Thursday , February 27 2020
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Kansas City Fed: "Tenth District Manufacturing Activity Increased Modestly" in February

5 hours ago

From the Kansas City Fed: Tenth District Manufacturing Activity Increased ModestlyThe Federal Reserve Bank of Kansas City released the February Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity increased modestly, reaching positive territory for the first time in eight months.“Regional factory activity finally expanded again in February,” said Wilkerson. “This was despite over 40 percent of firms reporting some negative effect from the spread of coronavirus so far in 2020.”…The month-over-month composite index was 5 in February, higher than -1 in January and -5 in December. The composite index is an average of the production, new orders,

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Q4 GDP Unchanged at 2.1% Annual Rate

8 hours ago

From the BEA: Gross Domestic Product, Fourth Quarter and Year 2019 (Second Estimate)Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of 2019 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP also increased 2.1 percent.The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was also 2.1 percent. In the second estimate, an upward revision to private inventory investment was offset by a downward revision to nonresidential fixed investment.emphasis addedHere is a Comparison of Second and Advance Estimates. PCE growth was revised down to 1.7%

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Weekly Initial Unemployment Claims Increase to 219,000

8 hours ago

The DOL reported:In the week ending February 22, the advance figure for seasonally adjusted initial claims was 219,000, an increase of 8,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 210,000 to 211,000. The 4-week moving average was 209,750, an increase of 500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 209,000 to 209,250. 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 209,750.This was higher than the consensus forecast.

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Thursday: GDP, Unemployment Claims

21 hours ago

Thursday:• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 211 thousand initial claims, up from 210 thousand the previous week.• At 8:30 AM, Gross Domestic Product, 4th quarter 2019 (Second estimate). The consensus is that real GDP increased 2.1% annualized in Q4, unchanged from the advance estimate.• At 8:30 AM, Durable Goods Orders for January from the Census Bureau. The consensus is for a 1.5% decrease in durable goods orders.• At 11:00 AM, the Kansas City Fed manufacturing survey for February. This is the last of regional manufacturing surveys for February.

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Zillow Case-Shiller Forecast: House Price Gains "Back on the Gas"

24 hours ago

The Case-Shiller house price indexes for December were released yesterday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.From Matthew Speakman at Zillow: December Case-Shiller Results & January Forecast: Back on the GasThe final reading of 2019 confirmed that a reacceleration of home price growth has indeed begun, after growth spent nearly the entire calendar year tapping on the brakes.The national Case-Shiller Home Price Index rose 3.8% year-over-year in December. The smaller 10- and 20-city composite indices grew more slowly, at 2.4% and 2.9% year-over-year, respectively….For-sale inventory remains near its lowest level on record, which has stoked competition for the relatively few homes on the market and

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New Home Prices

1 day ago

As part of the new home sales report released today, the Census Bureau reported the number of homes sold by price and the average and median prices.From the Census Bureau: "The median sales price of new houses sold in January 2020 was $348,200. The average sales price was $402,300."The following graph shows the median and average new home prices. Click on graph for larger image.During the housing bust, the builders had to build smaller and less expensive homes to compete with all the distressed sales.  When housing started to recovery – with limited finished lots in recovering areas – builders moved to higher price points to maximize profits.The average price in January 2020 was $402,300, and the median price was $348,200.The second graph shows the percent of new homes sold by price.Very

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A few Comments on January New Home Sales

1 day ago

New home sales for January were reported at 764,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised up, combined.This was the highest sales rate since July 2007.Earlier: New Home Sales increase to 764,000 Annual Rate in January.Click on graph for larger image.This graph shows new home sales for 2019 and 2020 by month (Seasonally Adjusted Annual Rate).The year-over-year comparison are fairly easy in the first half of 2020, and sales were up 18.6% YoY in January.And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales. The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through January 2020.

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New Home Sales increase to 764,000 Annual Rate in January

1 day ago

The Census Bureau reports New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 764 thousand.The previous three months were revised up, combined. "Sales of new single‐family houses in January 2020 were at a seasonally adjusted annual rate of 764,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.9 percent above the revised December rate of 708,000 and is 18.6 percent above the January 2019 estimate of 644,000."emphasis addedClick on graph for larger image.The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.Even with the increase in sales over the last several years, new home sales are just at a normal level.The second graph

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MBA: Mortgage Applications Increased in Latest Weekly Survey

1 day ago

From the MBA: Mortgage Applications Increase in Latest MBA Weekly SurveyMortgage applications increased 1.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 21, 2020. This week’s results include an adjustment for the Washington Birthday (Presidents’ Day) Holiday…. The Refinance Index decreased 1 percent from the previous week and was 152 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 10 percent higher than the same week one year ago….“Last week appears to have been the calm before the storm. Weaker readings

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Wednesday: New Home Sales

2 days ago

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, New Home Sales for January from the Census Bureau. The consensus is for 715 thousand SAAR, up from 694 thousand in December.

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Real House Prices and Price-to-Rent Ratio in December

2 days ago

Here is the post earlier on Case-Shiller: Case-Shiller: National House Price Index increased 3.8% year-over-year in DecemberIt has been almost thirteen years since the bubble peak. In the Case-Shiller release today, the seasonally adjusted National Index (SA), was reported as being 15.8% above the previous bubble peak. However, in real terms, the National index (SA) is still about 6.6% below the bubble peak (and historically there has been an upward slope to real house prices).  The composite 20, in real terms, is still 14.0% below the bubble peak.The year-over-year growth in prices increased to 3.8% nationally, as expected with lower mortgage rates and fewer homes for sell.Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation

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FDIC: Fewer Problem banks, Residential REO Declined in Q4

2 days ago

The FDIC released the Quarterly Banking Profile for Q4 2019 today: For the 5,177 commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC), aggregate net income totaled $55.2 billion in fourth quarter 2019, a decline of $4.1 billion (6.9 percent) from a year ago. The decline in net income was led by lower net interest income and higher expenses. Financial results for fourth quarter 2019 are included in the FDIC’s latest Quarterly Banking Profile released today….The Number of Banks on the "Problem Bank List" Remained Low: The number of problem banks fell from 55 to 51 during the fourth quarter, the lowest number of problem banks since fourth quarter 2006. Total assets of problem banks declined from $48.8 billion in the third quarter to $46.2

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Update: A few comments on the Seasonal Pattern for House Prices

2 days ago

CR Note: This is a repeat of earlier posts with updated graphs.A few 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.3) Even though distressed sales are down significantly, the seasonal factor is based on several years of data – and the factor is now overstating the seasonal change (second graph below).4) Still the seasonal index is probably a better indicator of actual price movements than the Not Seasonally Adjusted (NSA) index.For in depth description of these issues, see former Trulia chief economist Jed Kolko’s article "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

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Richmond Fed: Manufacturing Activity Softened in February

2 days ago

From the Richmond Fed: Manufacturing Activity Softened in FebruaryFifth District manufacturing activity softened in February, according to the most recent survey from the Richmond Fed. The composite index fell from 20 in January to −2 in February. All three components of the composite index — shipments, new orders, and employment — moved lower from January. Firms also reported a decrease in backlog of orders. Still, the index for local business conditions remained positive, and manufacturers were optimistic that activity would improve in the coming months. Survey results suggest that firms saw continued growth in employment and wages in February. However firms continued to struggle to find workers with the necessary skills, as this index dropped to −35. emphasis added

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Case-Shiller: National House Price Index increased 3.8% year-over-year in December

2 days ago

S&P/Case-Shiller released the monthly Home Price Indices for December ("December" is a 3 month average of October, November and December prices).This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.Note: Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs. From S&P: S&P CoreLogic Case-Shiller Index Shows Growth in Annual Home Price Gains to End 2019The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.8% annual gain in December, up from 3.5% in the previous month. The 10-City Composite annual increase came in at 2.4%, up from 2.0% in the previous month. The 20-City Composite posted a 2.9% year-over-year

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Tuesday: Case-Shiller House Prices

3 days ago

From Matthew Graham at Mortgage News Daily: Important Lessons From Near-Record Low Mortgage RatesMortgage rates continue to carve out the unlikeliest of victories in 2020 with significant help from coronavirus. The epidemic has taken a year that was almost certain to start off with a steady move toward higher rates and turned it into one of the strongest starts on record. In fact, when it comes to the combination of ground covered and levels achieved, no other year has started off any better. [Most Prevalent Rates For Top Tier Scenarios 30YR FIXED – 3.375 – 3.5%]emphasis addedTuesday:• At 9:00 AM ET, FHFA House Price Index for December 2018. 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 December.

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House Prices and Inventory

3 days ago

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. Click on graph for larger image.This graph below shows existing home months-of-supply (from the NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999).There is a clear relationship, and this is no surprise (but interesting to graph).If

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Dallas Fed: "Texas Manufacturing Expansion Continues"

3 days ago

From the Dallas Fed: Texas Manufacturing Expansion ContinuesGrowth in Texas factory activity accelerated further in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose six points to 16.4, suggesting stronger output growth than last month.Other measures of manufacturing activity pointed to continued expansion in February, though demand growth decelerated. The new orders index fell nine points to 8.4, down from a 15-month high in January but still slightly above average. Similarly, the growth rate of orders index fell but remained above average, edging down from 6.1 to 3.6. The capacity utilization and shipments indexes held steady at 11.3 and 8.5, respectively.Perceptions

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"Chicago Fed National Activity Index Points to an Uptick in Economic Growth in January"

3 days ago

From the Chicago Fed: Chicago Fed National Activity Index Points to an Uptick in Economic Growth in JanuaryThe Chicago Fed National Activity Index (CFNAI) increased to –0.25 in January from –0.51 in December. All four broad categories of indicators that make up the index increased from December, but only one of the four categories made a positive contribution to the index in January. The index’s three-month moving average, CFNAI-MA3, moved up to –0.09 in January from –0.23 in December.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 January (using the three-month average).According to the Chicago Fed:The index is a weighted

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Sunday Night Futures

4 days ago

Note: Most analysts are forecasting that the novel coronavirus will be contained sometime in Q2 (perhaps on the assumption that the virus is seasonal like SARS or the flu). However there are significant downside risks to this view.  The CDC has expanded travel advisories to include South Korea, Japan and Hong Kong – and Italy is having a significant outbreak.From Goldman Sachs tonight: Despite a negligible hit to aggregate US activity from supply chain production disruptions under our baseline scenario, we have nevertheless increased our estimated growth drag from the coronavirus given the slower than expected pickup in Chinese activity and travel. We now estimate a 0.8pp growth drag in Q1 (from 0.5-0.6pp previously), with positive growth effects of about 0.3pp in Q2, 0.3-0.4pp in Q3,

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Quarterly Starts by Purpose and Design

4 days ago

Along with the monthly housing starts for January last week, the Census Bureau released Quarterly Starts by Purpose and Design through Q4 2019.This graph shows the NSA quarterly intent for four start categories since 1975: single family built for sale, owner built (includes contractor built for owner), starts built for rent, and condos built for sale.Click on graph for larger image.Single family starts built for sale (red) were up 18.1% in Q4 2019 compared to Q4 2018. Owner built starts (orange) were up 15.8% year-over-year.Condos built for sale were still near the record low.The ‘units built for rent’ (blue) and were up 25.3% in Q4 2019 compared to Q4 2018.

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Schedule for Week of February 23, 2020

5 days ago

The key reports this week are January New Home sales and the second estimate of Q4 GDP.Other key reports include Case-Shiller house prices and Personal Income and Outlays for January.For manufacturing, the February Dallas, Richmond and Kansas City manufacturing surveys will be released.—– Monday, Feb 24th —–8:30 AM ET: Chicago Fed National Activity Index for January. This is a composite index of other data.10:30 AM: Dallas Fed Survey of Manufacturing Activity for February.—– Tuesday, Feb 25th —–9:00 AM: FHFA House Price Index for December 2018. This was originally a GSE only repeat sales, however there is also an expanded index. 9:00 AM: S&P/Case-Shiller House Price Index for December.This graph shows the year-over-year change for the Case-Shiller National, Composite 10 and

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Hotels: Occupancy Rate Increases Year-over-year

6 days ago

From HotelNewsNow.com: STR: US hotel results for week ending 15 February The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 9-15 February 2020, according to data from STR.In comparison with the week of 10-16 February 2019, the industry recorded the following:• Occupancy: +0.2% to 63.6%• Average daily rate (ADR): +0.9% to US$133.55• Revenue per available room (RevPAR): +1.2% to US$85.00emphasis 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 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).2020 is off to a solid start,

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Comments on January Existing Home Sales

6 days ago

Earlier: NAR: Existing-Home Sales Decreased to 5.46 million in JanuaryA few key points:1) Existing home sales were up 9.6% year-over-year (YoY) in January.2) Inventory is very low, and was down 10.7% year-over-year (YoY) in January.   Inventory always decreases sharply in December as people take their homes off the market for the holidays, and then inventory starts to increase in February and March.Click on graph for larger image.3) Sales slumped at the end of 2018 and in January 2019 due to higher mortgage rates, the stock market selloff, and fears of an economic slowdown.The comparison to January of last year will be the easiest for this year.Note that existing home sales picked up somewhat in the second half of 2019 as interest rates declined.The second graph shows existing home sales

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Q1 GDP Forecasts: 0.7% to 2.6%

6 days ago

From Merrill Lynch: We are tracking 0.7% qoq saar for 1Q GDP and 2.0% for 4Q. [Feb 21 estimate]emphasis addedFrom Goldman Sachs: we raised our Q1 GDP tracking estimate by one tenth to +1.5%. [Feb 19 estimate]From the NY Fed Nowcasting ReportThe New York Fed Staff Nowcast stands at 2.0% for 2020:Q1. News from this week’s data increased the nowcast for 2020:Q1 by 0.6 percentage point. Positive surprises from regional survey and housing data drove most of the increase. [Feb 21 estimate]And from the Altanta Fed: GDPNowThe GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2020 is 2.6 percent on February 19, up from 2.4 percent on February 14. [Feb 19 estimate]CR Note: These early estimates suggest real GDP growth will be between 0.7% and 2.6%

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NAR: Existing-Home Sales Decreased to 5.46 million in January

6 days ago

From the NAR: Existing-Home Sales Drop 1.3% in JanuaryExisting-home sales declined in January, continuing a fluctuating pattern of monthly increases and declines, according to the National Association of Realtors®. Significant declines in the West region dragged down nationwide numbers, with the other three major U.S. regions reporting marginal – or no – changes last month.Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.3% from December to a seasonally-adjusted annual rate of 5.46 million in January. However, for the second straight month, overall sales substantially increased year-over-year, up 9.6% from a year ago (4.98 million in January 2019)…..Total housing inventory at the end of January totaled

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Friday: Existing Home Sales

7 days ago

Friday:• At 10:00 AM, Existing Home Sales for January from the National Association of Realtors (NAR). The consensus is for 5.45 million SAAR, down from 5.54 million.Housing economist Tom Lawler expects the NAR to report sales of 5.42 million SAAR.

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Phoenix Real Estate in January: Sales up 18.1% YoY, Active Inventory Down 38.9% YoY

7 days ago

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 were at 6,328 in January, down from 7,585 in December, but up from 5,357 in January 2019. Sales were down 16.6% from December 2019 (last month), but up 18.1% from January 2019.2) Active inventory was at 11,602, down from 18,990 in January 2019. That is down 38.9% year-over-year.3) Months of supply increased to 2.54 in January from 2.05 months in December. This remains low.This is another market with increasing sales and falling inventory.

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Black Knight’s First Look: National Mortgage Delinquency Rate Decreased in January, Lowest Level on Record

7 days ago

From Black Knight: Black Knight’s First Look: Mortgage Delinquencies Fall to Lowest Level on Record; January Sees Strongest Decline in More Than a Year • Mortgage delinquencies fell by more than 5% in January, hitting their lowest level on record dating back to 2000• January’s 14% year-over-year decline is the strongest in more than 12 months, with the rate of improvement picking up noticeably in recent months• There are now fewer than 2 million homeowners past due on their mortgages or in active foreclosure, the fewest since March 2005• Despite the decline in delinquencies, foreclosure starts edged upward in January, but remain nearly 15% below last year’s levels• The number of loans in active foreclosure remained relatively flat for the month (+1,000 properties in foreclosure), and down

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Philly Fed Manufacturing Suggests Activity Increased in February

7 days ago

From the Philly Fed: Current Manufacturing Indicators Suggest a Pickup in Growth in February Manufacturing firms reported an improvement in regional manufacturing activity, according to results from the February Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments increased this month, suggesting more widespread growth. The firms reported expansion in employment, although at a moderated pace from January. The survey’s broad future indexes also showed improvement this month, indicating that growth is expected to continue over the next six months. The diffusion index for current general activity rose nearly 20 points this month to 36.7, its highest reading since February 2017 … The firms reported overall increases in

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