by Calculated Risk on 4/23/2024 04:49:00 PM

Last week, in the CalculatedRisk Real Estate Newsletter on March existing home sales, NAR: Existing-Home Sales Decreased to 4.19 million SAAR in March; Median House Prices Increased 4.8% Year-over-Year, I noted that median prices were up year-over-year (median prices are distorted by the mix).

Seasonally prices typically peak in June (closed sales are mostly for contracts signed in April and May).

And seasonally prices usually bottom the following January (contracts signed in November and December). 

The recent surge in prices started mid-year 2020 and ran through Q1 2022 when mortgage rates started increasing significantly.

Here is a table of the seasonal percentage increases from January to March, and from March to June (the usual seasonal peak) over the last several years. The third row is the total percentage increase from January to June.

The last row shows the seasonal decline from June to December.  Note: In 2019, prices only declined 3.8% in the 2nd half of the year as mortgage rates declined into the mid-3s (pre-pandemic low was 3.5% on a 30-year mortgage according to Freddie MAC PMMS).  

In 2020, prices continued to increase in the 2nd half of the year and didn't peak seasonally until October.  And prices only declined slightly in the 2nd half of 2021.

	2018	2019	2020	2021	2022	2023	2024
Jan to Mar	3.7%	4.1%	5.4%	7.5%	7.1%	4.0%	3.9%
Mar to Jun	9.6%	9.9%	4.9%	12.4%	9.1%	9.3%	NA
Total Jan to Jun	13.7%	14.4%	10.6%	20.8%	16.8%	13.7%	NA
Jun to Dec	-7.0%	-3.8%	5.0%	-2.2%	-11.4%	-7.0%	NA

The 2024 increase in median prices from January to March was about the same as in 2018 and 2019.

Normally we'd expect median prices to increase 9% to 10% over the next three months, before declining in the 2nd half of the year.  With more inventory, the seasonal pattern will be interesting this year.

by Calculated Risk on 4/23/2024 10:40:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales Increase to 693,000 Annual Rate in March

Brief excerpt:

The Census Bureau reports New Home Sales in March were at a seasonally adjusted annual rate (SAAR) of 693 thousand. The previous three months were revised down combined.
...
The next graph shows new home sales for 2023 and 2024 by month (Seasonally Adjusted Annual Rate). Sales in March 2024 were up 8.3% from March 2023.
...
Note that the median and average price are down due to the mix of homes sold, not because of large price declines. Homebuilders are building less expensive homes to keep up volumes.

There is much more in the article.

by Calculated Risk on 4/23/2024 10:00:00 AM

The Census Bureau reports New Home Sales in March were at a seasonally adjusted annual rate (SAAR) of 693 thousand.

The previous three months were revised down combined.

Sales of new single‐family houses in March 2024 were at a seasonally adjusted annual rate of 693,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.8 percent above the revised February rate of 637,000 and is 8.3 percent above the March 2023 estimate of 640,000.
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 were close to pre-pandemic levels.

The second graph shows New Home Months of Supply.

The months of supply decreased in March to 8.3 months from 8.8 months in February.

The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 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 March was 477,000. This represents a supply of 8.3 months at the current sales rate."

Sales were above expectations of 670 thousand SAAR, however, sales for the three previous months were revised down, combined. I'll have more later today.

by Calculated Risk on 4/22/2024 08:08:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Essentially Flat Just Under 5 Month Highs

Mortgage rates began the new week at almost exactly the same levels seen at the end of last week. There were no major events or economic reports to cause volatility in the underlying bond market, but bonds were able to improve modestly by the end of the day.
...
By staying near Friday's levels, the average lender is just shy of the highest rates in 5 months. A top tier conventional 30yr fixed scenario is still in the mid 7% range. [30 year fixed 7.43%]
emphasis added

Tuesday:
• At 10:00 AM ET, New Home Sales for March from the Census Bureau. The consensus is for 670 thousand SAAR, up from 662 thousand in February.

• Also at 10:00 AM, Richmond Fed Survey of Manufacturing Activity for April.

by Calculated Risk on 4/22/2024 04:13:00 PM

From the MBA: Share of Mortgage Loans in Forbearance Remains at 0.22% in March

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance remained unchanged at 0.22% as of March 31, 2024. According to MBA’s estimate, 110,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.1 million borrowers since March 2020.

In March 2024, the share of Fannie Mae and Freddie Mac loans in forbearance remained at 0.12%. Ginnie Mae loans in forbearance stayed at 0.40%, and the forbearance share for portfolio loans and private-label securities (PLS) increased 2 basis points to 0.31%.

“For the past three months, the number of loans in forbearance has held steady,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “The current labor market is showing resilience, minimizing the need for mortgage forbearance. However, life events and temporary hardships still happen, regardless of employment conditions, which may explain why we have reached a floor in the forbearance rate.”
emphasis added

At the end of February, there were about 110,000 homeowners in forbearance plans.

by Calculated Risk on 4/22/2024 02:58:00 PM

Altos reports that active single-family inventory was up 3.0% week-over-week. Inventory bottomed in mid-February this year, as opposed to mid-April in 2023, and inventory is now up 8.5% from the February bottom.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of April 19th, inventory was at 543 thousand (7-day average), compared to 526 thousand the prior week.   

Inventory is still far below pre-pandemic levels. 

The second graph shows the seasonal pattern for active single-family inventory since 2015.

The red line is for 2024.  The black line is for 2019.  Note that inventory is up almost double from the record low for the same week in 2022, but still well below normal levels.

Inventory was up 30.9% compared to the same week in 2023 (last week it was up 29.6%), and down 37.2% compared to the same week in 2019 (last week it was down 38.2%). 

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels is slowly closing.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 4/22/2024 10:52:00 AM

The TSA is providing daily travel numbers.

This data is as of April 21st.

Click on graph for larger image.

This data shows the 7-day average of daily total traveler throughput from the TSA (Blue).

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

Air travel - as a percent of 2019 - is tracking at about 105% of pre-pandemic levels.

by Calculated Risk on 4/22/2024 08:14:00 AM

This is something I check occasionally.

The Department of Transportation (DOT) reported:

• Travel on all roads and streets changed by +2.0% (+4.8 billion vehicle miles) for February 2024 as compared with February 2023. Travel for the month is estimated to be 240.2 billion vehicle miles.

• The seasonally adjusted vehicle miles traveled for February 2024 is 274.8 billion miles, a +1.4% ( +3.9 billion vehicle miles) change over February 2023. It also represents a 0.6% change (1.7 billion vehicle miles) compared with January 2024.

• Cumulative Travel for 2024 changed by +0.6% (+2.7 billion vehicle miles). The cumulative estimate for the year is 487.4 billion vehicle miles of travel.
emphasis added

Click on graph for larger image.

This graph shows the monthly total vehicle miles driven, seasonally adjusted.

Miles driven declined sharply in March 2020, and really collapsed in April 2020.  Miles driven are now at pre-pandemic levels.

by Calculated Risk on 4/21/2024 07:14:00 PM

Weekend:
• Schedule for Week of April 21, 2024

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

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 17 and DOW futures are up 100 (fair value).

Oil prices were up over the last week with WTI futures at $83.26 per barrel and Brent at $86.96 per barrel. A year ago, WTI was at $78, and Brent was at $83 - so WTI oil prices are up year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.64 per gallon. A year ago, prices were at $3.67 per gallon, so gasoline prices are down $0.03 year-over-year.

by Calculated Risk on 4/21/2024 09:40:00 AM

As of December 2023, looking at the "dot plot", most FOMC participants expected between 2 and 4 rate cuts in 2024:

As of Dec 2023 Meeting
25 bp Rate Cuts	FOMC Members
No Change	2
One Rate Cut	1
Two Rate Cuts	5
Three Rate Cuts	6
Four Rate Cuts	4
More than Four	1

As of the March 2024 meeting, FOMC participants were down to 2 to 3 rate cuts in 2024:

As of Mar 2024 Meeting
25 bp Rate Cuts	FOMC Members
No Change	2
One Rate Cut	2
Two Rate Cuts	5
Three Rate Cuts	9
Four Rate Cuts	1

Most market participants expect between 1 and 2 rate cuts this year, with the first cut in September.  Here are a couple analyst views:

From BofA:

[W]e revised our Fed forecasts in response to the upside surprise in the March inflation data. We now expect the Fed to start cutting in December rather than June, and we still think cuts will proceed at a quarterly cadence. Importantly, we did not simply push our projected cutting cycle out by two quarters. We removed the June and September 2024 cuts entirely from our forecast, raising the terminal rate by 50bp to 3.5-3.75%.

From Goldman Sachs:

The FOMC was already narrowly divided on its three-cut baseline for 2024, and we think it will now need to see the string of three firmer inflation prints from January to March balanced by a series of softer prints in subsequent months.

We continue to expect cuts at a quarterly pace after July, which now implies two cuts in 2024 in July and November.