by Calculated Risk on 9/29/2022 08:35:00 AM

From the BEA: Gross Domestic Product (Third Estimate), GDP by Industry, and Corporate Profits (Revised), 2nd Quarter 2022 and Annual Update

Real gross domestic product (GDP) decreased at an annual rate of 0.6 percent in the second quarter of 2022, according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 1.6 percent (same as previously published).

The “third” estimate of GDP released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the decrease in real GDP was also 0.6 percent. The update primarily reflected an upward revision to consumer spending that was offset by a downward revision to exports. Imports, which are a subtraction in the calculation of GDP, were revised down
...
Real gross domestic income (GDI) increased 0.1 percent in the second quarter, a downward revision of 1.3 percentage points from the previous estimate. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 0.3 percent in the second quarter, a downward revision of 0.7 percentage point.
emphasis added

Here is a Comparison of Third and Second Estimates. PCE growth was revised up from 1.5% to 2.0%. Residential investment was revised down from -16.2% to -17.8%.

by Calculated Risk on 9/28/2022 09:04:00 PM

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released.  The consensus is for an increase to 218 thousand from 213 thousand last week.

• Also, at 8:30 AM, Gross Domestic Product (Third Estimate), GDP by Industry, and Corporate Profits (Revised), 2nd Quarter 2022 and Annual Update The consensus is that real GDP decreased 0.6% annualized in Q2, unchanged from the second estimate of -0.6%.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
New Cases per Day2	50,397	55,529	≤5,0001
Hospitalized2	23,531	25,768	≤3,0001
Deaths per Day2	354	379	≤501
1my goals to stop daily posts, 27-day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the daily (columns) and 7-day average (line) of deaths reported.

NOTE: Cases have declined by more than half, and deaths lag cases - so we might see average daily deaths in the 200s soon (better, but still too high).

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 9/28/2022 04:17:00 PM

Two key points:
1) There is a clear seasonal pattern for house prices.
2) The surge in distressed sales during the housing bust distorted the seasonal pattern.

For in depth description of these issues, see Jed Kolko's article from 2014 "Let’s Improve, Not Ignore, Seasonal Adjustment of Housing Data"

Note: I was one of several people to question the change in the seasonal factor (here is a post in 2009) - and this led to S&P Case-Shiller questioning the seasonal factor too (from April 2010).  I still use the seasonal factor (I think it is better than using the NSA data).

Click on graph for larger image.

This graph shows the month-to-month change in the NSA Case-Shiller National index since 1987 (through July 2022). The seasonal pattern was smaller back in the '90s and early '00s and increased once the bubble burst.

The seasonal swings declined following the bust, however the recent price surge changed the month-over-month pattern.

The second graph shows the seasonal factors for the Case-Shiller National index since 1987. The factors started to change near the peak of the bubble, and really increased during the bust since normal sales followed the regular seasonal pattern - and distressed sales happened all year.   

The swings in the seasonal factors have decreased, and the seasonal factors had been moving back towards more normal levels.

Note that the recent price surge hasn't distorted the seasonal factors.  Unless there is a wave of distressed sales (unlikely due to mostly solid lending), the seasonal pattern won't be distorted like during the housing bust.

by Calculated Risk on 9/28/2022 11:15:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Pace of Rent Increases Continues to Slow

A brief excerpt:

Here is a graph of the year-over-year (YoY) change for these measures since January 2015. All of these measures are through August 2022 (Apartment List through September 2022).

Note that new lease measures (Zillow, Apartment List) dipped early in the pandemic, whereas the BLS measures were steady. Then new leases took off, and the BLS measures are picking up.
...
The Zillow measure is up 12.3% YoY in August, down from 13.8% YoY in July. This is down from a peak of 17.2% YoY in February.

The ApartmentList measure is up 7.5% YoY as of September, down from 9.8% in August. This is down from the peak of 18.0% YoY last November.

Rents are still increasing, and we should expect this to continue to spill over into measures of inflation. The Owners’ Equivalent Rent (OER) was up 6.3% YoY in August, from 5.8% YoY in July - and will likely increase further in the coming months.
...
My suspicion is rent increases will slow further over the coming months as the pace of household formation slows, and more supply comes on the market.

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 9/28/2022 10:03:00 AM

From the NAR: Pending Home Sales Dropped 2.0% in August

Pending home sales sagged for the third straight month in August, according to the National Association of REALTORS®. Three out of four major regions experienced month-over-month decreases in transactions, however, the West saw a modest gain. Year-over-year, all four regions posted double-digit declines.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, fell 2.0% to 88.4 in August. Year-over-year, pending transactions dwindled by 24.2%. An index of 100 is equal to the level of contract activity in 2001.

"The direction of mortgage rates – upward or downward – is the prime mover for home buying, and decade-high rates have deeply cut into contract signings," said NAR Chief Economist Lawrence Yun. "If mortgage rates moderate and the economy continues adding jobs, then home buying should also stabilize."
...
The Northeast PHSI decreased 3.4% from last month to 76.6, down 19.0% from August 2021. The Midwest index fell 5.2% to 88.4 in August, a 21.1% drop from the previous year.

The South PHSI slid 0.9% to 105.4 in August, a decline of 24.2% from a year ago. The West index rose by 1.4% in August to 71.0, down 31.3% from August 2021.
emphasis added

This was a larger decline than expected for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in September and October.

by Calculated Risk on 9/28/2022 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 September 23, 2022.

... The Refinance Index decreased 11 percent from the previous week and was 84 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.4 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 29 percent lower than the same week one year ago.

“Applications for both purchase and refinances declined last week as mortgage rates continued to increase to multi-year highs following more aggressive policy measures from the Federal Reserve to bring down inflation. Additionally, ongoing uncertainty about the impact of the Fed’s reduction of its MBS and Treasury holdings is adding to the volatility in mortgage rates. The 30-year fixed rate was 6.52 percent, its highest level since mid-2008. After a brief pause in July, mortgage rates have increased more than a percentage point over the past six weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With rates now more than double what they were a year ago, the pace of refinancing is running at a 22-year low and last week was more than 80 percent below last year’s level. Similarly, purchase activity was 29 percent lower than a year ago, with higher rates and economic uncertainty weighing on buyers’ decisions.”

Added Kan, “With the recent jump in rates, the ARM share reached 10 percent of applications and almost 20 percent of dollar volume. ARM loans remain a viable option for qualified borrowers in this rising rate environment.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.52 percent from 6.25 percent, with points increasing to 1.15 from 0.71 (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 refinance index since 1990.

With higher mortgage rates, the refinance index has declined sharply this year.

The refinance index is at the lowest level since the year 2000.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 29% year-over-year unadjusted.

The purchase index is only 9% above the pandemic low.

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

by Calculated Risk on 9/27/2022 08:53:00 PM

From Matthew Graham at Mortgage News Daily: Yes, Mortgage Rates Are Now Over 7%, But It's Complicated

That brings us to the bottom line on 7% not necessarily being 7%. Most rate quotes and most major rate indices include upfront "points" or other cost assumptions (and in larger amounts than normal). The presence of points means you could definitely still get 6.625% today. You'd just be paying more for it upfront. [30 year fixed 7.08%]
emphasis added

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

• At 10:00 AM, Pending Home Sales Index for August. The consensus is 1.0% decrease in the index.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
New Cases per Day2	49,808	56,844	≤5,0001
Hospitalized2	23,355	26,111	≤3,0001
Deaths per Day2	353	385	≤501
1my goals to stop daily posts, 27-day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the daily (columns) and 7-day average (line) of deaths reported.

NOTE: Cases have declined by more than half, and deaths lag cases - so we might see average daily deaths in the 200s soon (better, but still too high).

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 9/27/2022 03:54:00 PM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Increased in August; Completed Inventory Increased

Brief excerpt:

The next graph shows the months of supply by stage of construction. “Months of supply” is inventory at each stage, divided by the sales rate.

There are 0.86 months of completed supply (red line). This is about 60% of the normal level.

The inventory of new homes under construction is at 5.36 months (blue line). This elevated level of homes under construction is due to supply chain constraints.

And a record 106 thousand homes have not been started - about 1.86 months of supply (grey line) - about double the normal level. Homebuilders are probably waiting to start some homes until they have a firmer grasp on prices and demand.
...
First, as I discussed yesterday, the Census Bureau overestimates sales, and underestimates inventory when cancellation rates are rising, see: New Home Sales and Cancellations: Net vs Gross Sales. So, take the headline sales number with a large grain of salt - the actual negative impact on the homebuilders is greater than the headline number suggests!

There are a large number of homes under construction, and this suggests we will see a sharp increase in completed inventory over the next several months - and that will put pressure on new home prices.

You can subscribe at https://calculatedrisk.substack.com/.

by Calculated Risk on 9/27/2022 10:09:00 AM

The Census Bureau reports New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 685 thousand.

The previous three months were revised up, combined.

Sales of new single‐family houses in August 2022 were at a seasonally adjusted annual rate of 685,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 28.8 percent above the revised July rate of 532,000, but is 0.1 percent below the August 2021 estimate of 686,000.
emphasis added

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

New home sales are now at pre-pandemic levels.

The second graph shows New Home Months of Supply.

The months of supply decreased in August to 8.1 months from 10.4 months in July.

The all-time record high was 12.1 months of supply in January 2009. The all-time record low was 3.5 months, most recently in October 2020.

This is well above the top of the normal range (about 4 to 6 months of supply is normal).

"The seasonally‐adjusted estimate of new houses for sale at the end of August was 461,000. This represents a supply of 8.1 months at the current sales rate."

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In August 2022 (red column), 55 thousand new homes were sold (NSA). Last year, 55 thousand homes were sold in August.

The all-time high for August was 110 thousand in 2005, and the all-time low for August was 23 thousand in 2010.

This was well above expectations, and sales in the three previous months were revised up, combined. I'll have more later today.

by Calculated Risk on 9/27/2022 09:48:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index "Continued its Deceleration" to 15.8% year-over-year increase in July

Excerpt:

Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for July were released today. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The Case-Shiller Home Price Indices for “July” is a 3-month average of May, June and July closing prices. May closing prices include some contracts signed in March, so there is a significant lag to this data.

The MoM decrease in Case-Shiller was at -0.24%. This was the first MoM decrease since February 2012, and since this includes closings in May and June, this suggests prices fell sharply in July.

On a seasonally adjusted basis, prices declined in 12 of the 20 Case-Shiller cities on a month-to-month basis: Phoenix, Los Angeles, San Diego, San Francisco, Denver, Washington DC, Boston, Detroit, Minneapolis, Portland, Dallas and Seattle all saw month-to-month price declines in the July report.
...
On the FHFA index: FHFA House Price Index Down 0.6 Percent in July; Up 13.9 Percent from Last Year

House prices fell nationwide in July, down 0.6 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 13.9 percent from July 2021 to July 2022.

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 9/27/2022 09:11:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for July ("July" is a 3-month average of May, June and July closing prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

From S&P: S&P Corelogic Case-Shiller Index Continued its Deceleration in July

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 15.8% annual gain in July, down from 18.1% in the previous month. The 10-City Composite annual increase came in at 14.9%, down from 17.4% in the previous month. The 20-City Composite posted a 16.1% year-over-year gain, down from 18.7% in the previous month.

Tampa, Miami, and Dallas reported the highest year-over-year gains among the 20 cities in July. Tampa led the way with a 31.8% year-over-year price increase, followed by Miami in second with a 31.7% increase, and Dallas in third with a 24.7% increase. All 20 cities reported lower price increases in the year ending July 2022 versus the year ending June 2022.
...
Before seasonal adjustment, the U.S. National Index posted a -0.3% month-over-month decrease in July, while the 10-City and 20-City Composites both posted decreases of -0.8%.

After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of -0.2%, and the 10-City and 20-City Composites posted decreases of -0.5% and -0.4%, respectively.

In July, only 7 cities reported increases before and after seasonal adjustments.

“Although U.S. housing prices remain substantially above their year-ago levels, July’s report reflects a forceful deceleration,” says Craig J. Lazzara, Managing Director at S&P DJI. “For example, while the National Composite Index rose by 15.8% in the 12 months ended July 2022, its year-over-year price rise in June was 18.1%. The -2.3% difference between those two monthly rates of gain is the largest deceleration in the history of the index. We saw similar patterns in our 10-City Composite (up 14.9% in July vs. 17.4% in June) and our 20-City Composite (up 16.1% in July vs. 18.7% in June). On a monthover-month basis, all three composites declined in July"
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is down 0.5% in July (SA).

The Composite 20 index is down 0.4% (SA) in July.

The National index is 65% above the bubble peak (SA), and down 0.2% (SA) in July.  The National index is up 136% from the post-bubble low set in February 2012 (SA).

The second graph shows the year-over-year change in all three indices.

The Composite 10 SA is up 14.9% year-over-year.  The Composite 20 SA is up 16.1% year-over-year.

The National index SA is up 15.8% year-over-year.

Price increases were lower than expectations.  I'll have more later.

by Calculated Risk on 9/26/2022 09:10:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Now at 20-Year Highs

The most recent historical high water market for mortgage rates was "14 years." It was broken so many times in September that we officially declared it to be boring last Tuesday. Now, less than a week later, 14-year highs would be more exciting than boring. As of mid-day today, we're officially at 20 year highs. [30 year fixed 6.87%]
emphasis added

Tuesday:
• At 8:30 AM ET, Durable Goods Orders for August from the Census Bureau. The consensus is for a 0.1% decrease in durable goods orders.

• At 9:00 AM, S&P/Case-Shiller House Price Index for July. The consensus is for a 17.0% year-over-year increase in the Comp 20 index for July.

• Also at 9:00 AM, FHFA House Price Index for July. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 10:00 AM, New Home Sales for August from the Census Bureau. The consensus is for 500 thousand SAAR, down from 511 thousand in July.

• Also at 10:00 AM, the Richmond Fed manufacturing survey for September. This is the last of the regional surveys for September.

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
New Cases per Day2	50,017	58,522	≤5,0001
Hospitalized2	22,280	26,467	≤3,0001
Deaths per Day2	348	391	≤501
1my goals to stop daily posts, 27-day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the daily (columns) and 7-day average (line) of deaths reported.

NOTE: Cases have declined by more than half, and deaths lag cases - so we might see average daily deaths in the 200s soon (good news, but still too high).

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 9/26/2022 05:05:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate in August was 0.70%, down from 0.73% July. Freddie's rate is down year-over-year from 1.62% in August 2021.

Freddie's serious delinquency rate peaked in February 2010 at 4.20% following the housing bubble and peaked at 3.17% in August 2020 during the pandemic.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

Click on graph for larger image

Mortgages in forbearance are being counted as delinquent in this monthly report but are not reported to the credit bureaus.

This is very different from the increase in delinquencies following the housing bubble.   Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes - and they will be able to restructure their loans once they are employed.

The serious delinquency rate was at 0.60% just prior to the pandemic - almost back.

by Calculated Risk on 9/26/2022 12:31:00 PM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales and Cancellations: Net vs Gross Sales

A brief excerpt:

Tomorrow (Tuesday), the Census Bureau will report new home sales for August. The consensus is for 500 thousand on a Seasonally Adjusted Annual rates (SAAR) basis, down from 511 thousand in July.
...
When looking at new home sales, we are interested in net sales for each month, however the Census Bureau reports gross new sales. A simple equation would be:

Sales (net) = Sales (gross) – Cancellations + Sales of earlier cancellations.

In the long run, the cancellation terms balance out, and the Census Bureau numbers are what we want. In other words, Sales(net) = sales(gross). But in the short run, when cancellations increase, the Census Bureau overestimates sales; and when cancellations decrease, the Census Bureau underestimates sales.
...
The bottom line is - with rapidly rising cancellations - the Census Bureau will overestimate sales tomorrow (and underestimate new home inventory).

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 9/26/2022 09:02:00 AM

Active inventory increased for the 2nd consecutive week, increasing 0.9% last week, and hitting a new peak for the year.  Here are the same week inventory changes for the last four years:

2022: +4.9K

2021: -3.7K

2020: -5.2K

2019: -0.3K

Inventory bottomed seasonally at the beginning of March 2022 and is now up 131% since then.  More than double!  Altos reports inventory is up 28.7% year-over-year. 

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of September 23rd, inventory was at 557 thousand (7-day average), compared to 552 thousand the prior week.  Inventory was up 0.9% from the previous week. 

Inventory is still historically low. Compared to the same week in 2021, inventory is up 28.7% from 433 thousand, however compared to the same week in 2020 inventory is down 1.9% from 568 thousand.  Compared to 3 years ago, inventory is down 42.2% from 963 thousand.

Here are the inventory milestones I’m watching for with the Altos data:

1. The seasonal bottom (happened on March 4th for Altos) ✅

2. Inventory up year-over-year (happened on May 13th for Altos) ✅

3. Inventory up compared to two years ago (currently down 1.9% according to Altos)

4. Inventory up compared to 2019 (currently down 42.2%).

Here is a graph of the inventory change vs 2021, 2020 (milestone 3 above) and 2019 (milestone 4).

The blue line is the year-over-year data, the red line is compared to two years ago, and dashed purple is compared to 2019.

Two years ago (in 2020) inventory was declining all year, so the two-year comparison will get easier all year.  

Based on the recent changes in inventory, my current estimate is inventory will be up compared to 2020 in Q4 of this year.

A key will be if inventory increases in the Fall this year.  Inventory was up slightly in September.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 9/26/2022 08:36:00 AM

These indicators are mostly for travel and entertainment.    It is interesting to watch these sectors recover as the pandemic subsides.  Notes: I've added back gasoline supplied to see if there is an impact from higher gasoline prices.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

This data is as of September 25th.

Click on graph for larger image.

This data shows the 7-day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Black), 2021 (Blue) and 2022 (Red).

The dashed line is the percent of 2019 for the seven-day average.

The 7-day average is down 2.7% from the same day in 2019 (90.9% of 2019).  (Dashed line) 

Air travel - as a percent of 2019 - had been moving sideways over the last several months, off about 10% from 2019.   Travel has picked up recently compared to 2019.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue).  

Black is 2020, Blue is 2021 and Red is 2022.  

The data is from BoxOfficeMojo through September 22nd.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.  

Movie ticket sales were at $71 million last week, down about 52% from the median for the week.

----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

The red line is for 2022, black is 2020, blue is the median, and dashed light blue is for 2021. Dashed purple is 2019 (STR is comparing to a strong year for hotels).

This data is through Sept 17th. The occupancy rate was down 2.4% compared to the same week in 2019. 

The 4-week average of the occupancy rate is above the median rate for the previous 20 years (Blue).

Notes: Y-axis doesn't start at zero to better show the seasonal change.

----- Gasoline Supplied: Energy Information Administration -----

This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020.  Purple is for 2021, and Red is for 2022.

As of September 16th, gasoline supplied was down 6.9% compared to the same week in 2019.

Recently gasoline supplied has been running below 2019 and 2021 levels - and sometimes below 2020.

by Calculated Risk on 9/25/2022 06:32:00 PM

Weekend:
• Schedule for Week of September 25, 2022

Monday:
• At 8:30 AM ET, Chicago Fed National Activity Index for August. This is a composite index of other data.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for September.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 6 and DOW futures are down 42 (fair value).

Oil prices were down over the last week with WTI futures at $78.74 per barrel and Brent at $86.15 per barrel. A year ago, WTI was at $75, and Brent was at $79 - so WTI oil prices are up 5% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.65 per gallon. A year ago, prices were at $3.17 per gallon, so gasoline prices are up $0.48 per gallon year-over-year.

by Calculated Risk on 9/25/2022 11:58:00 AM

On Friday, the average 30-year mortgage rate hit 6.7% for zero points and top tier scenarios. This was the highest rate in 14 years and is close to the highest rate in over 20 years (above 6.76% will be the highest since early 2002).

Here is a graph showing the 30-year rate using Freddie Mac PMMS, and MND for last week.

Click on graph for larger image.

This is a graph from Mortgage News Daily (MND) showing 30-year fixed rates from three sources (MND, MBA, Freddie Mac) over the last 5 years.  

Yes, rates were much higher in the 1980 period, but it is the change in monthly payments that impacts housing. Monthly payments include principal, interest, taxes, insurance (PITI), and sometimes HOA fees (Homeowners Association). We could also include maintenance, utilities and other costs.

The following graph shows the year-over-year change in principal & interest (P&I) assuming a fixed loan amount since 1977. Currently P&I is up about 52% year-over-year for a fixed amount (this doesn’t take into account the change in house prices).

This is above the previous record increase of 50% in 1980.  This assumed a fixed loan amount - if we add in the year-over-year increase in house prices, payments would be up around 65% YoY for the same house.

This is one of the reasons I've argued in my real estate newsletter Housing: Don't Compare the Current Housing Boom to the Bubble and Bust, Look instead at the 1978 to 1982 period for lessons.

I'll have much more in the newsletter.

by Calculated Risk on 9/24/2022 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• August Housing Starts: Record Number of Housing Units Under Construction

• NAR: Existing-Home Sales Decreased Slightly to 4.80 million SAAR in August

• Why Measures of Existing Home Inventory appear Different

• Final Look at Local Housing Markets in August

• 3rd Look at Local Housing Markets in August


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

You can subscribe at https://calculatedrisk.substack.com/

Most content is available for free (and no Ads), but please subscribe!

by Calculated Risk on 9/24/2022 08:11:00 AM

The key reports this week are August New Home sales, the third estimate of Q2 GDP, Personal Income and Outlays for August, and Case-Shiller house prices for July.

For manufacturing, the Richmond and Dallas Fed manufacturing surveys will be released this week.

----- Monday, Sept 26th -----
8:30 AM ET: Chicago Fed National Activity Index for August. This is a composite index of other data.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for September.

----- Tuesday, Sept 27th -----
8:30 AM: Durable Goods Orders for August from the Census Bureau. The consensus is for a 0.1% decrease in durable goods orders.

9:00 AM: S&P/Case-Shiller House Price Index for July.

This graph shows the year-over-year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The consensus is for a 17.0% year-over-year increase in the Comp 20 index for July.

9:00 AM: FHFA House Price Index for July. This was originally a GSE only repeat sales, however there is also an expanded index.

10:00 AM: New Home Sales for August from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the sales rate for last month.

The consensus is for 500 thousand SAAR, down from 511 thousand in July.

10:00 AM: the Richmond Fed manufacturing survey for September. This is the last of the regional surveys for September.

----- Wednesday, Sept 28th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM: Pending Home Sales Index for August. The consensus is 1.0% decrease in the index.

----- Thursday, Sept 29th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for an increase to 218 thousand from 213 thousand last week.

8:30 AM: Gross Domestic Product (Third Estimate), GDP by Industry, and Corporate Profits (Revised), 2nd Quarter 2022 and Annual Update The consensus is that real GDP decreased 0.6% annualized in Q2, unchanged from the second estimate of -0.6%.

----- Friday, Sept 30th -----
8:30 AM: Personal Income and Outlays, August 2022 and Annual Update The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.5%.  PCE prices are expected to be up 6.0% YoY, and core PCE prices up 4.8% YoY.

9:45 AM: Chicago Purchasing Managers Index for September. The consensus is for a reading of 52.0, down from 52.2 in August.

10:00 AM: University of Michigan's Consumer sentiment index (Final for September). The consensus is for a reading of 59.5.