22 vs 23), so seasonally adjusted sales were down about the same as NSA sales.

Sales in all of these markets are down significantly compared to October 2019.
...
This was just several early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 11/07/2024 09:50:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Declined in October

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were lower in October compared to September. The Manheim Used Vehicle Value Index (MUVVI) fell to 202.8, a decline of 3.2% from a year ago. The seasonal adjustment to the index reduced the change for the month, as non-seasonally adjusted values declined at a higher rate. The non-adjusted price in October decreased by 1.9% compared to September, moving the unadjusted average price down 3.7% year over year.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices decreased in October (seasonally adjusted) and were down 3.2% year-over-year (YoY).

by Calculated Risk on 11/07/2024 08:30:00 AM

The DOL reported:

In the week ending November 2, the advance figure for seasonally adjusted initial claims was 221,000, an increase of 3,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 216,000 to 218,000. The 4-week moving average was 227,250, a decrease of 9,750 from the previous week's revised average. The previous week's average was revised up by 500 from 236,500 to 237,000.
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 decreased to 227,250.

The previous week was revised up.

Weekly claims were close to the consensus forecast.

by Calculated Risk on 11/06/2024 07:36:00 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 230 thousand initial claims, up from 227 thousand last week.

• At 2:00 PM, FOMC Meeting Announcement. The Fed is expected to cut rates 25bp at this meeting.

• At 2:30 PM, Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

by Calculated Risk on 11/06/2024 02:51:00 PM

CR Note: I'll be assessing the impact of Trump's election on the economy, but we have to remember he doesn't do most of what he says. For example, in 2016 he promised to deport 10 million residents, but that never happened. He said he'd repeal and replace the Affordable Care Act; didn't happen. He promised an infrastructure bill. Nope.

But we do know he will increase tariffs and cut taxes on the wealthy.

A few excerpts from a BofA research note:

Tariffs:

We think tariffs on China are likely to increase significantly and in short order after Trump assumes office. The outlook for tariffs against other countries is less clear. In our view, Europe could also see higher tariffs, but Mexico and Canada should continue to enjoy free trade relations with the US.

Immigration and deregulation:

We do not have a strong view on the timing and extent of changes to immigration policy. Roughly speaking, we would expect weaker immigration flows to be a mild, persistent headwind to labor supply and GDP growth. On the flip side, we think broad deregulation, including in energy and financial services, will likely be a tailwind to growth. Increased energy production could marginally offset the increase in headline inflation from tariffs and fiscal easing.

Tariffs could derail the Fed cutting cycle:

We don’t expect the Fed to pre-judge the Trump policy agenda. But we think it will pause the cutting cycle if large tariff increases are announced, assuming the economy is still on solid footing.

by Calculated Risk on 11/06/2024 12:13:00 PM

Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year

Brief excerpt:

Another monthly update on rents.

Tracking rents is important for understanding the dynamics of the housing market. Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure. ...

Welcome to the November 2024 Apartment List National Rent Report. National Rent Report. The national median rent dipped by 0.7% in October, as we get further into the slow season for the rental market. The median monthly rent nationally fell by $10, putting it at $1,394, and we’re likely to see that number continue to dip modestly through the remainder of the year. ...

Realtor.com: 14th Consecutive Month with Year-over-year Decline in Rents

In September 2024, the U.S. median rent continued to decline year-over-year for the fourteenth month in a row, down $8 or -0.5% year-over-year for 0-2 bedroom properties across the top 50 metros, faster than the rate of -0.3% seen in August 2024.

by Calculated Risk on 11/06/2024 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 10.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending November 1, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 10.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12 percent compared with the previous week. The Refinance Index decreased 19 percent from the previous week and was 48 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 2 percent higher than the same week one year ago.

“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates. The 30- year fixed rate last week increased to 6.81 percent, the highest level since July,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications decreased for the sixth consecutive week, with purchase activity falling to its lowest level since mid-August and refinance activity declining to the lowest level since May. The average loan size on a refinance application dropped below $300,000, as borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.81 percent from 6.73 percent, with points decreasing to 0.68 from 0.69 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 2% year-over-year unadjusted. 

Red is a four-week average (blue is weekly).  

Purchase application activity is up about 4% from the lows in late October 2023, but still about 13% below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index increased significantly as mortgage rates declined September but decreased over the last six weeks as rates moved back up.