by Calculated Risk on 12/20/2024 09:09:00 AM

Here is a graph of the year-over-year change in shelter from the CPI report and housing from the PCE report this morning, both through November 2024.

CPI Shelter was up 4.8% year-over-year in November, down from 4.9% in October, and down from the cycle peak of 8.2% in March 2023.

Housing (PCE) was up 4.8% YoY in November, down from 5.0% in October, and down from the cycle peak of 8.3% in April 2023.

Since asking rents are mostly flat year-over-year, these measures will slowly continue to decline over the next year.

The second graph shows PCE prices, Core PCE prices and Core ex-housing over the last 3 months (annualized):

Key measures are slightly below the Fed's target on a 3-month basis. Note: There appears to be some residual seasonality distorting PCE prices in Q1, especially in January.

3-month annualized change:

PCE Price Index: 2.1%
Core PCE Prices: 2.5%
Core minus Housing: 2.3%

by Calculated Risk on 12/20/2024 08:30:00 AM

The BEA released the Personal Income and Outlays report for November:

Personal income increased $71.1 billion (0.3 percent at a monthly rate) in November, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI), personal income less personal current taxes, increased $61.1 billion (0.3 percent) and personal consumption expenditures (PCE) increased $81.3 billion (0.4 percent).

The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent. Real DPI increased 0.2 percent in November and real PCE increased 0.3 percent; goods increased 0.7 percent and services increased 0.1 percent.
emphasis added

The November PCE price index increased 2.4 percent year-over-year (YoY), up from 2.3 percent YoY in October, and down from the recent peak of 7.2 percent in June 2022.

The PCE price index, excluding food and energy, increased 2.8 percent YoY, unchanged from 2.8 percent in October, and down from the recent peak of 5.6 percent in February 2022.

The following graph shows real Personal Consumption Expenditures (PCE) through November 2024 (2017 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income and PCE were below expectations.

Inflation was below expectations.

Using the two-month method to estimate Q4 real PCE growth, real PCE was increasing at a 3.3% annual rate in Q4 2024. (Using the mid-month method, real PCE was increasing at 3.8%).  This suggests solid PCE growth in Q4.

by Calculated Risk on 12/19/2024 07:55:00 PM

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

Friday:
• At 8:30 AM ET, Personal Income and Outlays for November. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the PCE price index to increase 0.2%, and the Core PCE price index to increase 0.2%.  PCE prices are expected to be up 2.5% YoY, and core PCE prices up 2.9% YoY.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Final for December).

• Also at 10:00 AM, State Employment and Unemployment (Monthly) for November 2024

by Calculated Risk on 12/19/2024 04:45:00 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 November, Realtor.com reported inventory was up 26.2% YoY, but still down 21.5% compared to the 2017 to 2019 same month levels. 

 Now - on a weekly basis - inventory is up 23.4% 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 Dec. 14, 2024

• Active inventory increased, with for-sale homes 23.4% above year-ago levels

For the 58th consecutive week, the number of homes for sale has increased compared with the same time last year. However, this week’s growth was the slowest since March 2024. As the mortgage rates remain close to 7%, the combination of sluggish listing activity and muted buyer demand has led to a slowdown in inventory growth. This increase should help lead to a more balanced housing market heading into 2025.

• New listings—a measure of sellers putting homes up for sale—increased 7.9%

The past two weeks have brought the highest combined two-week increase in new listings since April, reflecting a rising desire of existing home sellers to sell their home and, in many cases, also buy a new one. This late-season increase could lead to a noticeable but modest increase in housing market activity throughout the remainder of the year.

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

Inventory was up year-over-year for the 58th consecutive week.  

New listings remain below typical pre-pandemic levels.

by Calculated Risk on 12/19/2024 02:03:00 PM

From the Census Bureau: Net International Migration Drives Highest U.S. Population Growth in Decades

The U.S. population grew by nearly 1.0% between 2023 and 2024, according to the new Vintage 2024 population estimates released today by the U.S. Census Bureau.

As the nation’s population surpasses 340 million, this is the fastest annual population growth the nation has seen since 2001 — a notable increase from the record low growth rate of 0.2% in 2021. The growth was primarily driven by rising net international migration.
...
Natural increase also contributed to the population growth, as births outnumbered deaths by nearly 519,000 between 2023 and 2024. This marks an increase from the historic low in 2021 when natural increase was just over 146,000, but it was still well below the highs in prior decades.

by Calculated Risk on 12/19/2024 10:50:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: NAR: Existing-Home Sales Increased to 4.15 million SAAR in November

Excerpt:

The sales rate was above the consensus forecast (but close to housing economist Tom Lawler’s estimate).
...
Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The fourth graph shows existing home sales by month for 2023 and 2024.

Sales increased 6.1% year-over-year compared to November 2023.
...
On an NSA basis, sales are down 1.5% year-to-date compared to 2023.

by Calculated Risk on 12/19/2024 10:00:00 AM

From the NAR: Existing-Home Sales Elevated 4.8% in November; Post Strongest Year-Over-Year Increase Since June 2021

Existing-home sales grew in November, according to the National Association of Realtors®. Sales advanced in three major U.S. regions and remained steady in the West. Year-over-year, sales climbed in all four regions.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – improved 4.8% from October to a seasonally adjusted annual rate of 4.15 million in November. Year-over-year, sales bounced 6.1% (up from 3.91 million in November 2023).
...
Total housing inventory registered at the end of November was 1.33 million units, down 2.9% from October but up 17.7% from one year ago (1.13 million). Unsold inventory sits at a 3.8-month supply at the current sales pace, down from 4.2 months in October but up from 3.5 months in November 2023.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1994.

Sales in November (4.15 million SAAR) were up 4.8% from the previous month and were 6.1% above the November 2023 sales rate.  This was the second year-over-year increase since July 2021.  Last month was the first.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.33 million in November from 1.37 million the previous month.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 17.7% year-over-year (blue) in November compared to November 2023.

Months of supply (red) decreased to 3.8 months in November from 4.2 months the previous month.

The sales rate was above the consensus forecast.  I'll have more later. 

by Calculated Risk on 12/19/2024 08:37:00 AM

From the BEA: Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, Third Quarter 2024

Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the third quarter of 2024, according to the "third" estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.8 percent. The update primarily reflected upward revisions to exports and consumer spending that were partly offset by a downward revision to private inventory investment. Imports, which are a subtraction in the calculation of GDP, were revised up.
emphasis added

Here is a Comparison of Third and Second Estimates. PCE growth was revised up from 3.5% to 3.7%. Residential investment was revised up from -5.0% to -4.3%.

by Calculated Risk on 12/19/2024 08:30:00 AM

The DOL reported:

In the week ending December 14, the advance figure for seasonally adjusted initial claims was 220,000, a decrease of 22,000 from the previous week's unrevised level of 242,000. The 4-week moving average was 225,500, an increase of 1,250 from the previous week's unrevised average of 224,250.
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 225,500.

The previous week was unrevised.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 12/19/2024 08:27:00 AM

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 232 thousand initial claims, down from 242 thousand last week.

• Also at 8:30 AM, Gross Domestic Product, 3rd quarter 2024 (Third estimate). The consensus is for real GDP at 2.8% annualized, unchanged from the second estimate of 2.8%.

• Also at 8:30 AM, the Philly Fed manufacturing survey for December. The consensus is for a reading of 2.2, up from -6.0.

• At 10:00 AM, Existing Home Sales for November from the National Association of Realtors (NAR). The consensus is for 3.97 million SAAR, up from 3.96 million.

• At 11:00 AM, the Kansas City Fed manufacturing survey for December.