by Calculated Risk on 7/23/2022 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• Final Look at Local Housing Markets in June

• NAR: Existing-Home Sales Decreased to 5.12 million SAAR in June

• Slowdown in Showings Suggests Further Declines in Existing Home Sales in Coming Months

• June Housing Starts: All-Time Record Housing Units Under Construction

• 3rd Look at Local Housing Markets in June, Sales Down Sharply, Inventory "Surged"

• Record Single Family Investor Buying in Q1, Possible evidence of Slowdown in Q2


This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

You can subscribe at https://calculatedrisk.substack.com/

Most content is available for free (and no Ads), but please subscribe!

by Calculated Risk on 7/23/2022 08:11:00 AM

The key report this week is the advance estimate of Q2 GDP.

Other key reports include June New Home Sales, Personal Income and Outlays for June, and Case-Shiller house prices for May.

For manufacturing, the July Richmond, Dallas and Kansas City Fed manufacturing surveys will be released.

The FOMC meets this week and is expected to raise rates 75 bp.

----- Monday, July 25th -----
8:30 AM ET: Chicago Fed National Activity Index for June. This is a composite index of other data.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for July.

----- Tuesday, July 26th -----
9:00 AM: S&P/Case-Shiller House Price Index for May.

This graph shows the year-over-year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The consensus is for a 21.0% year-over-year increase in the Comp 20 index for May.

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

10:00 AM: New Home Sales for June from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the sales rate for last month.

The consensus is for 666 thousand SAAR, down from 696 thousand in May.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for July.

----- Wednesday, July 27th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Durable Goods Orders for June from the Census Bureau. The consensus is for a 0.5% decrease in durable goods orders.

10:00 AM: Pending Home Sales Index for June. The consensus is for a 3.7% decrease in the index.

2:00 PM: FOMC Meeting Announcement. The FOMC is expected to raise rates 75 bps, increasing the target range for the federal funds rate to 2‑1/4 to 2-1/2 percent.

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

----- Thursday, July 28th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 248 thousand down from 251 thousand last week.

8:30 AM: Gross Domestic Product, 2nd quarter (advance estimate), and annual update. The consensus is that real GDP increased 0.4% annualized in Q2, up from -1.6% in Q1.

11:00 AM: Kansas City Fed Survey of Manufacturing Activity for July. This is the last of the regional surveys for July.

----- Friday, July 29th -----
8:30 AM ET: Personal Income and Outlays, June 2022. The consensus is for a 0.5% increase in personal income, and for a 0.9% increase in personal spending. And for the Core PCE price index to increase 0.5%.  PCE prices are expected to be up 6.6% YoY, and core PCE prices up 4.7% YoY.

9:45 AM: Chicago Purchasing Managers Index for July.

10:00 AM: University of Michigan's Consumer sentiment index (Final for July). The consensus is for a reading of 51.1.

by Calculated Risk on 7/22/2022 09:26:00 PM

On COVID (focus on hospitalizations and deaths):

Hospitalizations have almost quadrupled from the lows in April 2022.

COVID Metrics
	Now	Week Ago	Goal
New Cases per Day2	126,128	128,126	≤5,0001
Hospitalized2🚩	35,362	33,246	≤3,0001
Deaths per Day2	355	378	≤501
1my goals to stop daily posts, 27-day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the daily (columns) and 7-day average (line) of deaths reported.

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 7/22/2022 03:13:00 PM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in June in 10 states and the District of Columbia, higher in 2 states, and stable in 38 states, the U.S. Bureau of Labor Statistics reported today. All 50 states and the District had jobless rate decreases from a year earlier.
...
Minnesota had the lowest jobless rate in June, 1.8 percent, closely followed by Nebraska, 1.9 percent. The next lowest rates were in New Hampshire and Utah, 2.0 percent each. The rates in Minnesota and New Hampshire set new series lows, as did the rates in the following six states (all state series begin in 1976): Alabama (2.6 percent), Georgia (2.9 percent), Kentucky (3.7 percent), Louisiana (3.8 percent), Mississippi (3.8 percent), and Missouri (2.8 percent). The District of Columbia had the highest unemployment rate, 5.5 percent, followed by New Mexico, 4.9 percent.
emphasis added

Click on graph for larger image.

This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006.

Eight states set new series record low unemployment rates in June, and currently 14 states are at series record low unemployment rates.

by Calculated Risk on 7/22/2022 10:58:00 AM

The advance estimate of Q2 GDP will be released next week, and the consensus is for real GDP to increase 0.4% in Q2.

Note: We've seen two consecutive quarters of negative GDP before without a recession (that isn't the definition). If Q2 is negative, it will mostly be due to inventory and trade issues. No worries. My view is the US economy is not currently in a recession, see: Predicting the Next Recession

From BofA:

In next week’s advance estimate of 2Q US GDP, we expect the BEA to report that the economy contracted by 1.5% qoq saar, marking the second consecutive decline in quarterly output. [July 22 estimate]
emphasis added

From Goldman:

[W]e lowered our Q2 GDP tracking estimate by 0.1pp to +0.5% (qoq ar). [July 20 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2022 is -1.6 percent on July 19, down from -1.5 percent on July 15. [July 19 estimate]

by Calculated Risk on 7/22/2022 08:26:00 AM

From CoStar: STR: US Hotels Reverse Demand Trends as Performance Recovers Following July Fourth

After two consecutive weeks of lower demand around the Fourth of July holiday, U.S. hotel performance bounced back from the previous week, according to STR‘s latest data through July 16.

July 10-16, 2022 (percentage change from comparable week in 2019*):

• Occupancy: 72.0% (-7.4%)
• Average daily rate (ADR): US$157.23 (+14.9%)
• Revenue per available room (RevPAR): US$113.28 (+6.4%)

*Due to the pandemic impact, STR is measuring recovery against comparable time periods from 2019.
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 2022, black is 2020, blue is the median, and dashed light blue is for 2021.  Dashed purple is 2019 (STR is comparing to a strong year for hotels).

The 4-week average of the occupancy rate is close to the median rate for the previous 20 years (Blue).

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

The 4-week average of the occupancy rate will increase further seasonally over the next month.

by Calculated Risk on 7/21/2022 03:37:00 PM

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report released yesterday from Chief Economist Danielle Hale: Weekly Housing Trends View — Data Week Ending July 16, 2022. Note: They have data on list prices, new listings and more, but this focus is on inventory.

• Active inventory continued to grow, rising 29% above one year ago. With fewer owners listing homes for sale this week and last, the rapid recent run-up in active inventory has stalled somewhat. Inventory was roughly even with last year’s levels at the beginning of May and the gains mounted each week until early July. Since then, the market has stabilized just shy of a 30% increase over year ago levels. This is a welcome improvement for shoppers, but the market still lags what was once normal.

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

Note the rapid increase in the YoY change, from down 30% at the beginning of the year, to up 29% YoY now.

However, the Realtor.com data has been stuck at up 29% YoY for 3 weeks in a row.  This might be noise, or it might suggest a slowdown in inventory increases.

by Calculated Risk on 7/21/2022 12:23:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Final Look at Local Housing Markets in June

A brief excerpt:

And here is a table for new listings in June. For these areas, new listings were up 4.4% YoY.

Last month, new listings in these markets were up 5.9% YoY. New listings have increased over the last two months - new listing were down YoY as recently as April - but overall, we aren’t seeing a huge increase in new listings in these markets.

However, several markets are seeing a surge in new listings - Austin, Las Vegas, Phoenix and mid-Florida (Tampa, Orlando) are examples. A combination of less demand, and more new listings, is really pushing up inventory in these areas.

These are all formerly “hot” markets and perhaps some people are just trying to cash out in these markets after the huge increase in prices. Or it could be a leading indicator of more listings to come in other areas. This is something to watch.

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 7/21/2022 10:29:00 AM

From the National Multifamily Housing Council (NMHC): Higher Interest Rates Begin to Impact Multifamily

Apartment sales volume fell while both equity and debt financing became more costly, according to the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for July 2022. However, demand in most markets was still strong relative to supply.

“Continued interest rate hikes from the Fed have translated into higher longer-term rates and a higher cost of both debt and equity,” noted NMHC’s Chief Economist, Mark Obrinsky. “While these higher rates have cut into investor proceeds, many sellers are reluctant to lower prices, causing a sharp drop in sales volume.”

“The apartment market recorded its sixth consecutive quarter of tightening conditions, if just barely. Fifty-six percent of respondents reported unchanged conditions, while those reporting tighter conditions slightly outpaced those reporting looser market conditions.”
...
Market Tightness Index came in at 51, just above the breakeven level of 50. This indicates that market conditions have become tighter, albeit with considerable variation by market. Twenty-three percent of respondents reported markets to be tighter than three months ago compared to 21% of respondents who observed looser conditions in the markets they watch. Meanwhile, over half of respondents (56%) thought that apartment market conditions were unchanged from last quarter.

Click on graph for larger image.

This graph shows the quarterly Apartment Tightness Index. Any reading above 50 indicates tighter conditions from the previous quarter. 

Even though the index declined in July, this indicates market conditions tightened slightly in July for the sixth consecutive quarter.

This suggests rent growth will slow.

by Calculated Risk on 7/21/2022 08:34:00 AM

The DOL reported:

In the week ending July 16, the advance figure for seasonally adjusted initial claims was 251,000, an increase of 7,000 from the previous week's unrevised level of 244,000. The 4-week moving average was 240,500, an increase of 4,500 from the previous week's revised average. The previous week's average was revised up by 250 from 235,750 to 236,000.
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 increased to 240,500.

The previous week was unrevised.

Weekly claims were higher than the consensus forecast.