by Calculated Risk on 2/17/2023 12:42:00 PM

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report released today from Chief Economist Danielle Hale: Weekly Housing Trends View — Data Week Ending Feb 11, 2023

• Active inventory growth continued to climb with for-sale homes up 70% above one year ago. Inventories of for-sale homes rose again, on par with the yearly gains we saw last week. Still-low buyer interest amid high costs rather than an influx of sellers is driving this increase. Even after these huge gains, January data show that nationwide there are still more than 40% fewer homes for sale than were available pre-pandemic,
...
• New listings–a measure of sellers putting homes up for sale–were again down, this week by 13% from one year ago. For 32 weeks now, fewer homeowners put their homes on the market for sale than at this time last year. After smaller declines in the first few weeks of the year, the gap has widened for a third week, indicating lower seller interest than we saw one year ago.

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

In early 2022, inventory was declining rapidly, so the year-over-year change is up sharply.

by Calculated Risk on 2/17/2023 09:40:00 AM

From BofA:

On net,this week’s data initiated our 1Q US GDP tracking estimate at 1.5% q/q saar, somewat above our official forecast of 1.0%. The data also reduced our 4Q US GDP tracking estimate from 3.2% q/q saar to 2.9%. [Feb 17th estimate]
emphasis added

From Goldman:

We left our Q1 GDP tracking estimate unchanged at +1.4% (qoq ar) and our domestic final sales forecast unchanged at +1.9%. We also left our past-quarter GDP tracking estimate for Q4 unchanged at +3.0%, compared to +2.9% as originally reported. [Feb 16th estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2023 is 2.5 percent on February 16, up from February 15. After this morning’s housing starts report from the US Census Bureau, the nowcast of first-quarter real residential investment growth increased from -10.4 percent to -8.1 percent. [Feb 16th estimate]

by Calculated Risk on 2/17/2023 08:34:00 AM

From CoStar: STR: US Hotel Rates Maintain Strength in First Full Week of February

U.S. hotel performance increased from the previous week, according to STR‘s latest data through Feb. 11.

Feb. 5-11, 2023 (percentage change from comparable week in 2019*):

• Occupancy: 57.8% (-8.7%)
• Average daily rate (ADR): $150.97 (+13.4%)
• Revenue per available room (RevPAR): $87.21 (+3.6%)

*Due to the pandemic impact, STR is measuring recovery against comparable time periods from 2019. Year-over-year comparisons will once again become standard after the first quarter.
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 2023, black is 2020, blue is the median, and dashed light blue is for 2022.  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 seasonally over the next two months.

by Calculated Risk on 2/16/2023 01:42:00 PM

From the MBA: Mortgage Delinquencies Increase in the Fourth Quarter of 2022

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.96 percent of all loans outstanding at the end of the fourth quarter of 2022, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The delinquency rate was up 51 basis points from the third quarter of 2022 but still down 69 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the fourth quarter fell by 1 basis point to 0.14 percent.

“As expected, the overall national mortgage delinquency rate increased in the fourth quarter of 2022 from its previous quarterly survey low,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “The weaker economy and ongoing inflationary pressures contributed to the uptick in delinquencies. The delinquency rate – while still low – increased from the previous quarter across all loan types and across all stages of delinquency.”

According to Walsh, for the past 15 years, mortgage delinquencies have tracked very closely with employment conditions. Despite recent indicators of resiliency in the job market, including the unemployment rate declining to 3.4 percent in January, MBA still forecasts for slower hiring and rising unemployment, with the rate rising to 5.2 percent by the end of the year. This will likely mean further increases in mortgage delinquencies.

Added Walsh, “Notwithstanding the fourth-quarter increase in mortgage delinquencies, the foreclosure starts rate of 0.14 percent was well below the historical quarterly average of 0.40 percent. Many distressed homeowners have loss mitigation options available to them and have accumulated home equity, which can ease financial hardship and avert foreclosure actions.”
emphasis added

Click on graph for larger image.

This graph shows the percent of loans delinquent by days past due.  Overall delinquencies increased in Q4 from a record low in Q3.

From the MBA:

Compared to last quarter, the seasonally adjusted mortgage delinquency rate increased for all loans outstanding. By stage, the 30-day delinquency rate increased 26 basis points to 1.92 percent, the 60-day delinquency rate increased 13 basis points to 0.66 percent, and the 90-day delinquency bucket increased 11 basis points to 1.38 percent.
...
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.57 percent, up 1 basis point from the third quarter of 2022 and 15 basis points higher than one year ago.

The sharp increase in 2020 in the 90-day bucket was due to loans in forbearance (included as delinquent, but not reported to the credit bureaus).

The percent of loans in the foreclosure process increased year-over-year in Q4 with the end of the foreclosure moratoriums but are still historically low.

by Calculated Risk on 2/16/2023 11:21:00 AM

From the NY Fed: Total Household Debt Reaches $16.90 trillion in Q4 2022; Mortgage and Auto Loan Growth Slows

The Federal Reserve Bank of New York's Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The Report shows an increase in total household debt in the fourth quarter of 2022, increasing by $394 billion (2.4%) to $16.90 trillion. Balances now stand $2.75 trillion higher than at the end of 2019, before the pandemic recession. The report is based on data from the New York Fed's nationally representative Consumer Credit Panel.

Mortgage balances rose by $254 billion in the fourth quarter of 2022 and stood at $11.92 trillion at the end of December, marking a nearly $1 trillion increase in mortgage balances in 2022.

Credit card balances increased $61 billion in the fourth quarter to $986 billion, surpassing the pre-pandemic high of $927 billion. Auto loan balances increased by $28 billion in the fourth quarter, consistent with the upward trajectory seen since 2011. Student loan balances now stand at $1.60 trillion, up by $21 billion from the previous quarter. In total, non-housing balances grew by $126 billion.

Mortgage originations, which include refinances, fell to $498 billion in the fourth quarter, representing a return to lower levels last seen in 2019. The volume of newly originated auto loans was $186 billion, representing a slight increase from the previous quarter. Aggregate limits on credit card accounts increased by $88 billion in the fourth quarter and now stand at $4.4 trillion.

The share of current debt becoming delinquent increased again in the fourth quarter for nearly all debt types, following two years of historically low delinquency transitions. The delinquency transition rate for credit cards and auto loans increased by 0.6 and 0.4 percentage points, respectively.

"Credit card balances grew robustly in the 4th quarter, while mortgage and auto loan balances grew at a more moderate pace, reflecting activity consistent with pre-pandemic levels," said Wilbert van der Klaauw, economic research advisor at the New York Fed. "Although historically low unemployment has kept consumer's financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers' ability to repay their debts."
emphasis added

Click on graph for larger image.

Here are three graphs from the report:

The first graph shows aggregate consumer debt increased in Q4.  Household debt previously peaked in 2008 and bottomed in Q3 2013. Unlike following the great recession, there wasn't a decline in debt during the pandemic.

From the NY Fed:

Aggregate household debt balances increased by $394 billion in the fourth quarter of 2022, a 2.4% rise from 2022Q3. Balances now stand at $16.90 trillion and have increased by $2.75 trillion since the end of 2019, just before the pandemic recession.

The second graph shows the percent of debt in delinquency.

The overall delinquency rate decreased in Q4.  From the NY Fed:

Aggregate delinquency rates decreased in the fourth quarter of 2022 and remained low, after declining sharply through the beginning of the pandemic, although there has been some shift in the composition, with increases in the share of balances that are 30- 59 days past due and declines in seriously delinquent balances. As of December, 2.5% of outstanding debt was in some stage of delinquency, 2.2 percentage points lower than last quarter of 2019, just before the COVID-19 pandemic hit the United States.

The third graph shows Mortgage Originations by Credit Score.

From the NY Fed:

Mortgage originations, measured as appearances of new mortgages on consumer credit reports, declined to $498 billion in 2022Q4, back to the lower levels seen in 2019. ... The median credit score of newly originated mortgages declined again, to 766, down from a series high in 2021Q1 of 788 and returning to pre-covid levels which remain very high and reflect continuing high lending standards. The median credit score on newly originated auto loans was down slightly, to 711, but remained about level with the past two years.

There is much more in the report.

by Calculated Risk on 2/16/2023 09:26:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: January Housing Starts: Near Record Number of Housing Units Under Construction

Excerpt:

Possibly Important: Multi-family permits averaged 547,000 SAAR over the last three months after averaging close to 650,000 SAAR over the previous 8 months. This decline in permits is a possible signal that the expected decline in multi-family starts has begun (although permits aren’t a perfect leading indicator for starts).
...
The fourth graph shows housing starts under construction, Seasonally Adjusted (SA).

Red is single family units. Currently there are 752 thousand single family units (red) under construction (SA). This was down in January compared to December, and 76 thousand below the recent peak in April and May 2022. Single family units under construction have peaked since single family starts are now declining. The reason there are still so many homes under construction is probably due to supply constrain

Blue is for 2+ units. Currently there are 948 thousand multi-family units under construction.  This is the highest level since November 1973! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Combined, there are 1.700 million units under construction, just below the all-time record of 1.711 million set in October 2022.
...
The weakness in 2022 was mostly for single family starts; however, it appears the expected decline in multi-family starts has begun.

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

by Calculated Risk on 2/16/2023 08:42:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately‐owned housing starts in January were at a seasonally adjusted annual rate of 1,309,000. This is 4.5 percent below the revised December estimate of 1,371,000 and is 21.4 percent below the January 2022 rate of 1,666,000. Single‐family housing starts in January were at a rate of 841,000; this is 4.3 percent below the revised December figure of 879,000. The January rate for units in buildings with five units or more was 457,000.

Building Permits:
Privately‐owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,339,000. This is 0.1 percent above the revised December rate of 1,337,000, but is 27.3 percent below the January 2022 rate of 1,841,000. Single‐family authorizations in January were at a rate of 718,000; this is 1.8 percent below the revised December figure of 731,000. Authorizations of units in buildings with five units or more were at a rate of 563,000 in January
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (blue, 2+ units) decreased in January compared to December.   Multi-family starts were down 8.1% year-over-year in January. 

Single-family starts (red) decreased in January and were down 27.3% year-over-year.

The second graph shows single and multi-family housing starts since 1968.

This shows the huge collapse following the housing bubble, and then the eventual recovery - and the recent collapse in single-family starts.

Total housing starts in January were below expectations, however, starts in November and December were revised up slightly, combined.

I'll have more later …

by Calculated Risk on 2/16/2023 08:30:00 AM

The DOL reported:

In the week ending February 11, the advance figure for seasonally adjusted initial claims was 194,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 196,000 to 195,000. The 4-week moving average was 189,500, an increase of 500 from the previous week's revised average. The previous week's average was revised down by 250 from 189,250 to 189,000.
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 189,500.

The previous week was revised down.

Weekly claims were below the consensus forecast.

by Calculated Risk on 2/15/2023 08:53:00 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 200 thousand initial claims, up from 196 thousand last week.

• Also at 8:30 AM, Housing Starts for January. The consensus is for 1.361 million SAAR, down from 1.382 million SAAR.

• Also at 8:30 AM, The Producer Price Index for December from the BLS. The consensus is for a 0.4% increase in PPI, and a 0.3% increase in core PPI.

• Also at 8:30 AM, the Philly Fed manufacturing survey for February. The consensus is for a reading of -6.7, up from -8.9.

• At 11:00 AM, NY Fed: Q4 Quarterly Report on Household Debt and Credit

by Calculated Risk on 2/15/2023 12:39:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Update: Some "Good News" for Homebuilders

A brief excerpt:

Last October I wrote: Some "Good News" for Homebuilders

I noted:

Even though we can expect significant further declines in new home sales and single-family housing starts, the good news for the homebuilders is activity usually picks up quickly following an interest rate induced slowdown (as opposed to following the housing bust when the recovery took many years).

I included the following graph to illustrate this point. The following graph shows new home sales for three periods: 1978-1982, 2005-2020, and current (red). The prior peak in sales is set to 100 (updated through the December New Home sales release).
...
My sense is this downturn will have some similarities to the 1980 period, see: Housing: Don't Compare the Current Housing Boom to the Bubble and Bust

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