by Calculated Risk on 1/29/2025 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. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation 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 maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of 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; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Adriana D. Kugler; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller.
emphasis added

Weekly Schedule

by Calculated Risk on 1/29/2025 10:17:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 1.1% Below 2022 Peak

Excerpt:

It has been over 18 years since the housing bubble peak. In the November Case-Shiller house price index released yesterday, the seasonally adjusted National Index (SA), was reported as being 77% above the bubble peak in 2006. However, in real terms, the National index (SA) is about 12% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is 3% above the bubble peak.

People usually graph nominal house prices, but it is also important to look at prices in real terms. As an example, if a house price was $300,000 in January 2010, the price would be $436,000 today adjusted for inflation (45% increase). That is why the second graph below is important - this shows "real" prices.

The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the Case-Shiller National Index.
...
The second graph shows the same two indexes in real terms (adjusted for inflation using CPI).

In real terms (using CPI), the National index is 1.1% below the recent peak, and the Composite 20 index is 1.3% below the recent peak in 2022. The real National index and the Composite 20 index increased slightly in real terms in November.

It has now been 30 months since the real peak in house prices. Typically, after a sharp increase in prices, it takes a number of years for real prices to reach new highs (see House Prices: 7 Years in Purgatory)

There is much more in the article!

by Calculated Risk on 1/29/2025 07:00:00 AM

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

Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 24, 2025. This week’s results include an adjustment for the Martin Luther King holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 5 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.4 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 7 percent lower than the same week one year ago.

“Mortgage rates were mixed last week, and the 30-year fixed rate remained unchanged at 7.02 percent. Application activity was slightly weaker, primarily because of a 7 percent decline in refinancing across both conventional and government loans,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase activity decreased slightly, but applications for FHA purchase loans were a bright spot, increasing by 2 percent. New and existing-home sales ended 2024 on a strong note, and if mortgage rates continue to stabilize and for-sale inventory loosens, we expect a gradual pick up in purchase activity in the coming months.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) remained unchanged at 7.02 percent, with points increasing to 0.63 from 0.62 (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 down 7% year-over-year unadjusted. 

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

Purchase application activity is up about 30% from the lows in late October 2023 and is now 8% above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index is very low.

by Calculated Risk on 1/28/2025 07:59:00 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 mortgage purchase applications index.

• At 2:00 PM, FOMC Meeting Announcement. No change to policy is expected.

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

by Calculated Risk on 1/28/2025 01:31:00 PM

From the MBA: Delinquency Rates for Commercial Properties Increased in Fourth-Quarter 2024

Delinquency rates for mortgages backed by commercial properties increased during the fourth quarter of 2024, according to the Mortgage Bankers Association's (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.

"The delinquency rate for commercial mortgages increased during the final three months of 2024, with increases across most capital sources and property types,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “The challenges facing different sectors vary – with office properties perhaps facing the most challenging combination of weaker fundamentals and stubbornly high interest rates. However, despite the current conditions, other property types continue to benefit from a relatively strong economy.”

Click on graph for larger image.

The balance of commercial mortgages that are not current increased slightly in the fourth quarter of 2024.

• The share of loans that were delinquent increased for some property types, particularly office, lodging, retail, and multifamily. Delinquencies decreased for industrial properties.

• Among capital sources, CMBS loan delinquency rates saw the highest levels but were flat during the quarter.

• 5.3% of CMBS loan balances were 30 days or more delinquent, up from 4.8% at the end of last quarter.

• Non-current rates for other capital sources remained more moderate.

• 1.0% of FHA multifamily and health care loan balances were 30 days or more delinquent, up from 0.87% at the end of last quarter.

• 0.86% of life company loan balances were delinquent, down from 0.94%.

• 0.6% of GSE loan balances were delinquent, up from 0.5% the previous quarter.

by Calculated Risk on 1/28/2025 10:03:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 3.8% year-over-year in November

Excerpt:

S&P/Case-Shiller released the monthly Home Price Indices for November ("November" is a 3-month average of September, October and November closing prices). November closing prices include some contracts signed in July, so there is a significant lag to this data. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The MoM increase in the seasonally adjusted (SA) Case-Shiller National Index was at 0.44% (a 5.3% annual rate), This was the 22nd consecutive MoM increase in the seasonally adjusted index.

On a seasonally adjusted basis, prices increased month-to-month in 18 of the 20 Case-Shiller cities (prices declined in Seattle and Tampa seasonally adjusted). San Francisco has fallen 6.42% from the recent peak, Phoenix is down 2.1% from the peak, and Denver down 1.7%.

There is much more in the article.

by Calculated Risk on 1/28/2025 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for November ("November" is a 3-month average of September, October and November closing prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

From S&P S&P CoreLogic Case-Shiller Index Records 3.8% Annual Gain in November 2024

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.8% annual return for November, up from a 3.6% annual gain in the previous month. The 10-City Composite saw an annual increase of 4.9%, recording the same annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.3%, up from a 4.2% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.3% increase in November, followed by Chicago and Washington with annual increases of 6.2% and 5.9%, respectively. Tampa posted the lowest return, falling 0.4%.
...
The pre-seasonally adjusted U.S. National, 20-City, and 10-City Composite Indices’ upward trends continued to reverse in November, with a -0.1% drop for the national index, while the 20-City Composite saw a -0.1% decline and the 10-City Composite was unchanged.

After seasonal adjustment, the U.S. National, 20-City, and 10-City Composite Indices all posted a month-over-month increase of 0.4%.

“With the exception of pockets of above-trend performance, national home prices are trending below historical averages,” says Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets. “Markets in New York, Washington, D.C., and Chicago are well above norms, with New York leading the way. Unsurprisingly, the Northeast was the fastest growing region, averaging a 6.1% annual gain. However, markets out west and in once red-hot Florida are trending well below average growth. Tampa’s decline is the first annual drop for any market in over a year. Returns for the Tampa market and entire Southern region rank in the bottom quartile of historical annual gains, with data going back to 1988.

“Despite below-trend growth, our National Index hit its 18th consecutive all-time high on a seasonally adjusted basis,” Luke continued. “Again, with the exception of Tampa, all markets rose monthly with seasonal adjustment. With New York leading the nation for the seventh consecutive month and U.S. banks reporting strong Q4 earnings, this could set the Big Apple up as we close out the year.”
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index was up 0.4% in November (SA).  The Composite 20 index was up 0.4% (SA) in November.

The National index was up 0.4% (SA) in November.

The second graph shows the year-over-year change in all three indices.

The Composite 10 SA was up 4.9% year-over-year.  The Composite 20 SA was up 4.3% year-over-year.

The National index SA was up 3.8% year-over-year.

Annual price changes were close to expectations.  I'll have more later.

by Calculated Risk on 1/27/2025 07:17:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Only Moderately Lower After Tech Rout

Even though there is some uncertainty about the near-term Fed rate outlook and even though we have a Fed meeting coming up on Wednesday, today was all about conventional wisdom for interest rates. Tech stocks plummeted on news of a cheap, competent, Chinese AI competitor. ...

Whether investors were simply looking for places to park the proceeds from that stock selling or legitimately betting on economic fallout, bond buying ramped up in a major way. The average mortgage lender is now back in line with the lowest levels since late December, but just barely. [30 year fixed 7.07%]
emphasis added

Tuesday:
• At 8:30 AM ET, Durable Goods Orders for December. The consensus is for a 0.8% increase in durable goods.

• Also at 9:00 AM, FHFA House Price Index for November. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 9:00 AM, S&P/Case-Shiller House Price Index for November. The National Index was up 3.6% YoY in October and is expected to be up about the same in November.

• Also at 10:00 AM, Richmond Fed Survey of Manufacturing Activity for January. This is the last of the regional Fed manufacturing surveys for January.

• At 10:00 AM, State Employment and Unemployment (Monthly) for December 2024

by Calculated Risk on 1/27/2025 02:23:00 PM

From STR: U.S. hotel results for week ending 18 January

On the positive side of the MLK Day calendar shift, the U.S. hotel industry reported positive year-over-year comparisons, according to CoStar’s latest data through 18 January. ...

12-18 January 2025 (percentage change from comparable week in 2024):

• Occupancy: 55.8% (+6.7%)
• Average daily rate (ADR): US$155.81 (+10.0%)
• Revenue per available room (RevPAR): US$86.93 (+17.4%)
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2025, blue is the median, and dashed light blue is for 2024.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking both last year and the median rate for the period 2000 through 2024 (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.

This is the weakest period of the year for hotel occupancy and the 4-week average will increase seasonally for the next several months.

by Calculated Risk on 1/27/2025 10:48:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Increase to 698,000 Annual Rate in December

Brief excerpt:

The Census Bureau reported New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 698 thousand. The previous three months were revised down slightly, combined.
...
The next graph shows new home sales for 2023 and 2024 by month (Seasonally Adjusted Annual Rate). Sales in December 2024 were up 6.7% from December 2023.

New home sales, seasonally adjusted, have increased year-over-year in 19 of the last 21 months. This is essentially the opposite of what happened with existing home sales that had been down year-over-year every month for 3+ years (existing home sales have been up year-over-year for the last 3 months).

There is much more in the article.