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Bill McBride

Bill McBride

A full time blogger, Mr. McBride retired as a senior executive from a small public company in the '90s. Mr. McBride holds an MBA from the University of California, Irvine, and has a background in management, finance and economics.

Articles by Bill McBride

Tuesday: Housing Starts, Case-Shiller House Prices, and More

March 25, 2019

From Matthew Graham at Mortgage News Daily: Mortgage Rates Still Moving Lower After Last Week’s Stellar DropMortgage rates continued deeper into long-term lows today as the underlying bond market experiences its most impressive rally of the year. In a rally, bond prices are moving higher and rates are moving lower. [30YR FIXED – 4.00 – 4.125]emphasis addedTuesday:• At 8:30 AM ET: Housing Starts for February. The consensus is for 1.201 million SAAR, down from 1.230 million SAAR in January.• At 9:00 AM: FHFA House Price Index for January 2019. This was originally a GSE only repeat sales, however there is also an expanded index.• At 9:00 AM: S&P/Case-Shiller House Price Index for January. The consensus is for a 4.2% year-over-year increase in the Comp 20 index for December.• At 10:00 AM:

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Freddie Mac: Mortgage Serious Delinquency Rate Decreased Slightly in February

March 25, 2019

Freddie Mac reported that the Single-Family serious delinquency rate in February was 0.69%, down slightly from 0.70% in January. Freddie’s rate is down from 1.06% in February 2018.Freddie’s serious delinquency rate peaked in February 2010 at 4.20%.This matches the lowest serious delinquency rate for Freddie Mac since December 2007.These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  Click on graph for larger imageThe increase in the delinquency rate in late 2017 and early 2018 was due to the hurricanes (These are serious delinquencies, so it took three months late to be counted). I expect the delinquency rate to decline to a cycle bottom in the 0.5% to 0.7% range – but this is close to a bottom.Note: Fannie Mae will report for February soon.

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Housing Inventory Tracking

March 25, 2019

Update: Watching existing home "for sale" inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing.And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here.And in 2015, it appeared the inventory build in several markets was ending, and that boosted price increases.  I don’t have a crystal ball, but watching inventory helps understand the housing market.Inventory, on a national basis, was up 4.6% year-over-year (YoY) in January, this was the sixth consecutive month with a YoY increase, following over three years of YoY declines.The graph below shows the YoY change for non-contingent inventory in Houston, Las Vegas, and Sacramento and Phoenix, and

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Dallas Fed: "Texas Manufacturing Activity Continues to Grow"

March 25, 2019

From the Dallas Fed: Texas Manufacturing Activity Continues to GrowTexas factory activity continued to expand in Marc­h, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, held fairly steady at 11.5, indicating output growth continued at about the same pace as last month.Other measures of manufacturing activity also suggested continued expansion in March, although demand growth slowed. The new orders index fell from 6.9 to 2.4, and the growth rate of orders index slipped into negative territory for the first time since December 2016. The shipments index declined five points to 5.8, while the capacity utilization index moved up four points to 10.9.Perceptions of broader business

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Chicago Fed "Index points to little change in economic growth in February"

March 25, 2019

From the Chicago Fed: Index points to little change in economic growth in FebruaryThe Chicago Fed National Activity Index (CFNAI) edged down to –0.29 in February from –0.25 in January. Two of the four broad categories of indicators that make up the index decreased from January, and three of the four categories made negative contributions to the index in February. The index’s three-month moving average, CFNAI-MA3, moved down to –0.18 in February from a neutral reading in January.emphasis addedThis graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. Click on graph for larger image.This suggests economic activity was below the historical trend in February (using the three-month average).According to the Chicago Fed:The index is a weighted average of

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Sunday Night Futures

March 25, 2019

Weekend:• Schedule for Week of March 24, 2019Monday:• At 8:30 AM ET, Chicago Fed National Activity Index for February. This is a composite index of other data.• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for March.From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 5 and DOW futures are up 55 (fair value).Oil prices were mixed over the last week with WTI futures at $58.79 per barrel and Brent at $66.85 per barrel.  A year ago, WTI was at $66, and Brent was at $69 – so oil prices are down about 10% year-over-year. Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.63 per gallon. A year ago prices were at $2.63 per gallon, so gasoline prices are unchanged year-over-year.

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Hotels: Occupancy Rate Decreased Year-over-year

March 24, 2019

From HotelNewsNow.com: STR: U.S. hotel results for week ending 16 MarchThe U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 10-16 March 2019, according to data from STR.In comparison with the week of 11-17 March 2018, the industry recorded the following:• Occupancy: -0.9% to 70.2%• Average daily rate (ADR): +0.6% to US$134.50• Revenue per available room (RevPAR): -0.3% to US$94.40emphasis addedThe following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. Click on graph for larger image.The red line is for 2019, dash light blue is 2018, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).A decent start for 2019 – close, but

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Schedule for Week of March 24, 2019

March 23, 2019

The key reports this week are the third estimate of Q4 GDP, February Housing Starts and New Home Sales.Other key reports include Case-Shiller house prices, and Personal Income for February, and Personal Outlays for January.For manufacturing, the March Dallas, Richmond and Kansas City manufacturing surveys will be released.—– Monday, Mar 25th —–8:30 AM ET: Chicago Fed National Activity Index for February. This is a composite index of other data.10:30 AM: Dallas Fed Survey of Manufacturing Activity for March.—– Tuesday, Mar 26th —–8:30 AM ET: Housing Starts for February. This graph shows single and total housing starts since 1968.The consensus is for 1.201 million SAAR, down from 1.230 million SAAR in January.9:00 AM: FHFA House Price Index for January 2019. This was originally

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Q1 GDP Forecasts: Around 1%

March 22, 2019

From Goldman Sachs: We boosted our Q1 GDP tracking estimate by three tenths to +0.7% (qoq ar). However … we lowered our past-quarter GDP tracking estimate for Q4 by two tenths to +2.1%. [March 22 estimate]emphasis addedFrom the NY Fed Nowcasting ReportThe New York Fed Staff Nowcast stands at 1.3% for 2019:Q1 and 1.7% for 2019:Q2. [Mar 22 estimate].And from the Altanta Fed: GDPNowThe GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2019 is 1.2 percent on March 22, up from 0.4 percent on March 13. [Mar 13 estimate]CR Note: These early estimates suggest real GDP growth will be around 1% annualized in Q1.

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BLS: Unemployment Rates at New Series Lows in Alabama, North Dakota, Tennesse and Vermont

March 22, 2019

From the BLS: Regional and State Employment and Unemployment SummaryUnemployment rates were lower in February in 4 states and stable in 46 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. … Iowa, New Hampshire, North Dakota, and Vermont had the lowest unemployment rates in February, 2.4 percent each. The rates in Alabama (3.7 percent), North Dakota (2.4 percent), Tennessee (3.2 percent), and Vermont (2.4 percent) set new series lows.emphasis addedClick on graph for larger image.This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 1976.At the worst of the great recession, there were 11 states with an unemployment rate at or above 11% (red).Currently only one state, Alaska, has an

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Comments on February Existing Home Sales

March 22, 2019

Earlier: NAR: Existing-Home Sales Increased to 5.51 million in FebruaryA few key points:1) Seasonally February is one of the weakest months of the year for existing home sales (See Not Seasonally Adjusted NSA graph below).  Since existing home sales are counted at closing, these are properties that usually went under contract during the holidays or in early January.   So I wouldn’t read too much into the pickup in February.   Sales will be stronger seasonally over the next several months.  The headline number was not a surprise (see note 3), and the pickup was probably due to lower mortgage rates and a stronger stock market (so buyers were more confident).  But the next several months are more important for existing home sales.2) Inventory is still low, and was only up 3.2% year-over-year

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NAR: Existing-Home Sales Increased to 5.51 million in February

March 22, 2019

From the NAR: Existing-Home Sales Surge 11.8 Percent in FebruaryExisting-home sales rebounded strongly in February, experiencing the largest month-over-month gain since December 2015, according to the National Association of Realtors®. Three of the four major U.S. regions saw sales gains, while the Northeast remained unchanged from last month.Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, shot up 11.8 percent from January to a seasonally adjusted annual rate of 5.51 million in February. However, sales are down 1.8 percent from a year ago (5.61 million in February 2018)….Total housing inventory at the end of February increased to 1.63 million, up from 1.59 million existing homes available for sale in January, a 3.2

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Friday: Existing Home Sales

March 22, 2019

From Matthew Graham at Mortgage News Daily: Mortgage Rates Move Deeper Into Long-Term LowsGranted, we’re not back to the sub-4% mortgage rates that dominated much of the past 8 years, but breaking into the high 3% range is a valid consideration after the past few days. Yesterday’s surprising Fed news hit the rates that were already holding near their lowest levels in well over a year. The net effect has been a decisive break lower with the average lender easily able to offer 4.375% on a typical 30yr fixed scenario. Many lenders are at 4.25% … [30YR FIXED – 4.375%]Friday:• At 10:00 AM, Existing Home Sales for February from the National Association of Realtors (NAR). The consensus is for 5.08 million SAAR, up from 4.94 million. Take the over!• At 10:00 AM, State Employment and

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Black Knight: National Mortgage Delinquency Rate Increased in February

March 21, 2019

CR Note: It is possible that some of the increase in the delinquency rate in February was due to late tax refunds.From Black Knight: Black Knight’s First Look: Bucking Historical Seasonal Trend, February Sees Delinquencies Rise; Prepayments Up 11 Percent, Driven by Softening Interest Rates• Delinquencies rose by 3.7 percent in February, the first February increase in 12 years• Despite the monthly rise, delinquencies remain more than 9.5 percent below last year’s level• At 40,400 for the month, foreclosure starts were down 19.5 percent from January and edged close to September 2018’s 15-year low• The national foreclosure rate improved marginally and is now down more than 21 percent year-over-year• Prepayment speeds rose by 11 percent from January’s 18-year low, suggesting an increase in

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Existing Home Sales for February: Upside Surprise (Surprise for others)

March 21, 2019

The NAR is scheduled to release Existing Home Sales for February at 10:00 AM on Friday, March 22nd.The consensus is for 5.08 million SAAR, up from 4.94 million in January. Housing economist Tom Lawler estimates the NAR will reports sales of 5.46 million SAAR for February and that inventory will be up 5.7% year-over-year. Based on Lawler’s estimate, I expect existing home sales to be well above the consensus for February.Housing economist Tom Lawler has been sending me his predictions of what the NAR will report for almost 9 years.  The table below shows the consensus for each month, Lawler’s predictions, and the NAR’s initially reported level of sales.  Lawler hasn’t always been closer than the consensus, but usually when there has been a fairly large spread between Lawler’s estimate and

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Philly Fed Mfg "Improved" in March

March 21, 2019

From the Philly Fed: March 2019 Manufacturing Business Outlook Survey Manufacturing conditions in the region improved this month, according to firms responding to the March Manufacturing Business Outlook Survey. The indicators for general activity, new orders, and shipments returned to positive territory, while the indicator for employment remained positive. Price pressures also moderated, according to the surveyed firms. Most of the survey’s indexes for future conditions continued to moderate, but the firms remained generally optimistic about growth over the next six months.The index for current manufacturing activity in the region increased from a reading of -4.1 in February to 13.7 this month. The index nearly recovered its decline from last month, when it dropped to its first negative

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Weekly Initial Unemployment Claims decreased to 221,000

March 21, 2019

The DOL reported:In the week ending March 16, the advance figure for seasonally adjusted initial claims was 221,000, a decrease of 9,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 229,000 to 230,000. The 4-week moving average was 225,000, an increase of 1,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 223,750 to 224,000. emphasis addedThe previous week was revised up.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 225,000.This was slightly below to the consensus forecast.

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Thursday: Unemployment Claims, Philly Fed Mfg Survey

March 21, 2019

Thursday:• At 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for 225 thousand initial claims, down from 229 thousand the previous week.• At 8:30 AM, the Philly Fed manufacturing survey for March. The consensus is for a reading of 4.4, up from -4.1.

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Phoenix Real Estate in February: Sales down 7% YoY, Active Inventory up 10% YoY

March 20, 2019

This is a key housing market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.The Arizona Regional Multiple Listing Service (ARMLS) reports ("Stats Report"):1) Overall sales declined to 6,409 from 6,911 in February 2018. Sales were UP 19.6% from January 2019, but down 7.3% from February 2018.2) Active inventory was at 18,731, up from 16,961 in February 2018. This is up 10.4% year-over-year.  This is the fourth consecutive month with a YoY increase in active inventory.The last four months – with a YoY increase – followed twenty-four consecutive months with a YoY decrease in inventory in Phoenix.Months of supply decreased from 4.28 in January to 3.63 in February. This is still somewhat low.

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FOMC Projections and Press Conference

March 20, 2019

Statement here. Fed Chair Powell press conference video here starting at 2:30 PM ET.On the projections, growth was revised down, the unemployment rate revised up slightly, and inflation was softer.GDP projections of Federal Reserve Governors and Reserve Bank presidentsChange inReal GDP1201920202021Mar 20191.9 to 2.21.8 to 2.01.7 to 2.0Dec 20182.3 to 2.51.8 to 2.01.5 to 2.0Sep 20182.4 to 2.71.8 to 2.1NA1 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 3.8% in February. The unemployment rate projection for 2019 was revised up slightly.Unemployment projections of Federal Reserve Governors and Reserve Bank presidentsUnemploymentRate2201920202021Mar 20193.6 to 3.83.6 to

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FOMC Statement: No Change to Policy, Balance Sheet Runoff Ends September, No Hikes in 2019

March 20, 2019

FOMC Statement: Information received since the Federal Open Market Committee met in January indicates that the labor market remains strong but that growth of economic activity has slowed from its solid rate in the fourth quarter. Payroll employment was little changed in February, but job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Recent indicators point to slower growth of household spending and business fixed investment in the first quarter. On a 12-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of

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AIA: "Billings Moderate in February Following Robust New Year"

March 20, 2019

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment. From the AIA: Billings Moderate in February Following Robust New Yearrchitecture firm billings growth softened in February but remained positive, according to a new report today from The American Institute of Architects (AIA).AIA’s Architecture Billings Index (ABI) score for February was 50.3, down from 55.3 in January. Indicators of work in the pipeline, including inquiries into new projects and the value of new design contracts remained positive.“Overall business conditions at architecture firms across the country have remained generally healthy,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “Firms in the south recorded continued strong design activity, likely reflecting a healthy

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MBA: Mortgage Applications Increased in Latest Weekly Survey

March 20, 2019

From the MBA: Mortgage Applications Increase in Latest MBA Weekly SurveyMortgage applications increased 1.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 15, 2019…. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 1 percent higher than the same week one year ago….“Mortgage rates declined once again, as concerns about the slowing global economy and status of Brexit continued to drive investors’ demand for U.S. Treasuries, ultimately pushing yields lower,” said Joel Kan, Associate Vice

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Wednesday: FOMC Announcement

March 20, 2019

Wednesday:• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.• During the day, The AIA’s Architecture Billings Index for February (a leading indicator for commercial real estate).• At 2:00 PM, FOMC Meeting Announcement. No change to policy is expected at this meeting.• At 2:00 PM, FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants’ projections of the appropriate target federal funds rate along with the quarterly economic projections. • At 2:30 PM, Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

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Lawler: Early Read on Existing Home Sales in February

March 19, 2019

From housing economist Tom Lawler: Early Read on Existing Home Sales in FebruaryBased on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.46 million in February, up 10.5% from January’s preliminary estimate and down 2.7% from last February’s seasonally adjusted pace.On the inventory front, local realtor/MLS data, as well as data from other inventory trackers, suggest that the inventory of existing homes for sale at the end of February will be up 5.7% from last February.Finally, local realtor/MLS data suggest that the median US existing single-family home sales price last month was up by about 2.6% from a year earlier.CR

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CAR: "California home sales rebound in February"

March 19, 2019

The CAR reported: California home sales rebound in February; median price dips, C.A.R. reportsCalifornia home sales bounced back in February after hitting the lowest sales level in more than 10 years the previous month, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. February’s annual sales level was the highest in six months, and the monthly growth in sales was the highest since January 2011.Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 399,080 units in February, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained

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Housing Inventory Tracking

March 19, 2019

Update: Watching existing home "for sale" inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing.And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here.And in 2015, it appeared the inventory build in several markets was ending, and that boosted price increases.  I don’t have a crystal ball, but watching inventory helps understand the housing market.Inventory, on a national basis, was up 4.6% year-over-year (YoY) in January, this was the sixth consecutive month with a YoY increase, following over three years of YoY declines.The graph below shows the YoY change for non-contingent inventory in Houston, Las Vegas, and Sacramento (through February)

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Hotels: Occupancy Rate Decreased Year-over-year

March 19, 2019

From HotelNewsNow.com: STR: US hotel results for week ending 9 March The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 3-9 March 2019, according to data from STR.In comparison with the week of 4-10 March 2018, the industry recorded the following:• Occupancy: -2.4% to 66.8%• Average daily rate (ADR): +0.8% to US$132.01• Revenue per available room (RevPAR): -1.7% at US$88.15emphasis addedThe following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. Click on graph for larger image.The red line is for 2019, dash light blue is 2018, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).A decent start for 2019 – close to the previous 4

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"Mortgage Rates Hold 14-Month Lows"

March 18, 2019

From Matthew Graham at MortgageNewsDaily: Mortgage Rates Hold 14-Month LowsMortgage rates didn’t budge today–a logical result with no signs of life in underlying bond markets. In the current case, this is just fine with us considering the bond market has gone silent while remaining at the best levels in 14 months. [30YR FIXED – 4.375%] Click on graph for larger image.This graph from Mortgage News Daily shows mortgage rates since 2014.  This graph is interactive, and you could view mortgage rates back to the mid-1980s – click here for graph.

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Goldman: FOMC Preview

March 18, 2019

Note: Over the weekend I wrote some thoughts on the FOMC meeting this week.A few excerpts from a note by Goldman Sachs economists David Mericle and Jan Hatzius: March FOMC Preview: Are We There Yet?• The main question for the March meeting is just how far Fed officials will take the new theme of patience and the new perspective on inflation in their next set of projections.• The economic projections are likely to change only modestly. We expect a downgrade to the 2019 GDP growth projections …• The FOMC is also likely to announce that balance sheet runoff will conclude at the end of Q3 or in Q4. …• Our own forecast continues to be for a hike in December of this year … the risks are tilted toward delay and our probability-weighted forecast is now just 0.4 net hikes for 2019.

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