by Calculated Risk on 1/24/2025 10:00:00 AM

From the NAR: Existing-Home Sales Ascended 2.2% in December

Existing-home sales climbed in December, according to the National Association of Realtors®. Sales advanced in three major U.S. regions and slipped in the Midwest. Year-over-year, sales accelerated in all four regions.

On an annual basis, existing-home sales (4.06 million) declined to the lowest level since 1995, while the median price reached a record high of $407,500 in 2024.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – elevated 2.2% from November to a seasonally adjusted annual rate of 4.24 million in December. Year-over-year, sales swelled 9.3% (up from 3.88 million in December 2023).
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Total housing inventory registered at the end of December was 1.15 million units, down 13.5% from November but up 16.2% from one year ago (990,000). Unsold inventory sits at a 3.3-month supply at the current sales pace, down from 3.8 months in November but up from 3.1 months in December 2023.
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Click on graph for larger image.

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

Sales in December (4.24 million SAAR) were up 2.2% from the previous month and were 9.3% above the December 2023 sales rate.  This was the third consecutive year-over-year increase after declining YoY every month for over 3 years.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.15 million in December from 1.33 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 16.2% year-over-year (blue) in December compared to December 2023.

Months of supply (red) decreased to 3.3 months in December from 3.8 months the previous month.

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

Weekly Schedule

by Calculated Risk on 1/24/2025 08:11:00 AM

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 1.7% in December compared to the rolling 12 months ending in November.   Outbound traffic decreased 0.5% 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 24% YoY in December, and exports were down 6% YoY.    

This was a very strong July through December period as importers were likely stockpiling goods prior to the increase in tariffs. 

by Calculated Risk on 1/23/2025 08:49:00 PM

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

Friday:
• At 10:00 AM ET, Existing Home Sales for December from the National Association of Realtors (NAR). The consensus is for 4.20 million SAAR, up from 4.15 million.

• Also at 10:00 AM, University of Michigan's Consumer sentiment index (Preliminary for January).

by Calculated Risk on 1/23/2025 03:51:00 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 December, Realtor.com reported inventory was up 22.0% YoY, but still down 15.7% compared to the 2017 to 2019 same month levels. 

 Now - on a weekly basis - inventory is up 25.1% 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 January 18, 2025

• Active inventory increased, with for-sale homes 25.1% above year-ago levels.

For the 63rd consecutive week, the number of homes for sale has increased compared to the same time last year. However, the week’s growth was near levels seen throughout the winter, showing a narrower gap between current and previous year listings compared to last summer.

• New listings–a measure of sellers putting homes up for sale–increased 17.9%.

New listing activity can be bumpy around the holidays as homeowners turn their attention to the season’s festivities. This week brought the highest number of new listings to the market since October suggesting that sellers are ready to get into the market this year. The past two weeks have brought the most new listings so far this winter, getting the year started with a jolt of housing activity.

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

Inventory was up year-over-year for the 63rd consecutive week.  

New listings have jumped recently but remain below typical pre-pandemic levels.

by Calculated Risk on 1/23/2025 12:29:00 PM

Today, in the Calculated Risk Real Estate Newsletter: 4th Look at Local Housing Markets in December

A brief excerpt:

Here are a few more local markets before the NAR releases December Existing Home sales tomorrow, Friday, January 24th at 10:00 AM. This will be the 3rd consecutive month with a year-over-year increase in sales.

Watch the regional difference! Inventory is recovering quicker than sales in some areas (especially Florida and Texas), and this is pushing up months-of-supply - and could lead to some price declines in 2025.

The consensus is for 4.20 million SAAR, up from 4.15 million in November. Last year, the NAR reported sales in December 2023 at 3.88 million SAAR. Housing economist Tom Lawler expects the NAR to report sales of 4.15 million SAAR for December.
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Here is a look at months-of-supply using NSA sales. Since this is NSA data, it is likely this will be the seasonal low for months-of-supply.
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Several local markets - like Illinois, Miami, New Jersey and New York - will report after the NAR release.

There is much more in the article.

by Calculated Risk on 1/23/2025 11:31:00 AM

From ICE: ICE First Look at Mortgage Performance: Delinquencies Ended 2024 on a Strong Note Despite Remaining Near a Three-Year High

• The national delinquency rate eased 2 basis points (bps) to 3.72% in December, but rose 4.0% year over year – the seventh consecutive annual increase – ending 2024 near a three-year high

• Early-stage delinquencies fell 41K (-3.6%) in the month, while serious delinquencies (loans 90+ days past due but not in active foreclosure) continued their slow climb – up 29K (+5.7%) in the month and a fifth consecutive rise year over year

• Foreclosure sales declined by 5K (-5.6%) in December, hitting their lowest level in nearly two years, while foreclosure inventory climbed 7K (+3.8%), but was down -10.7% year-over-year

• Despite rising in December on volatility around the holidays, foreclosure starts averaged 26,800 per month in 2024, down from 28,500 in 2023 and lower than any year outside the pandemic moratoria

• Prepayment activity (measured by single-month mortality or SMM) fell to 0.57% on rising interest rates, down -9.8% in the month but up 47.2% from the same time last year
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Click on graph for larger image.

Here is a table from ICE.

by Calculated Risk on 1/23/2025 08:30:00 AM

The DOL reported:

In the week ending January 18, the advance figure for seasonally adjusted initial claims was 223,000, an increase of 6,000 from the previous week's unrevised level of 217,000. The 4-week moving average was 213,500, an increase of 750 from the previous week's unrevised average of 212,750.
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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 213,500.

The previous week was unrevised.

Weekly claims were below the consensus forecast.

by Calculated Risk on 1/22/2025 07:30:00 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 a increase to 227 thousand from 217 thousand last week.

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

by Calculated Risk on 1/22/2025 12:16:00 PM

Today, in the CalculatedRisk Real Estate Newsletter: NMHC on Apartments: "Looser market conditions for the tenth consecutive quarter"

Excerpt:

From the NMHC: Apartment Market Experiences Loosening Conditions, Decreased Deal Flow and Less Available Financing to Start the New Year

Apartment market conditions declined in the National Multifamily Housing Council’s (NMHC’s) most recent Quarterly Survey of Apartment Market Conditions. All four indices – Market Tightness (40), Sales Volume (41), Equity Financing (48) and Debt Financing (32) – came in below the breakeven level (50), signaling less favorable conditions this quarter.
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• The Market Tightness Index came in at 40 this quarter – below the breakeven level of 50 – indicating looser market conditions for the tenth consecutive quarter. Slightly over half (52%) of respondents thought market conditions were unchanged relative to three months ago, while a third of respondents thought conditions have become looser. Fourteen percent of respondents reported tighter market conditions than three months prior.

This index has been an excellent leading indicator for rents and vacancy rates, and this suggests higher vacancy rates and a further weakness in asking rents. This is the tenth consecutive quarter with looser conditions than the previous quarter.

There is much more in the article.

by Calculated Risk on 1/22/2025 11:26:00 AM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: ABI December 2024: Business conditions end the year on a weak note

The AIA/Deltek Architecture Billings Index (ABI) score fell to 44.1 for the month as the share of firms reporting a decline in firm billings increased. Firm billings have now decreased for the majority of firms every month except two since October 2022. While not a full-fledged recession, this period of softness and uncertainty has been challenging for many firms. And prospects for future work remain soft as well. Although inquiries into new projects continued to increase at a relatively slow rate, the value of newly signed design contracts decreased further in December as clients remained hesitant to commit to new work. In one brighter spot, backlogs at firms remained steady and strong at 6.5 months in December, so many firms still have work in the pipeline for now.

Despite overall softness in billings, firms located in the West reported growth for the third consecutive month in December. But business conditions remained soft for firms in all other regions, particularly at firms located in the Northeast, which were the first to report slight growth earlier in the year. Billings also declined at firms of all specializations in December, although firms with an institutional sector are on the cusp of growth and have been for several months. However, business conditions softened further for both firms with multifamily residential and commercial/industrial specializations this month, ending the year on a down note.
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The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients.
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• Northeast (41.7); Midwest (46.4); South (47.2); West (52.2)

• Sector index breakdown: commercial/industrial (44.1); institutional (49.8); multifamily residential (46.5)

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 44.1 in November, down from 49.7 in November.  Anything below 50 indicates a decrease in demand for architects' services.

This index has indicated contraction for 25 of the last 27 months.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment in 2025.

In November, we saw the first positive score for multi-family since 2022.  However, multi-family billings turned negative again in December and has been negative for 28 of the last 29 months.  This suggests we will see further weakness in multi-family starts.