by Calculated Risk on 12/09/2024 08:51:00 PM

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

Mortgage rates ended last week with an impressive drop to the lowest levels in more than a month and a half. Today's rates ended up being the 2nd lowest over that time after the average lender moved to just slightly higher levels to start the new new week.
...
In terms of economic reports, Wednesday's Consumer Price Index (CPI) has the most potential to cause volatility, for better or worse. [30 year fixed 6.72%]
emphasis added

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

by Calculated Risk on 12/09/2024 02:15:00 PM

From Dodge Data Analytics: Dodge Momentum Index Slides 2% in November

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, decreased 2.3% in November to 191.5 (2000=100) from the revised October reading of 196.0. Over the month, commercial planning fell 4.6% while institutional planning improved 2.5%.

“Throughout 2024, we’ve seen robust growth in nonresidential planning activity – but labor shortages and high construction costs have prevented those projects from moving through the planning process at a normal pace. The current backlog may be constraining demand for commercial planning in the short-term,” stated Sarah Martin, associate director of forecasting at Dodge Construction Network. “Uncertainty over new tariff and immigration policies under president-elect Trump’s administration may also be generating some pause with developers, although it’s a bit too early to tell if that’s the primary factor here. Overall, easing monetary policy will help alleviate the backlog of projects in the planning queue throughout 2025 and spur more demand for projects in the coming months.”

On the commercial side, slower data center, office, warehouse and retail planning drove much of this month’s decline, while strong growth in education planning informed much of the growth on the institutional side. The institutional portion of the DMI has grown in 5 of the last 6 months.

In November, the DMI was 12% higher than year-ago levels. The commercial segment was up 13% from November 2023, while the institutional segment was up 8% over the same period. The influence of data centers on the DMI this year has been substantial. If we remove all data center projects in 2023 and 2024, commercial planning would be down 6% from year-ago levels, and the entire DMI would be down 1%.
...
The DMI is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 191.5 in November, down from 196.0 the previous month.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests a slowdown in early 2025, but a pickup in mid-2025.  

Commercial construction is typically a lagging economic indicator.

by Calculated Risk on 12/09/2024 10:57:00 AM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: Refinance Activity Increased Especially for Rate/Term Refinances

Brief excerpt:

When mortgage rates declined in September and October, there was a surge in refinance activity, especially in rate/term refinances by homeowners with mortgage rates in the 7%+ range.

• More than 300K borrowers closed on refinances in September and October, including nearly 150K rate/term refinances
...
• Refinances out of 2023 and 2024 vintages drove 78% of rate/term lending, and nearly half of refinance activity overall

There is much more in the newsletter.

by Calculated Risk on 12/09/2024 08:11:00 AM

Altos reports that active single-family inventory was down 2.3% week-over-week.  Inventory is now 6.7% below the peak for the year (7 weeks ago).

Inventory will now decline seasonally until early next year.

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 26.2% compared to the same week in 2023 (last week it was up 27.1%), and down 16.8% compared to the same week in 2019 (last week it was down 17.2%). 

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 Dec 6th, inventory was at 690 thousand (7-day average), compared to 707 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 12/08/2024 06:21:00 PM

Weekend:
• Schedule for Week of December 8, 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 down over the last week with WTI futures at $67.14 per barrel and Brent at $71.06 per barrel. A year ago, WTI was at $71, and Brent was at $76 - so WTI oil prices are down about 5% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.97 per gallon. A year ago, prices were at $3.15 per gallon, so gasoline prices are down $0.18 year-over-year.

by Calculated Risk on 12/08/2024 08:21:00 AM

From CoreLogic: CoreLogic: US Homeowners See Equity Gains Drop by More Than 5 Percent in Q3

CoreLogic® ... today released the Homeowner Equity Report (HER) for the third quarter of 2024. The report shows that U.S. homeowners with mortgages (which account for roughly 62% of all properties) saw home equity increase by $425 billion since the third quarter of 2023, a gain of 2.5% year over year, bringing the total net homeowner equity to over $17.5 trillion in the third quarter of 2024.

For the first time since the fourth quarter of 2022, the share of negative equity rose in the U.S. on a quarterly basis. Just compared to last quarter, the number of residential properties that fell into negative equity increased by 30,000 homes or 1.8%.
...
“As home prices flattened in the third quarter, home equity gains also slowed, even declined in some regions of the country,” said Dr. Selma Hepp, CoreLogic Chief Economist. “While home equity closely depends on home price changes, equity losses are also tied to natural disaster events since households can lose a lot of their equity following a catastrophe, particularly if not property insured. As a result, following Maui’s 2023 devastating wildfire, Hawaii now tops the list with largest decline in home equity.”

From the report:

In the third quarter of 2024, the total number of mortgaged residential properties with negative equity increased by 3.5% from the second quarter of 2024, to currently about 990,000 homes with negative equity, or 1.8% of all mortgaged properties. On a year-over-year basis, negative equity declined by 3%, or about 30,000 fewer homes in negative equity from the third quarter of 2023.

This map from the report shows the percent of mortgaged homes with negative equity by state.

by Calculated Risk on 12/07/2024 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Inflation Adjusted House Prices 1.4% Below 2022 Peak

• 1st Look at Local Housing Markets in November

• Freddie Mac House Price Index Increased in October; Up 3.7% Year-over-year

• FHFA Announces Baseline Conforming Loan Limit Will Increase to $806,500

• Asking Rents Mostly Unchanged Year-over-year

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

by Calculated Risk on 12/07/2024 08:11:00 AM

The key economic report this week is November CPI.

----- Monday, December 9th -----
No major economic releases scheduled.

----- Tuesday, December 10th -----
6:00 AM: NFIB Small Business Optimism Index for November.

----- Wednesday, December 11th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The Consumer Price Index for November from the BLS. The consensus is for a 0.3% increase in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 2.7% year-over-year and core CPI to be up 3.3% YoY.

----- Thursday, December 12th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 227 thousand initial claims, up from 224 thousand last week.

8:30 AM: The Producer Price Index for November from the BLS. The consensus is for a 0.3% increase in PPI, and a 0.2% increase in core PPI.

12:00 PM: Q3 Flow of Funds Accounts of the United States from the Federal Reserve.

----- Friday, December 13th -----
No major economic releases scheduled.

by Calculated Risk on 12/06/2024 07:01:00 PM

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

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So I'm no longer tracking hospitalizations.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week	517	570	≤3501
1my goals to stop weekly posts, 🚩 Increasing number weekly for Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported.

Although weekly deaths met the original goal to stop posting, I'm continuing to post now that deaths are above the goal again.  

Weekly deaths are now declining and will likely continue to decline based on wastewater sampling but are still above the low of 313 in early June 2024.

And here is a graph I'm following concerning COVID in wastewater as of December 5th:

This appears to be a leading indicator for COVID hospitalizations and deaths.

COVID in wastewater is fairly low - only about 20% higher than the lows of last May - suggesting weekly deaths will continue to decline.

by Calculated Risk on 12/06/2024 02:35:00 PM

From BofA:

Since our last weekly publication, our 3Q GDP tracking estimate has moved up a tenth to 2.9% q/q saar from the second official print of 2.8% q/q saar. Additionally, we initiated our 4Q US GDP tracker on Nov 15th with the October retail sales print. Since then, our 4Q US GDP tracker has gone up one-tenth from our official forecast of 2.0% to 2.1%. [Dec 6th estimate]
emphasis added

From Goldman:

We left our Q4 GDP tracking and domestic final sales estimates unchanged at +2.4% and +2.0%, respectively. [Dec 5th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2024 is 3.3 percent on December 5, up from 3.2 percent on December 2. After recent releases from the US Census Bureau, the Institute for Supply Management, and the US Bureau of Economic Analysis, the nowcast of fourth-quarter real gross private domestic investment growth increased from 1.2 percent to 1.8 percent. [Dec 5th estimate]