Today, in the Calculated Risk Real Estate Newsletter: Part 2: Current State of the Housing Market; Overview for mid-December 2024

A brief excerpt:

Earlier this week, in Part 1: Current State of the Housing Market; Overview for mid-December 2024 I reviewed home inventory, housing starts and sales.

In Part 2, I will look at house prices, mortgage rates, rents and more.
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The Case-Shiller National Index increased 3.9% year-over-year (YoY) in September and will be about the same YoY in the October report (based on other data).
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Other measures of house prices suggest prices will be up about the same YoY in the October Case-Shiller index as in the September report. The NAR reported median prices were up 4.0% YoY in October, up from 3.6% YoY in September.

ICE reported prices were up 3.0% YoY in October, up from 2.9% YoY in September, and Freddie Mac reported house prices were up 3.7% YoY in October, down from 3.8% YoY in September.

There is much more in the article.

Today, in the Calculated Risk Real Estate Newsletter: Q3 Update: Delinquencies, Foreclosures and REO

A brief excerpt:

We will NOT see a surge in foreclosures that would significantly impact house prices (as happened following the housing bubble) for two key reasons: 1) mortgage lending has been solid, and 2) most homeowners have substantial equity in their homes.
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This graph shows the nominal dollar value of Residential REO for FDIC insured institutions based on the Q3 FDIC Quarterly Banking Profile released yesterday. Note: The FDIC reports the dollar value and not the total number of REOs.

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) was mostly unchanged YOY from $747 million in Q3 2023 to $765 million in Q3 2024. This is historically extremely low.

There is much more in the article.

From BofA:

Since our last weekly publication, our 3Q GDP tracking estimate has moved up a tenth to 3.0% q/q saar. Additionally, our 4Q US GDP tracker was unchanged at 2.1% q/q saar. [Dec 13th estimate]
emphasis added

From Goldman:

We left our Q4 GDP tracking and domestic final sales estimates unchanged at +2.4% and +2.0%, respectively. [Dec 5th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2024 is 3.3 percent on December 5, up from 3.2 percent on December 2. After recent releases from the US Census Bureau, the Institute for Supply Management, and the US Bureau of Economic Analysis, the nowcast of fourth-quarter real gross private domestic investment growth increased from 1.2 percent to 1.8 percent. [Dec 5th estimate]

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

Friday:
• No major economic releases scheduled.

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For November, Realtor.com reported inventory was up 26.2% YoY, but still down 21.5% compared to the 2017 to 2019 same month levels. 
 Now - on a weekly basis - inventory is up 23.5% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending Dec. 7, 2024

• Active inventory increased, with for-sale homes 23.5% above year-ago levels

For the 57th consecutive week, the number of homes for sale has increased compared with the same time last year. However, this week’s growth was the slowest since March 2024. As the mortgage rates remain close to 7%, the combination of sluggish listing activity and muted buyer demand has led to a slowdown in inventory growth. The pace of growth suggests a more cautious environment where sellers are holding back, and buyers are taking their time—creating a more balanced but tentative housing landscape.

• New listings—a measure of sellers putting homes up for sale—increased 16.5% post-Thanksgiving, and adjusted to 2.6% after accounting for holiday timing

The number of newly listed homes has returned to its pre-Thanksgiving level, resulting in a large year-over-year growth as Thanksgiving falls later in 2024 compared with 2023. After adjusting for the holiday timing factor, the year-over-year increase in new listings is 2.6%.

Here is a graph of the year-over-year change in inventory according to realtor.com. 

Inventory was up year-over-year for the 57th consecutive week.  
However, inventory is still historically low.
New listings remain below typical pre-pandemic levels.

Today, in the Calculated Risk Real Estate Newsletter: The "Home ATM" Mostly Closed in Q3

A brief excerpt:

During the housing bubble, many homeowners borrowed heavily against their perceived home equity - jokingly calling it the “Home ATM” - and this contributed to the subsequent housing bust, since so many homeowners had negative equity in their homes when house prices declined.
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Here is the quarterly increase in mortgage debt from the Federal Reserve’s Financial Accounts of the United States - Z.1 (sometimes called the Flow of Funds report) released today. In the mid ‘00s, there was a large increase in mortgage debt associated with the housing bubble.

In Q3 2024, mortgage debt increased $105 billion, up from $99 billion in Q2, and down from the cycle peak of $467 billion in Q2 2021. Note the almost 7 years of declining mortgage debt as distressed sales (foreclosures and short sales) wiped out a significant amount of debt.

However, some of this debt is being used to increase the housing stock (purchase new homes), so this isn’t all Mortgage Equity Withdrawal (MEW).

The Federal Reserve released the Q3 2024 Flow of Funds report today: Financial Accounts of the United States.

The net worth of households and nonprofits rose to $168.8 trillion during the third quarter of 2024. The value of directly and indirectly held corporate equities increased $3.8 trillion and the value of real estate decreased $0.2 trillion..
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Household debt increased 3 percent at an annual rate in the third quarter of 2024. Consumer credit grew at an annual rate of 2.5 percent, while mortgage debt (excluding charge-offs) grew at an annual rate of 3.1 percent.

Click on graph for larger image.

The first graph shows Households and Nonprofit net worth as a percent of GDP.  
Net worth increased $4.8 trillion in Q3 to an all-time high.  As a percent of GDP, net worth increased in Q3 but is below the peak in 2021.
This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc.) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

The second graph shows homeowner percent equity since 1952.

Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.

In Q3 2024, household percent equity (of household real estate) was at 74.7% - down from 75.0% in Q2, 2024. This is close to the highest percent equity since the 1960s.

Note: This includes households with no mortgage debt.

The third graph shows household real estate assets and mortgage debt as a percent of GDP.  

Mortgage debt increased by $105 billion in Q3.

Mortgage debt is up $2.58 trillion from the peak during the housing bubble, but, as a percent of GDP is at 45.2% - down from Q2 - and down from a peak of 73.3% of GDP during the housing bust.

The value of real estate, as a percent of GDP, decreased in Q3 and is below the peak in Q2 2022, but is well above the median of the last 30 years.

The FDIC released the Quarterly Banking Profile for Q3 2024:

The Industry’s Net Income Decreased From the Prior Quarter, Driven by One-Time Items
Third quarter net income for the 4,517 FDIC-insured commercial banks and savings institutions decreased $6.2 billion (8.6 percent) from the prior quarter to $65.4 billion. The quarterly decrease in net income was largely driven by the absence of about $10 billion in one-time gains on equity security transactions reported in the previous quarter. The absence of these nonrecurring gains was partially offset by strong net interest income in the third quarter.
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Asset Quality Metrics Remained Generally Favorable, Though Weakness in Certain Portfolios Persists
The past-due and nonaccrual (PDNA) loan ratio increased 6 basis points from the prior quarter to 1.54 percent. This ratio was 18 basis points higher than the year-earlier quarter but below the pre-pandemic average of 1.94 percent.2 Quarterly, banks reported an increase in the PDNA ratio in credit card loan portfolios (up 20 basis points to 3.36 percent), nonfarm nonresidential commercial real estate (CRE) loan portfolios (up 7 basis points to 1.69 percent), 1–4 family residential loan portfolios (up 3 basis points to 1.83 percent), and auto loan portfolios (up 5 basis points to 3.13 percent). Annually, the industry reported the largest PDNA increases in nonfarm nonresidential CRE loan portfolios (up 43 basis points to 1.69 percent), credit card loan portfolios (up 27 basis points to 3.36 percent), and commercial and industrial loan portfolios (up 20 basis points to 1.17 percent).

The industry’s net charge-off ratio decreased 1 basis point to 0.67 percent from the prior quarter but was 16 basis points higher than the year-earlier quarter. This ratio was also 19 basis points above the pre-pandemic average and remained the highest quarterly ratio reported by the industry since second quarter 2013. Credit card and nonfarm nonresidential CRE loan charge-offs drove the quarterly decrease in the net charge-off ratio, which was partially offset by an increase in commercial and industrial loan charge-offs. The credit card net charge-off ratio was 4.48 percent in the third quarter, down 34 basis points quarter over quarter but still 100 basis points higher than the pre-pandemic average. The net charge-off ratio for nonfarm nonresidential CRE loans decreased 9 basis points quarter over quarter to 0.29 percent but was 25 basis points higher than the pre-pandemic average.
emphasis added

Click on graph for larger image.

From the FDIC:

The Number of Problem Banks Increased
The number of banks on the FDIC’s “Problem Bank List” increased from 66 to 68. Total assets held by problem banks rose $3.9 billion to $87.3 billion. Problem banks represent 1.5 percent of total banks, which is within the normal range of 1 to 2 percent of all banks during non-crisis periods.

This graph from the FDIC shows the number of problem banks.

The DOL reported:

In the week ending December 7, the advance figure for seasonally adjusted initial claims was 242,000, an increase of 17,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 224,000 to 225,000. The 4-week moving average was 224,250, an increase of 5,750 from the previous week's revised average. The previous week's average was revised up by 250 from 218,250 to 218,500.
emphasis added

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 224,250.

The previous week was revised up.

Weekly claims were above the consensus forecast.

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

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 220 thousand initial claims, up from 213 thousand last week.

• Also at 8:30 AM, The Producer Price Index for November from the BLS. The consensus is for a 0.3% increase in PPI, and a 0.2% increase in core PPI.

• At 12:00 PM, Q3 Flow of Funds Accounts of the United States from the Federal Reserve.

Today, in the Calculated Risk Real Estate Newsletter: 2nd Look at Local Housing Markets in November

A brief excerpt:

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

This is the second look at local markets in November. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in November were mostly for contracts signed in September and October when 30-year mortgage rates averaged 6.18% and 6.43%, respectively (Freddie Mac PMMS). These were the lowest mortgage rates in 2 years!
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Here is a look at months-of-supply using NSA sales. Note the regional differences, especially in Florida and Texas (although November statistics in Florida were likely still impacted by Hurricane Milton).
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Many more local markets to come!

There is much more in the article.

The Cleveland Fed released the median CPI and the trimmed-mean CPI.

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% in November. The 16% trimmed-mean Consumer Price Index increased 0.3%. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. 
On a year-over-year basis, the median CPI rose 3.9% (down from 4.1% in October), the trimmed-mean CPI rose 3.2% (unchanged from 3.2%), and the CPI less food and energy rose 3.3% (unchanged from 3.3%). 
Core PCE is for October was up 2.8% YoY, up from 2.7% in September.

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned when services less rent of shelter was up around 8% year-over-year.  This declined, but is still elevated, and is now up 4.1% YoY.

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through November 2024.
Services were up 4.5% YoY as of November 2024, down from 4.7% YoY in October.

Services less rent of shelter was up 4.1% YoY in November, down from 4.5% YoY in October
The second graph shows that goods prices started to increase year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Durables were at -2.0% YoY as of November 2024, up from -2.5% YoY in October.

Commodities less food and energy commodities were at -0.7% YoY in November, up from -1.2% YoY in October.
Here is a graph of the year-over-year change in shelter from the CPI report (through November) and housing from the PCE report (through October)

Shelter was up 4.8% year-over-year in November, down from 4.9% in October. Housing (PCE) was up 5.0% YoY in October, down from 5.1% in September.
The BLS noted this morning: "The index for shelter rose 0.3 percent in November, accounting for nearly forty percent of the monthly all items increase."
This is still catching up with private data.  
Core CPI ex-shelter was up 2.1% YoY in November.

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in November, after rising 0.2 percent in each of the previous 4 months, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.7 percent before seasonal adjustment.

The index for shelter rose 0.3 percent in November, accounting for nearly forty percent of the monthly all items increase. The food index also increased over the month, rising 0.4 percent as the food at home index increased 0.5 percent and the food away from home index rose 0.3 percent. The energy index rose 0.2 percent over the month, after being unchanged in October.

The index for all items less food and energy rose 0.3 percent in November, as it did in each of the previous 3 months. Indexes that increased in November include shelter, used cars and trucks, household furnishings and operations, medical care, new vehicles, and recreation. The index for communication was among the few major indexes that decreased over the month.

The all items index rose 2.7 percent for the 12 months ending November, after rising 2.6 percent over the 12 months ending October. The all items less food and energy index rose 3.3 percent over the last 12 months. The energy index decreased 3.2 percent for the 12 months ending November. The food index increased 2.4 percent over the last year.
emphasis added

The change in CPI was close to expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

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

Mortgage applications increased 5.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 6, 2024. Last week’s results included an adjustment for the Thanksgiving Holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 50 percent compared with the previous week. The Refinance Index increased 27 percent from the previous week and was 42 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 30 percent compared with the previous week and was 4 percent higher than the same week one year ago.

“Mortgage rates decreased again for the third consecutive week, with the 30-year fixed rate dipping to 6.67 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications increased 5 percent, driven by a 27-percent surge in refinance activity, as borrowers with higher rates acted on the chance to lower their payments. VA refinance applications were up 85 percent from the previous week, matching some of the larger swings in VA activity reported in recent months.”

Added Kan, “Purchase applications remained relatively strong and have shown annual gains in all but one week over the past three months. In addition to lower rates, purchase activity continues to be supported by sustained housing demand and inventory that continues to grow gradually in many markets.”
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The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.67 percent from 6.69 percent, with points decreasing to 0.66 from 0.67 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 4% year-over-year unadjusted. 
Red is a four-week average (blue is weekly).  
Purchase application activity is up about 24% from the lows in late October 2023 and is now above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index increased as mortgage rates declined in September but has decreased as rates moved back up.