by Calculated Risk on 12/26/2024 09:39:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: Question #9 for 2025: What will happen with house prices in 2025?

Excerpt:

Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2025. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I’ll post thoughts on those in this newsletter (others like GDP and employment will be on my blog).

I'm adding some thoughts and predictions for each question.

Here is a review of the Ten Economic Questions for 2024.

9) House Prices: It appears house prices - as measured by the national repeat sales index (Case-Shiller, FHFA, and Freddie Mac) - will be up 3% to 4% in 2024. What will happen with house prices in 2025?
...
The following graph shows the year-over-year change through September 2024, in the seasonally adjusted Case-Shiller Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000). The Case-Shiller Home Price Indices for "September" is a 3-month average of July, August and September closing prices. September closing prices include some contracts signed in May, so there is a significant lag to this data.

The Composite 10 SA was up 5.2% year-over-year in September. The Composite 20 SA was up 4.6% year-over-year. The National index SA was up 3.9% year-over-year. All were at new all-time highs in September.
...
Supply and demand are the keys for house prices; however, national house prices will mask some regional differences. We are seeing significant regional differences in supply at the end of 2024, with inventory increasing sharply in Florida and parts of Texas (and some other areas).

There is much more in the post.

by Calculated Risk on 12/26/2024 08:30:00 AM

The DOL reported:

In the week ending December 21, the advance figure for seasonally adjusted initial claims was 219,000, a decrease of 1,000 from the previous week's unrevised level of 220,000. The 4-week moving average was 226,500, an increase of 1,000 from the previous week's unrevised average of 225,500.
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 226,500.

The previous week was unrevised.

Weekly claims were close to the consensus forecast.

by Calculated Risk on 12/25/2024 07:23:00 PM

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

Mortgage rates as of Monday (a little lower on Tuesday).

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. Initial claims were at 220 thousand last week.

by Calculated Risk on 12/25/2024 08:11:00 AM

Here is a High Sierra webcam (it is snowing!)

And the beach in Newport.

Best Wishes to All!

by Calculated Risk on 12/24/2024 04:01:00 PM

From housing economist Tom Lawler:

Since September 17th the Federal Reserve has lowered its federal funds rate range by 100 basis points. Below is a table showing Treasury and MBS rates since September 17th.

Click on graph for larger image.

Ho, Ho, Ho!!!! Happy Holidays!!!!

10-Year T1PS Yield

The chart below shows the monthly average 10-Year TIPS yield from December 2003 to December 2007 and then from January 2023 to December 2024 (December 2024 is the average to date). It excludes the financial crisis and the subsequent decade as well as the 2020-2022 Covid period.

From 2003 to 2007 the 10-year TIPS yield averaged 2.06%, about the same as the average so far in December 2024.

by Calculated Risk on 12/24/2024 12:46:00 PM

Today, in the CalculatedRisk Real Estate Newsletter: Lawler: New Census Population Estimates Show Massively Higher Population Growth

Excerpt:

From housing economist Tom Lawler: New Census Population Estimates Incorporate Revised Methodology for Estimating Net International Migration, Show Massively Higher Population Growth

Last week Census released its “Vintage 2024” estimates of the US resident population, and the new estimates show substantially faster population growth over the past few years than those shown in the “Vintage 2023” estimates. The reason, not surprisingly, is that Census updated its methodology to include estimates of what it refers to as “humanitarian” migrants, including border patrol releases and paroles. As many probably remember, last year the CBO issued a report suggesting that border patrol/other data indicated that net international migration over the past few years had been massively higher than official Census estimates had suggested. For more details on Census’ updated NIM methodology, see Census Bureau Improves Methodology to Better Estimate Increase in Net International Migration

Below are some tables comparing the Vintage 2024 population estimates with the Vintage 2023 population estimates.

Note: Each population “Vintage” includes projections of the resident population for the subsequent year. Thus, for Vintage 2023 the 2024 numbers are projections, and for Vintage 2024 the 2025 numbers are projections.

As this table shows, estimated population growth from July 1, 2021 to July 1, 2024 from Vintage 2024 is an eye-popping 3,386,610 higher than the Vintage 2023 estimate. Virtually all of this difference reflects higher estimates of net international migration in the Vintage 2024 estimates.

by Calculated Risk on 12/24/2024 09:16:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: Question #10 for 2025: Will inventory increase further in 2025?

Excerpt:

Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2025. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I’ll post thoughts on those in this newsletter (others like GDP and employment will be on my blog).

I'm adding some thoughts, and maybe some predictions for each question.

Here is a review of the Ten Economic Questions for 2024.

10) Housing Inventory: Housing inventory decreased sharply during the pandemic to record lows in early 2022. Since then, inventory has increased but is still below pre-pandemic levels. Will inventory increase further in 2025?

First, a brief history. Here are a few times when watching existing home inventory helped my analysis.

Starting in January 2005, I was very bearish on housing, but I wasn’t sure when the market would turn. Speculative bubbles can go on and on. However, the increase in existing home inventory in late 2005 (see red arrow on graph below) helped me call the top for house prices in 2006.

Several years later, in early 2012, when many people were still bearish on housing, the plunge in inventory in 2011 (blue arrow on graph below) helped me call the bottom for house prices in early 2012 (see The Housing Bottom is Here).

by Calculated Risk on 12/23/2024 07:41:00 PM

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

Tuesday:
• At 10:00 AM ET, Richmond Fed Survey of Manufacturing Activity for December.

The NYSE and the NASDAQ will close early at 1:00 PM ET.

by Calculated Risk on 12/23/2024 04:00:00 PM

From the MBA: Share of Mortgage Loans in Forbearance Increases to 0.50% in November

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance increased to 0.50% as of November 30, 2024. According to MBA’s estimate, 250,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.5 million borrowers since March 2020.

The share of Fannie Mae and Freddie Mac loans in forbearance increased 1 basis point to 0.21% in November 2024. Ginnie Mae loans in forbearance increased by 5 basis points to 1.11%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 1 basis point to 0.42%.

“The overall mortgage forbearance rate increased three basis points in November and has now risen for six consecutive months,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “By investor type, Ginnie Mae loans are showing the greatest variance, with an increase of 72 basis points over the six-month period. That is compared to 11 basis points for Fannie Mae and Freddie Mac Loans, and portfolio and PLS loans, respectively.”

Added Walsh, “There is some weakening in performance of servicing portfolios and loan workouts compared to one year ago. In the wake of natural disasters and slowing in the labor market, borrowers with government loans tend to be impacted more than conventional borrowers.”
emphasis added

At the end of November, there were about 250,000 homeowners in forbearance plans.

by Calculated Risk on 12/23/2024 01:11:00 PM

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12-month average.

Click on graph for larger image.

On a rolling 12-month basis, inbound traffic increased 1.5% in November compared to the rolling 12 months ending in October.   Outbound traffic increased 0.8% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday and then decline sharply and bottom in the Winter depending on the timing of the Chinese New Year.  

Imports were up 20% YoY in November, and exports were up 10% YoY.    

This was a very strong July through November period for imports as retailers prepared for holiday shopping - and likely to stockpile goods prior to the increase in tariffs.