by Calculated Risk on 4/30/2024 01:00:00 PM

The Census Bureau released the Residential Vacancies and Homeownership report for Q1 2024 today.

The results of this survey were significantly distorted by the pandemic in 2020.

This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn't rely on the absolute numbers. Analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.

National vacancy rates in the first quarter 2024 were 6.6 percent for rental housing and 0.8 percent for homeowner housing. The rental vacancy rate was not statistically different from the rate in the first quarter 2023 (6.4 percent) and virtually the same as the rate in the fourth quarter 2023 (6.6 percent).

The homeowner vacancy rate of 0.8 percent was virtually the same as the rate in the first quarter 2023 (0.8 percent) and not statistically different from the rate in the fourth quarter 2023 (0.9 percent).

The homeownership rate of 65.6 percent was not statistically different from the rate in the first quarter 2023 (66.0 percent) and not statistically different from the rate in the fourth quarter 2023 (65.7 percent).
emphasis added

Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st, 1990, 2000, 2010, and 2020. 

The HVS homeownership rate decreased to 65.6% in Q1, from 65.7% in Q4.  

The results in Q2 and Q3 2020 were distorted by the pandemic and should be ignored.

The HVS homeowner vacancy decreased to 0.8% in Q1 from 0.9% in Q4.

Once again - this probably shows the general trend, but I wouldn't rely on the absolute numbers.

The homeowner vacancy rate declined sharply during the pandemic and includes homes that are vacant and for sale (so this mirrors the low levels of existing home inventory).

The rental vacancy rate was unchanged at 6.6% in Q1 from 6.6% in Q4.  This is up from the low of 5.6% in 2021 and 2022.

The quarterly HVS is the timeliest survey on households, but there are many questions about the accuracy of this survey.

by Calculated Risk on 4/30/2024 09:48:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 6.4% year-over-year in February; FHFA: House Prices Increased in February, up 7.0% YoY

Excerpt:

S&P/Case-Shiller released the monthly Home Price Indices for February ("February" is a 3-month average of December, January and February closing prices). January closing prices include some contracts signed in October, 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 0.41%. This was the thirteen consecutive MoM increase, and a larger MoM increase than the previous three months.

On a seasonally adjusted basis, prices increased month-to-month in 19 of the 20 Case-Shiller cities. Only Tampa saw a month-over-month decrease in February. Seasonally adjusted, San Francisco has fallen 8.2% from the recent peak, Seattle is down 6.1% from the peak, Portland down 4.0%, and Phoenix is down 3.1%.

There is much more in the article.

by Calculated Risk on 4/30/2024 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for February ("February" is a 3-month average of December, January and February 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’s Upward Trend Persists in February 2024

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.4% annual gain in February, up from a 6.0% rise in the previous month. The 10- City Composite showed an increase of 8.0%, up from a 7.4% increase in the previous month. The 20- City Composite posted a year-over-year increase of 7.3%, up from a 6.6% increase in the previous month. San Diego continued to report the highest year-over-year gain among the 20 cities with an 11.4% increase in February, followed by Chicago and Detroit , with an increase of 8.9%. Portland, though still holding the lowest rank after reporting two consecutive months of the smallest year-over-year growth, had a significant increase in annual gain of 2.2% in February.
...
The U.S. National Index, the 20-City Composite, and the 10-City Composite, for the first time since November 2023, showed a pre-seasonality adjustment increase of 0.6%, 0.9% and 1.0% respectively.

After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 0.4%, while the 20-City and the 10-City Composite both reported month-over-month increases of 0.6%.

“U.S. home prices continued their drive higher,” says Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “Our National Composite rose by 6% in January, the fastest annual rate since 2022. Stronger gains came from our 10- and 20-City Composite indices, rising 7.4% and 6.6%, respectively. For the second consecutive month, all cities reported increases in annual prices, with San Diego surging 11.2%. On a seasonal adjusted basis, home prices have continued to break through previous all-time highs set last 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 0.6% in February (SA).  The Composite 20 index was up 0.6% (SA) in February.

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

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

The Composite 10 SA was up 8.0% year-over-year.  The Composite 20 SA was up 7.3% year-over-year.

The National index SA was up 6.4% year-over-year.

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

by Calculated Risk on 4/29/2024 08:06:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Sideways to Slightly Lower to Start New Week

Mortgage rates didn't change much at all over the weekend with the average lender still in the highest territory since November. The average conventional 30yr fixed rate is just under 7.5% for top tier scenarios.

Things could end up changing quite a bit by the end of this week owing to a slew of important events and economic reports. [30 year fixed 7.43%]
emphasis added

Tuesday:
• At 9:00 AM ET, S&P/Case-Shiller House Price Index for February. The consensus is for a 6.7% year-over-year increase in the Comp 20 index for February.

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

• At 9:45 AM, Chicago Purchasing Managers Index for April. The consensus is for a reading of 45.0, up from 41.4 in March.

• At 10:00 AM, the Q1 2024 Housing Vacancies and Homeownership from the Census Bureau.

by Calculated Risk on 4/29/2024 03:02:00 PM

The BEA released the underlying details for the Q1 advance GDP report on Friday.

The BEA reported that investment in non-residential structures decreased at a 0.1% annual pace in Q1.  

Click on graph for larger image.

The first graph shows investment in offices, malls and lodging as a percent of GDP.

Investment in offices (blue) increased slightly in Q1 and was up 4.1% year-over-year.  And declined slightly as a percent of GDP.

Investment in multimerchandise shopping structures (malls) peaked in 2007 and was down about 1% year-over-year in Q1.   The vacancy rate for malls is still very high, so investment will probably stay low for some time.

Lodging investment decreased in Q1 compared to Q4, and lodging investment was up 1% year-over-year.

All three sectors - offices, malls, and hotels - were hurt significantly by the pandemic.  And the office vacancy rate is at a record high, and this will hold down office investment.

The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single-family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes).

Investment in single family structures was up to $433 billion (SAAR) (about 1.5% of GDP) and was up 16% year-over-year.

Investment in multi-family structures was down in Q1 compared to Q4 to $133 billion (SAAR), but still up 12% YoY.

Investment in home improvement was at a $351 billion (SAAR) in Q1 (about 1.2% of GDP).  Home improvement spending was strong during the pandemic but has declined as a percent of GDP recently.

Note that Brokers' commissions (black) increased sharply as existing home sales increased in the second half of 2020 but declined when mortgage rates increased.   Brokers' commissions were up 3% year-over-year in Q1.

by Calculated Risk on 4/29/2024 01:11:00 PM

From STR: U.S. hotel results for week ending 20 April

U.S. hotel performance showed mixed results from the previous week, according to CoStar’s latest data through 20 April. ...

14-20 April 2024 (percentage change from comparable week in 2023):

• Occupancy: 66.8% (-0.3%)
• Average daily rate (ADR): US$158.60 (+1.5%)
• Revenue per available room (RevPAR): US$105.94 (+1.2%)
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 2024, black is 2020, blue is the median, and dashed light blue is for 2023.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking last year, and slightly above the median rate for the period 2000 through 2023 (Blue).

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

The 4-week average of the occupancy rate will move mostly sideways seasonally until the summer travel season.

by Calculated Risk on 4/29/2024 11:01:00 AM

During the early stages of the pandemic, energy expenditures as a percentage of PCE hit an all-time low of 3.3% of PCE. Then energy expenditures increased to 2018 levels by the end of 2021.

With the invasion of Ukraine, energy expenditures as a percentage of PCE increased further in 2022.

Here is an update through the March 2024 PCE report.

This graph shows expenditures on energy goods and services as a percent of total personal consumption expenditures.  This is one of the measures that Professor Hamilton at Econbrowser looks at to evaluate any drag on GDP from energy prices.

Click on graph for larger image.

Data source: BEA.

In general, energy expenditures as a percent of PCE has been trending down for decades. The huge spikes in energy prices during the oil crisis of 1973 and 1979 are obvious. As is the increase in energy prices during the 2001 through 2008 period.

In August March 2024, energy expenditures as a percentage of PCE were at 4.1% of PCE, up from 4.0% in February, and down from the recent peak of 5.2% in June 2022. 

This is close to the pre-pandemic level of PCE.

by Calculated Risk on 4/29/2024 08:12:00 AM

Altos reports that active single-family inventory was up 2.5% week-over-week. Inventory bottomed in mid-February this year, as opposed to mid-April in 2023, and inventory is now up 12.6% from the February bottom.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of April 26th, inventory was at 556 thousand (7-day average), compared to 543 thousand the prior week.   

Inventory is still far below pre-pandemic levels. 

The second graph shows the seasonal pattern for active single-family inventory since 2015.

The red line is for 2024.  The black line is for 2019.  Note that inventory is up almost double from the record low for the same week in 2022, but still well below normal levels.

Inventory was up 31.8% compared to the same week in 2023 (last week it was up 30.9%), and down 35.9% compared to the same week in 2019 (last week it was down 37.2%). 

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels is slowly closing.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 4/28/2024 06:16:00 PM

Weekend:
• Schedule for Week of April 28, 2024

Monday:
• At 10:30 AM ET, Dallas Fed Survey of Manufacturing Activity for April.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 4 and DOW futures are up 60 (fair value).

Oil prices were up over the last week with WTI futures at $83.85 per barrel and Brent at $89.50 per barrel. A year ago, WTI was at $77, and Brent was at $81 - so WTI oil prices are up about 8% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.64 per gallon. A year ago, prices were at $3.59 per gallon, so gasoline prices are up $0.05 year-over-year.

by Calculated Risk on 4/28/2024 12:39:00 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 March, Realtor.com reported inventory was up 23.5% YoY, but still down almost 38% compared to March 2017 to 2019 levels. 

 Now - on a weekly basis - inventory is up 31.7% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data Week Ending April 20, 2024

• Active inventory increased, with for-sale homes 31.7% above year-ago levels.

For the 24th straight week, there were more homes listed for sale versus the prior year, giving homebuyers more options. As mortgage rates have climbed to new 2024 highs, we could see sellers adjust their plans, since nearly three-quarters of potential sellers also play to buy a home. However, the long build-up to listing–80% have been thinking about selling for 1 to 3 years–could mean that this year’s sellers are less-deterred by market fluctuations.

• New listings–a measure of sellers putting homes up for sale–were up this week, by 13.5% from one year ago.

Since February, the number of homes newly listed for sale has surpassed year ago pace by double-digit with the exception of a few weeks around this year’s spring holidays. As reported in the Realtor.com March housing report, newly listed homes trailed behind every prior year except 2023’s record low.

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

Inventory was up year-over-year for the 24th consecutive week.  

However, inventory is still historically very low.

New listings remain below typical pre-pandemic levels although increasing.