by Calculated Risk on 1/08/2025 08:12:00 PM

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

Thursday:
• The US NYSE and the NASDAQ will be closed in observance of a National Day of Mourning for former President Jimmy Carter.

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

• At 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for a decrease to 210 thousand from 211 thousand last week.

by Calculated Risk on 1/08/2025 04:15:00 PM

From Dodge Data Analytics: Dodge Momentum Index Grows 10% in December

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, grew 10.2% in December to 212.0 (2000=100) from the revised November reading of 192.3. Over the month, commercial planning increased 14.2% while institutional planning improved 2.5%.

“Commercial activity rebounded strongly in December, thanks to a re-acceleration in data center and warehouse planning activity,” stated Sarah Martin, associate director of forecasting at Dodge Construction Network. “Overall, the strong performance of the Momentum Index this past year is expected to support nonresidential construction spending throughout 2025.”

On the commercial side, data center and warehouse planning drove much of the growth this month, while stronger healthcare and education activity supported the institutional portion. In December, the DMI was up 19% when compared to year-ago levels. The commercial segment was up 30% from December 2023, while the institutional segment was flat 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 up 8% from year-ago levels, and the entire DMI would be up 5%.
...
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 212.0 in December, up from 192.3 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 1/08/2025 02:38:00 PM

From the Fed: Minutes of the Federal Open Market Committee, December 17–18, 2024. Excerpt:

With regard to the outlook for inflation, participants expected that inflation would continue to move toward 2 percent, although they noted that recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated. Several observed that the disinflationary process may have stalled temporarily or noted the risk that it could. A couple of participants judged that positive sentiment in financial markets and momentum in economic activity could continue to put upward pressure on inflation. All participants judged that uncertainty about the scope, timing, and economic effects of potential changes in policies affecting foreign trade and immigration was elevated. Reflecting that uncertainty, participants took varied approaches in accounting for these effects. A number of participants indicated that they incorporated placeholder assumptions to one degree or another into their projections. Other participants indicated that they did not incorporate such assumptions, and a few participants did not indicate whether they incorporated such assumptions.
emphasis added

by Calculated Risk on 1/08/2025 01:02:00 PM

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

A brief excerpt:

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

This is the first look at several early reporting local markets in December. 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 December were mostly for contracts signed in October and November when 30-year mortgage rates averaged 6.43% and 6.81%, respectively (Freddie Mac PMMS). This was an increase from the average rate for homes that closed in November, but down from the average rate of 7.5% in October and November 2023.
...
In December, sales in these markets were up 18.1% YoY. Last month, in November, these same markets were up 17.6% year-over-year Not Seasonally Adjusted (NSA).

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

Important: There was one more working day in December 2024 (21) as compared to December 2023 (20). So, the year-over-year change in the headline SA data will less than the NSA data suggests (there are other seasonal factors).
...
This was just several early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 1/08/2025 09:58:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Decreased in December

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were lower in December compared to November. The Manheim Used Vehicle Value Index (MUVVI) fell to 204.8, an increase of 0.4% from a year ago. The seasonal adjustment to the index reduced the change for the month, as non-seasonally adjusted values declined at a higher rate. The non-adjusted price in December decreased by 0.8% compared to November, moving the unadjusted average price up 0.3% 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 December (seasonally adjusted) and were up 0.4% year-over-year (YoY).

by Calculated Risk on 1/08/2025 08:15:00 AM

From ADP: ADP National Employment Report: Private employers added 122,000 jobs in December

“The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains. Health care stood out in the second half of the year, creating more jobs than any other sector.
emphasis added

This was below the consensus forecast of 143,000. The BLS report will be released Friday, and the consensus is for 150,000 non-farm payroll jobs added in December.

by Calculated Risk on 1/08/2025 07:00:00 AM

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

Mortgage applications decreased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 3, 2025. This week’s results include an adjustment for the New Year’s holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 47 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 6 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 43 percent compared with the previous week and was 15 percent lower than the same week one year ago.

“Applications decreased last week as rising mortgage rates continued to discourage buyers from entering the market and put a damper on purchase activity. The 30-year fixed rate increased for the fourth consecutive week, reaching 6.99 percent – the highest rate since July 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications declined for both conventional and government loans and dropped to the slowest weekly pace since February 2024. Refinance applications increased despite higher rates, but the increase was compared to recent low levels and was entirely driven by an increase in VA refinances, which continue to show weekly swings.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.99 percent from 6.97 percent, with points decreasing to 0.68 from 0.72 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is down 15% year-over-year unadjusted. 

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

Purchase application activity is up about 2% from the lows in late October 2023 and is now 15% below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index is very low.

by Calculated Risk on 1/07/2025 08:01:00 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 8:15 AM, The ADP Employment Report for December. This report is for private payrolls only (no government). The consensus is for 143,000, down from 146,000 jobs added in November.

by Calculated Risk on 1/07/2025 04:49:00 PM

Notes: This CoreLogic House Price Index report is for November. The recent Case-Shiller index release was for October. The CoreLogic HPI is a three-month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic: Northeastern, New England States Continue to Lead US for Annual Home Price Growth in November

• The national home price gain was 3.4% year over year in November 2024, down from the 5.2% growth recorded in the same month of 2023.

• Home prices are projected to rise by 3.8% annually by November 2025 after hitting a new high this spring.

• Northeastern and New England states took the top five spots for year-over-year appreciation.

• Seventeen states posted new price peaks in November.
...
U.S. home price gains remained static since the summer of 2022 in November, but 17 states reached new highs ...

“Heading into the end of the year, home prices remained relatively flat though showing some marginal improvement from the weakness seen heading into the fall and following reduced homebuyer demand amid the summer mortgage rate surge,” said CoreLogic Chief Economist Selma Hepp. “Nevertheless, the cooling home price growth trend is expected to continue well into 2025 partly due to the base effect and comparison with strong early 2023 appreciation and partly because of the expectations of higher mortgage rates over the course of 2025,” Hepp continued. “Regionally, variations persist, as some more affordable areas – including smaller metros in the Midwest – remain in high demand and continue to see upward home price pressures.”
emphasis added

This was the same YoY increase as reported for October.

This map is from the report.

Nationally, home prices increased by 3.4% year over year in November. No state posted an annual home price decline. The states with the highest increases year over year were New Jersey (up by 7.8%) and Rhode Island (up by 7.3%).

by Calculated Risk on 1/07/2025 01:48:00 PM

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. ...

Welcome to the January 2025 Apartment List National Rent Report. The national median monthly rent closed out 2024 at $1,373 in December, after declining by 0.6 percent, or $8, from the prior month. Year-over-year rent growth nationally also currently stands at -0.6 percent, meaning that the typical apartment is currently renting for slightly less than it was one year ago. ...

Realtor.com: 16th Consecutive Month with Year-over-year Decline in Rents

In November 2024, the U.S. median rent continued to decline year-over-year for the sixteenth month in a row, down $19 or -1.1% year-over-year for 0-2 bedroom properties across the top 50 metros, faster than the rate of -0.8% seen in October 2024.

This is much more in the article.