by Calculated Risk on 10/09/2024 11:23:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in September

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to September 2019 for each local market (some 2019 data is not available).

This is the first look at several early reporting local markets in September. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in September were mostly for contracts signed in July and August when 30-year mortgage rates averaged 6.85% and 6.50%, respectively (Freddie Mac PMMS).
...
In September, sales in these markets were unchanged YoY. Last month, in August, these same markets were down 2.3% year-over-year Not Seasonally Adjusted (NSA).

Important: There were the same number of working days in September 2024 (20) as in September 2023 (20). So, the year-over-year change in the headline SA data will be similar to the NSA data. Last month there was one fewer working day in August 2024 compared to August 2023 (22 vs 23), so seasonally adjusted sales were down less than NSA sales.

Sales in all of these markets are down significantly compared to September 2019.
...
This was just several early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 10/09/2024 07:00:00 AM

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

Mortgage applications decreased 5.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 4, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 9 percent from the previous week and was 159 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 0.1 percent compared with the previous week and was 8 percent higher than the same week one year ago.

“In the wake of stronger economic data last week, including the September jobs report, mortgage rates moved higher, with the 30-year fixed rate rising to 6.36 percent – the highest since August,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Conventional loan refinances, which tend to have larger balances than government loans and hence are more responsive for a given change in mortgage rates, fell to a greater extent over the week. Purchase application volume was little changed over the week and was 8 percent above last year’s level.”

Added Fratantoni, “As we have highlighted before, the decision to buy a home is impacted by many factors, not just the level of mortgage rates. The largest constraint for many prospective homebuyers over the past year had been the lack of inventory. Now, there are more homes available in many markets across the country, and with mortgage rates still low compared to recent history, at least some potential homebuyers are moving ahead.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.36 percent from 6.14 percent, with points increasing to 0.62 from 0.61 (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 up 8% year-over-year unadjusted. 

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

Purchase application activity is up about 19% from the lows in late October 2023, but still about 1% below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index increased significantly recently as mortgage rates declined but decreased slightly over the last two weeks with as rates increased.

by Calculated Risk on 10/08/2024 08:42:00 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 results for the mortgage purchase applications index.

• At 2:00 PM, FOMC Minutes, Minutes Meeting of September 17-18, 2024

by Calculated Risk on 10/08/2024 08:36:00 PM

Note: the power was out in my neighborhood due to a large fallen tree.  So, this is late ...

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $70.4 billion in August, down $8.5 billion from $78.9 billion in July, revised.

August exports were $271.8 billion, $5.3 billion more than July exports. August imports were $342.2 billion, $3.2 billion less than July imports.
emphasis added

Click on graph for larger image.

Exports increased and imports decreased in August.

Exports are up 5.1% year-over-year; imports are up 7.6% year-over-year.

Both imports and exports decreased sharply due to COVID-19 and then bounced back - imports and exports have generally increased recently.

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China increased to $27.9 billion from $25.9 billion a year ago.

by Calculated Risk on 10/07/2024 07:17:00 PM

From Matthew Graham at Mortgage News Daily: Highest Mortgage Rates in 2 Months

It's been a strange and frustrating couple of weeks for anyone who mistakenly believed that mortgage rates would move lower after the Fed rate cut. ... Bottom line, markets got locked into the belief that data would slowly deteriorate (with a lot of weight being given to the last few jobs reports) only to see the most recent jobs report say "not so fast!" There's a bit of a re-set happening at the moment. We can't know exactly how big it will be until we get through more econ data. [30 year fixed 6.62%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for September.

• At 8:30 AM, Trade Balance report for August from the Census Bureau.  The consensus is for the deficit to be $71.4 billion in August, from $78.8 billion in July.

by Calculated Risk on 10/07/2024 11:42:00 AM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: Insurance Costs "Spike", Especially in Florida

Brief excerpt:

The largest insurance increases are in Florida (for obvious reasons - stay safe this week with Hurricane Milton).

• While monthly principal, interest, and property tax obligations are up an average 15-17% since the beginning of 2020, the average monthly property insurance payment is up a whopping 52% over that same period

• In New Orleans, as well as Florida markets such as Deltona, Jacksonville and Cape Coral, monthly property insurance payments increased more than 80%

• Premiums also surged in areas with rising home values, including Utah; Boise, Idaho; and Midwest/Eastern Slope markets like Omaha, Denver and Colorado Springs, which have faced increased risks from tornados and hail damage

“Annual price growth slowed to +3.0%”

There is much more in the newsletter.

by Calculated Risk on 10/07/2024 09:40:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Declined in September

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were lower in September compared to August. The Manheim Used Vehicle Value Index (MUVVI) fell to 203.0, a decline of 5.3% from a year ago. The seasonal adjustment to the index amplified the change for the month, as non-seasonally adjusted values fell slightly. The non-adjusted price in September decreased by 0.1% compared to August, moving the unadjusted average price down 4.9% year over year.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices decreased in September (seasonally adjusted) and were down 5.3% year-over-year (YoY).

by Calculated Risk on 10/07/2024 08:11:00 AM

Altos reports that active single-family inventory was up 0.4% week-over-week. Inventory is now up 48.6% from the February seasonal bottom.  

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

Click on graph for larger image.

The red line is for 2024.  The black line is for 2019.  

Inventory was up 36.7% compared to the same week in 2023 (last week it was up 36.7%), and down 23.1% compared to the same week in 2019 (last week it was down 23.4%). 

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

This second inventory graph is courtesy of Altos Research.

As of October 4th, inventory was at 734 thousand (7-day average), compared to 731 thousand the prior week. 

This is the highest level of inventory since May 2020.  

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 10/06/2024 07:34:00 PM

Weekend:
• Schedule for Week of October 6, 2024

Monday:
• No major economic releases scheduled.

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

Oil prices were up over the last week with WTI futures at $73.98 per barrel and Brent at $77.59 per barrel. A year ago, WTI was at $83, and Brent was at $88 - so WTI oil prices are down about 10% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.13 per gallon. A year ago, prices were at $3.71 per gallon, so gasoline prices are down $0.58 year-over-year.

by Calculated Risk on 10/06/2024 08:14:00 AM

Note: I covered apartments and offices in the newsletter: Moody's: Apartment Vacancy Rate Unchanged in Q3; Office Vacancy Rate at Record High

From Moody’s Analytics economists: Multifamily Performance Steadied, Office Stress Continued to Manifest, Retail Vacancy Declined, And Industrial Cooled Down

The Q3 2024 data indicated a slight decrease in the longstanding 10.4% vacancy rate for the retail sector, dropping to 10.3% this quarter. Asking rents saw a marginal increase of 0.3% to $21.85, while effective rents rose by 0.4% to $24.87 per square foot. Consumer spending in the third quarter has thus far exceeded expectations, particularly in July, which experienced a 1.1% increase. Although August saw a modest 0.1% increase, it surpassed the anticipated -0.2% decrease. These results were propelled by robust performance in online purchases and core retail sales, excluding automobiles, gasoline, building materials, and food services, alongside a decline in the unemployment rate following four consecutive monthly increases.

This graph shows the strip mall vacancy rate starting in 1980 (prior to 2000 the data is annual). 

Back in the '80s, there was overbuilding in the mall sector even as the vacancy rate was rising. This was due to the very loose commercial lending that led to the S&L crisis.

In the mid-'00s, mall investment picked up as mall builders followed the "roof tops" of the residential boom (more loose lending). This led to the vacancy rate moving higher even before the recession started. Then there was a sharp increase in the vacancy rate during the recession and financial crisis.

Recently the vacancy rate has held fairly steady at a high level as online shopping continues to impact brick and mortar stores.