by Calculated Risk on 12/19/2024 10:50:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: NAR: Existing-Home Sales Increased to 4.15 million SAAR in November

Excerpt:

The sales rate was above the consensus forecast (but close to housing economist Tom Lawler’s estimate).
...
Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The fourth graph shows existing home sales by month for 2023 and 2024.

Sales increased 6.1% year-over-year compared to November 2023.
...
On an NSA basis, sales are down 1.5% year-to-date compared to 2023.

by Calculated Risk on 12/19/2024 10:00:00 AM

From the NAR: Existing-Home Sales Elevated 4.8% in November; Post Strongest Year-Over-Year Increase Since June 2021

Existing-home sales grew in November, according to the National Association of Realtors®. Sales advanced in three major U.S. regions and remained steady in the West. Year-over-year, sales climbed in all four regions.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – improved 4.8% from October to a seasonally adjusted annual rate of 4.15 million in November. Year-over-year, sales bounced 6.1% (up from 3.91 million in November 2023).
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Total housing inventory registered at the end of November was 1.33 million units, down 2.9% from October but up 17.7% from one year ago (1.13 million). Unsold inventory sits at a 3.8-month supply at the current sales pace, down from 4.2 months in October but up from 3.5 months in November 2023.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1994.

Sales in November (4.15 million SAAR) were up 4.8% from the previous month and were 6.1% above the November 2023 sales rate.  This was the second year-over-year increase since July 2021.  Last month was the first.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.33 million in November from 1.37 million the previous month.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 17.7% year-over-year (blue) in November compared to November 2023.

Months of supply (red) decreased to 3.8 months in November from 4.2 months the previous month.

The sales rate was above the consensus forecast.  I'll have more later. 

by Calculated Risk on 12/19/2024 08:37:00 AM

From the BEA: Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, Third Quarter 2024

Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the third quarter of 2024, according to the "third" estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.8 percent. The update primarily reflected upward revisions to exports and consumer spending that were partly offset by a downward revision to private inventory investment. Imports, which are a subtraction in the calculation of GDP, were revised up.
emphasis added

Here is a Comparison of Third and Second Estimates. PCE growth was revised up from 3.5% to 3.7%. Residential investment was revised up from -5.0% to -4.3%.

by Calculated Risk on 12/19/2024 08:30:00 AM

The DOL reported:

In the week ending December 14, the advance figure for seasonally adjusted initial claims was 220,000, a decrease of 22,000 from the previous week's unrevised level of 242,000. The 4-week moving average was 225,500, an increase of 1,250 from the previous week's unrevised average of 224,250.
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 225,500.

The previous week was unrevised.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 12/19/2024 08:27:00 AM

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 232 thousand initial claims, down from 242 thousand last week.

• Also at 8:30 AM, Gross Domestic Product, 3rd quarter 2024 (Third estimate). The consensus is for real GDP at 2.8% annualized, unchanged from the second estimate of 2.8%.

• Also at 8:30 AM, the Philly Fed manufacturing survey for December. The consensus is for a reading of 2.2, up from -6.0.

• At 10:00 AM, Existing Home Sales for November from the National Association of Realtors (NAR). The consensus is for 3.97 million SAAR, up from 3.96 million.

• At 11:00 AM, the Kansas City Fed manufacturing survey for December.

by Calculated Risk on 12/18/2024 05:31:00 PM

Today, in the Calculated Risk Real Estate Newsletter: 4th Look at Local Housing Markets in November

A brief excerpt:

The NAR is scheduled to release November Existing Home sales tomorrow, Thursday, December 19th at 10:00 AM. The consensus is for 3.97 million SAAR, up from 3.96 million in October. Last year, the NAR reported sales in November 2023 at 3.91 million SAAR. This will be the second year-over-year gain since July 2021 (last month was the first).

Housing economist Tom Lawler expects the NAR to report sales of 4.09 million SAAR for November.
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Here is a look at months-of-supply using NSA sales. Note the regional differences with more months-of-supply in the South, especially in Florida and Texas (although November statistics in Florida were likely still impacted by Hurricane Milton).
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Several local markets - like Illinois, Miami, New Jersey and New York - will report after the NAR release.

There is much more in the article.

by Calculated Risk on 12/18/2024 02:09:00 PM

Statement here.

Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET.

Here are the projections.  Since the last projections were released, economic growth has been above expectations, the unemployment rate is below expectations, and inflation close to expectations (although there are some "base effects" that might push PCE inflation up in Q4).

So, the projections for GDP were revised up for 2024, the unemployment rate revised down for 2024, and inflation revised up for the next couple of years.

In September, the FOMC participants’ midpoint of the target level for the federal funds rate was around 3.375% at the end of 2025 (3.1%–3.6%) and the long run range was 2.5% to 3.5%.  The FOMC participants’ midpoint of the target range is now at 3.875% at the end of 2025 (3.6%-4.1%) and the long run range is 2.8% to 3.6%.  

The BEA's second estimate for Q3 GDP showed real growth at 2.8% annualized, following 3.0% annualized real growth in Q2, and 1.6% in Q1.  Current estimates for Q4 GDP are around 2.6%.  That put real growth in 2024, Q4 over Q4, at 2.5% - well above the top end of the September FOMC projections.  

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2024	2025	2026	2027
Dec 2024	2.4 to 2.5	1.8 to 2.2	1.9 to 2.1	1.8 to 2.0
Sept 2024	1.9 to 2.1	1.8 to 2.2	1.9 to 2.3	1.8 to 2.1

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 4.2% in November (and 4.1% in October).  This is below the low end of the September projections for Q4.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2024	2025	2026	2027
Dec 2024	4.2	4.2 to 4.5	4.1 to 4.4	4.0 to 4.4
Sept 2024	4.3 to 4.4	4.2 to 4.5	4.0 to 4.4	4.0 to 4.4

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of October 2024, PCE inflation increased 2.3 percent year-over-year (YoY). This is in the middle of the September projection range.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2024	2025	2026	2027
Dec 2024	2.4 to 2.5	2.3 to 2.6	2.0-2.2	2.0
Sept 2024	2.2 to 2.4	2.1 to 2.2	2.0	2.0

PCE core inflation increased 2.8 percent YoY in October. This was slightly above the range of FOMC projections for Q4.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2024	2025	2026	2027
Dec 2024	2.8 to 2.9	2.5 to 2.7	2.0-2.3	2.0
Sept 2024	2.6 to 2.7	2.1 to 2.3	2.0	2.0

by Calculated Risk on 12/18/2024 02:00:00 PM

Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET.

FOMC Statement:

Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; and Christopher J. Waller. Voting against the action was Beth M. Hammack, who preferred to maintain the target range for the federal funds rate at 4-1/2 to 4-3/4 percent.
emphasis added

by Calculated Risk on 12/18/2024 11:30:00 AM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: ABI November 2024: Architecture firm billings remain flat

Despite the AIA/Deltek Architecture Billings Index (ABI) score dipping slightly below 50 for the month, it remains close enough to that threshold to indicate that the share of firms that reported declining billings was essentially the same as the share that reported increasing billings. Although it would be better to see the majority of firms reporting growth, the fact that billings have returned to flat after declining for nearly two full years is an encouraging sign that conditions are improving for more firms. Inquiries into new work continued to grow steadily, and while the value of newly signed design contracts declined for the eighth consecutive month, the pace of that decline slowed this month.

Business conditions continued to improve in the West and South regions of the country in November, where firm billings increased for the second consecutive month. Most notable was the strength of billings growth in the West, where the score was the highest it has been since mid-2022. Although billings continued to decline at firms located in the Northeast and Midwest, the pace of the decline slowed in both regions this month. There was significant improvement in business conditions at firms with a multifamily residential specialization in November as well, where they reported their first increase in billings since August 2022, at the end of the post-pandemic boom. In addition, billings increased for the second consecutive month at firms with an institutional specialization. While billings continued to decline at firms with a commercial/industrial specialization, the pace of the decline slowed significantly.
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The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients.
emphasis added

• Northeast (46.9); Midwest (48.1); South (50.0); West (54.3)

• Sector index breakdown: commercial/industrial (49.4); institutional (50.6); multifamily residential (50.8)

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 49.7 in November, down from 50.3 in October.  Anything below 50 indicates a decrease in demand for architects' services.

This index has indicated contraction for 24 of the last 26 months.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment into 2025.

This was first positive score for multi-family since August 2022.  This suggests we will see further weakness in multi-family starts, but a possible pickup in the 2nd half of 2025.

by Calculated Risk on 12/18/2024 09:09:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Housing Starts Decreased to 1.289 million Annual Rate in November

A brief excerpt:

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

The third graph shows the month-to-month comparison for total starts between 2023 (blue) and 2024 (red).

Total starts were down 14.6% in November compared to November 2023. The YoY decrease in November total starts was a combination of further weakness in multi-family starts and a difficult comparison to starts in November 2023.

Single family starts have been up year-over-year in 13 of the last 17 months, whereas multi-family has been up year-over-year in only 2 of last 18 months. Year-to-date (YTD), total starts are down 4.3% compared to the same period in 2023. Single family starts are up 7.2% YTD, and multi-family down 30.1% YTD.

There is much more in the article.