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Friday, December 06, 2024

1st Look at Local Housing Markets in November; Another Year-over-year Sales Gain in November

by Calculated Risk on 12/06/2024 11:33:00 AM

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

A brief excerpt:

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

This is the first look at several early reporting local markets in October. 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 October were mostly for contracts signed in September and October when 30-year mortgage rates averaged 6.18% and 6.43%, respectively (Freddie Mac PMMS). These were the lowest mortgage rate in 2 years!
...
Closed Existing Home SalesIn November, sales in these markets were up 17.0% YoY. Last month, in October, these same markets were up 15.7% year-over-year Not Seasonally Adjusted (NSA).

Note that most of these early reporting markets have shown stronger year-over-year sales than most other markets (for the last several months).

Important: There was one fewer working day in November 2024 (19) as compared to November 2023 (20). So, the year-over-year change in the headline SA data will better than the NSA data suggests (there are other seasonal factors).

Last month, there was one more working day in October 2024 (22) as in October 2023 (21), so seasonally adjusted sales were not as strong year-over-year as NSA sales.
...
This was just several early reporting markets. Many more local markets to come!
There is much more in the article.

Wholesale Used Car Prices Increased in November; Up 0.2% Year-over-year

by Calculated Risk on 12/06/2024 10:51:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Increase in November

Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) were higher in November compared to October. The Manheim Used Vehicle Value Index (MUVVI) rose to 205.4, an increase of 0.2% from a year ago. The seasonal adjustment to the index amplified the change for the month, as non-seasonally adjusted values declined slightly. The non-adjusted price in November decreased by 0.1% compared to October, moving the unadjusted average price down 1.0% year over year.
emphasis added
Manheim Used Vehicle Value Index 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 increased in November (seasonally adjusted) and were up 0.2% year-over-year (YoY).

Comments on November Employment Report

by Calculated Risk on 12/06/2024 09:12:00 AM

The headline jobs number in the November employment report was above expectations, and September payrolls and October payrolls were revised up by 56,000 combined.   The participation rate and the employment population ratio declined, and the unemployment rate increased to 4.2%.



Seasonal Retail Hiring

Typically, retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

Seasonal Retail HiringThis graph really shows the collapse in retail hiring in 2008. Since then, seasonal hiring had increased back close to more normal levels. Note: I expect the long-term trend will be down with more and more internet holiday shopping.

Retailers hired 281 thousand workers Not Seasonally Adjusted (NSA) net in November.  This was slightly lower than last year and suggests slightly less real retail sales this holiday season as last year.

This was seasonally adjusted (SA) to a loss of 28.0 thousand retail jobs in November.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate was unchanged in November at 83.5% from 83.5% in October.

The 25 to 54 employment population ratio decreased to 80.4% from 80.6% the previous month.

Both are near the highest level this millennium.

Average Hourly Wages

WagesThe graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.0% YoY in November.   

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of people employed part time for economic reasons changed little at 4.5 million in November. This measure is up from 4.0 million a year earlier. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons decreased in November to 4.46 million from 4.56 million in October.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that was increased to 7.8% from 7.7% in the previous month. This is down from the record high in April 2020 of 23.0% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.66 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.61 million the previous month.

This is down from post-pandemic high of 4.174 million, and up from the recent low of 1.050 million.

This is above pre-pandemic levels.

Job Streak

Through November 2024, the employment report indicated positive job growth for 47 consecutive months, putting the current streak in 3rd place of the longest job streaks in US history (since 1939).  It appears this streak will survive the annual benchmark revision (that will revise down job growth).

Headline Jobs, Top 10 Streaks
Year EndedStreak, Months
12019113
2199048
32024147
4200746
5197945
6 tie194333
6 tie198633
6 tie200033
9196729
10199525
1Currrent Streak

Summary:

The headline jobs number in the November employment report was above expectations, and September and October payrolls were revised up by 56,000 combined. The participation rate and the employment population ratio declined, and the unemployment rate increased to 4.2%.

This report was boosted by the end of strikes (especially Boeing) and workers returning following the hurricanes.  It probably makes sense to average the last two months, or about 132 thousand per month - down from the 153 thousand hiring pace over the previous 6 months.

November Employment Report: 227 thousand Jobs, 4.2% Unemployment Rate

by Calculated Risk on 12/06/2024 08:30:00 AM

From the BLS: Employment Situation

Total nonfarm payroll employment rose by 227,000 in November, and the unemployment rate changed little at 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment trended up in health care, leisure and hospitality, government, and social assistance. Retail trade lost jobs.
...
The change in total nonfarm payroll employment for September was revised up by 32,000, from +223,000 to +255,000, and the change for October was revised up by 24,000, from +12,000 to +36,000. With these revisions, employment in September and October combined is 56,000 higher than previously reported.
emphasis added
Employment per monthClick on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 227 thousand in November.  Private payrolls increased by 194 thousand, and public payrolls increased 33 thousand.

Payrolls for September and October were revised up 56 thousand, combined.

Year-over-year change employment The second graph shows the year-over-year change in total non-farm employment since 1968.

In November, the year-over-year change was 2.27 million jobs.  Employment was up solidly year-over-year (Although the annual benchmark revision will lower the year-over-year change).

The third graph shows the employment population ratio and the participation rate.

Employment Pop Ratio and participation rate The Labor Force Participation Rate decreased to 62.5% in November, from 62.6% in October. This is the percentage of the working age population in the labor force.

The Employment-Population ratio decreased to 59.8% from 60.0% in October (blue line).

I'll post the 25 to 54 age group employment-population ratio graph later.

unemployment rateThe fourth graph shows the unemployment rate.

The unemployment rate increased to 4.2% in November from 4.1% in October.

This was above consensus expectations, and September and October payrolls were revised up by 56,000 combined.  

This report was boosted by the end of strikes and workers returning after the hurricanes.

I'll have more later ...

Thursday, December 05, 2024

Friday: Employment Report

by Calculated Risk on 12/05/2024 07:52:00 PM

Mortgage Rates Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• At 8:30 AM ET, Employment Report for November.   The consensus is for 183,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Preliminary for December).

November Employment Preview

by Calculated Risk on 12/05/2024 02:39:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for November. The consensus is for 183,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

There were 12,000 jobs added in October, and the unemployment rate was at 4.1%.


From Goldman Sachs:
We estimate nonfarm payrolls rose by 235k in November, above consensus of +215k ... the end of strikes and the recent hurricanes that weighed on October job growth will likely boost November job growth. We estimate that the unemployment rate was unchanged at 4.1%, in line with consensus.
emphasis added
ADP Report: The ADP employment report showed 146,000 private sector jobs were added in November.  This was below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report (this also doesn't include the boost from the end of Boeing strike and bounce back from the hurricane impact in October).

ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased to was at 48.1%, up from 44.4%.   This would suggest about 30,000 jobs lost in manufacturing. The ADP report indicated 26,000 manufacturing jobs lost in November.

The ISM® services employment index decreased to 51.5% from 53.0%. This would suggest 115,000 jobs added in the service sector. Combined this suggests 85,000 jobs added, far below consensus expectations.  (Note: The ISM surveys have been way off recently)

Unemployment Claims: The weekly claims report showed more initial unemployment claims during the reference week at 215,000 in November compared to 242,000 in October.  This suggests fewer layoffs in November compared to October.

Strikes: The CES strike report shows almost 40,000 employees returned from strikes during the reference period in November. This will boost the headline jobs number.

Conclusion: Employment was impacted by strikes and hurricanes in October.  There should be a bounce back in November.  In the four months prior to October, employment gains averaged 140 thousand.  Adding close to 40 thousand for the strikes, and maybe 50 thousand workers returning following the hurricane impact in October, would suggest employment gains will be above consensus expectations.

Realtor.com Reports Active Inventory Up 25.9% YoY

by Calculated Risk on 12/05/2024 02:11:00 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 November, Realtor.com reported inventory was up 26.2% YoY, but still down 21.5% compared to the 2017 to 2019 same month levels. 


 Now - on a weekly basis - inventory is up 25.9% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending Nov. 30, 2024
Active inventory increased, with for-sale homes 25.9% above year-ago levels

For the 56th consecutive week, the number of homes for sale has increased compared with the same time last year. However, this week’s growth was smaller than last week’s, marking the ninth consecutive week of deceleration and tied for the smallest annual increase since late March. Sluggish listing activity, combined with subdued buyer demand, has contributed to this slowdown in inventory growth.

New listings—a measure of sellers putting homes up for sale—plummeted 29% during an idle Thanksgiving week

The number of newly listed homes plummeted 29% last week. While some of the drop may be due to a mortgage rate environment that remains persistently high, most of the large decrease is likely due to the Thanksgiving holiday as sellers are likely deciding to hold off listing their home until buyers are less occupied with their holiday festivities.
Realtor YoY Active ListingsHere is a graph of the year-over-year change in inventory according to realtor.com

Inventory was up year-over-year for the 56th consecutive week.  

However, inventory is still historically low.

New listings remain below typical pre-pandemic levels.

Asking Rents Mostly Unchanged Year-over-year

by Calculated Risk on 12/05/2024 11:03:00 AM

Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year

Brief excerpt:

Another monthly update on rents.

Tracking rents is important for understanding the dynamics of the housing market. Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure. ...

RentWelcome to the December 2024 Apartment List National Rent Report. The national median rent dipped by 0.8% in November, as we get further into the slow season for the rental market. Nationwide rent fell $12 to $1,382, and we’re likely to see that number dip one more time before the year ends. ...

Realtor.com: 15th Consecutive Month with Year-over-year Decline in Rents

In October 2024, the U.S. median rent continued to decline year-over-year for the fifteenth month in a row, down $14 or -0.8% year-over-year for 0-2 bedroom properties across the top 50 metros, faster than the rate of -0.5% seen in September 2024.

Trade Deficit decreased to $73.8 Billion in October

by Calculated Risk on 12/05/2024 08:50:00 AM

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 $73.8 billion in October, down $10.0 billion from $83.8 billion in September, revised.

October exports were $265.7 billion, $4.3 billion less than September exports. October imports were $339.6 billion, $14.3 billion less than September imports.
emphasis added
U.S. Trade Exports Imports Click on graph for larger image.

Exports and imports decreased in October.

Exports are up 1.9% year-over-year; imports are up 4.4% 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.

U.S. Trade Deficit 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 $28.0 billion from $25.7 billion a year ago.

It is possible some importers are trying to beat potential tariffs.

Weekly Initial Unemployment Claims Increase to 224,000

by Calculated Risk on 12/05/2024 08:30:00 AM

The DOL reported:

In the week ending November 30, the advance figure for seasonally adjusted initial claims was 224,000, an increase of 9,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 213,000 to 215,000. The 4-week moving average was 218,250, an increase of 750 from the previous week's revised average. The previous week's average was revised up by 500 from 217,000 to 217,500.
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 218,250.

The previous week was revised up.

Weekly claims were close to the consensus forecast.