Calculated Risk

Q3 GDP Tracking: Around 3%

From BofA:
Overall, the data flow since our last weekly lowered our 3Q US GDP tracking estimate by a tenth to 2.8%. [Sept 29th estimate]
emphasis added
From Goldman:
The foreign trade details of this morning’s report were stronger than our previous assumptions, and we boosted our Q3 GDP tracking estimate by 0.3pp to +3.5% (qoq ar). We left our domestic final sales growth forecast unchanged on a rounded basis at +2.6%. [Sept 29th estimate]
And from the Altanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 4.9 percent on September 29, unchanged from September 27 after rounding. After recent releases from the US Bureau of Economic Analysis and US Census Bureau, increases in the model’s nowcasts of the contributions of personal consumption expenditures and net exports to GDP growth were offset by a downward revision in the nowcast of real gross private domestic investment growth. [Sept 29th estimate]

Hotels: Occupancy Rate Decreased 1.6% Year-over-year

From STR: U.S. hotel results for week ending 23 September
U.S. hotel performance increased from the previous week, according to CoStar’s latest data through 23 September.

17-23 September 2023 (percentage change from comparable week in 2022):

Occupancy: 68.5% (-1.6%)
• Average daily rate (ADR): US$164.97 (+2.9%)
• Revenue per available room (RevPAR): US$112.96 (+1.2%)
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.
Hotel Occupancy RateClick on graph for larger image.

The red line is for 2023, black is 2020, blue is the median, and dashed light blue is for 2022.  Dashed purple is for 2018, the record year for hotel occupancy. 
The 4-week average of the occupancy rate is tracking below last year, and at the median rate for the period 2000 through 2022 (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.
The 4-week average of the occupancy rate will pick up a little during the Fall business travel season.

Fannie and Freddie: Single-Family Mortgage Delinquency Rate Declined, Multi-Family Increased in August

Today, in the Calculated Risk Real Estate Newsletter: Fannie and Freddie: Single-Family Mortgage Delinquency Rate Declined, Multi-Family Increased in August

Brief excerpt:
I’ve argued that there would not be a huge wave of single-family foreclosures this cycle since lending standards have been solid and most homeowners have substantial equity. That means we will not see cascading price declines like following the housing bubble. Delinquencies are a trailing indicator but are something to watch.

However, there is some concern about some multi-family properties.
Freddie Multi-Family Seriously Delinquent RateFreddie Mac reports that multi-family delinquencies increased to 0.25% in August, up from 0.12% in August 2022.

This graph shows the Freddie multi-family serious delinquency rate since 2012. Delinquency rates were still high in 2012 following the housing bust and financial crisis.

The multi-family delinquency rate increased following the pandemic and has increased recently as rent growth has stalled, vacancy rates have increased, lending has tightened, and interest rates have increased sharply. This will be something to watch as rents soften.
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PCE Measure of Shelter Slows to 7.4% YoY in August

Here is a graph of the year-over-year change in shelter from the CPI report and housing from the PCE report this morning, both through July 2023.

ShelterCPI Shelter was up 7.2% year-over-year in August, down from 7.7% in July, and down from the cycle peak of 8.2% in March 2023.
Housing (PCE) was up 7.4% YoY in August, down from 7.7% in July, and down from the cycle peak of 8.3% in April 2023.

Since asking rents are slightly negative year-over-year, these measures will continue to slow sharply over coming months.

Personal Income increased 0.4% in August; Spending increased 0.4%

The BEA released the Personal Income and Outlays report for August:
Personal income increased $87.6 billion (0.4 percent at a monthly rate) in August, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI), personal income less personal current taxes, increased $46.6 billion (0.2 percent) and personal consumption expenditures (PCE) increased $83.6 billion (0.4 percent).

The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.1 percent. Real DPI decreased 0.2 percent in August and real PCE increased 0.1 percent; goods decreased 0.2 percent and services increased 0.2 percent.
emphasis added
The August PCE price index increased 3.5 percent year-over-year (YoY), up from 3.4 percent YoY in July, and down from the recent peak of 7.1 percent in June 2022.
The PCE price index, excluding food and energy, increased 3.9 percent YoY, down from 4.3 percent in July, and down from the recent peak of 5.6 percent in February 2022.

The following graph shows real Personal Consumption Expenditures (PCE) through August 2023 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Personal Consumption Expenditures Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was slightly below expectations, and PCE was at expectations.
Inflation was below expectations.
Using the two-month method to estimate Q3 real PCE growth, real PCE was increasing at a 4.0% annual rate in Q3 2023. (Using the mid-month method, real PCE was increasing at 3.9%).  This suggests strong PCE growth in Q3.

Friday: Personal Income and Outlays

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

• At 8:30 AM ET, Personal Income and Outlays, August 2023.  The consensus is for a 0.5% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.2%.  PCE prices are expected to be up 3.5% YoY, and core PCE prices up 3.9% YoY.

• At 9:45 AM, Chicago Purchasing Managers Index for September. The consensus is for a reading of 47.6, down from 48.7 in August.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Final for September). The consensus is for a reading of 67.7.

Asking Rents Down 1.2% Year-over-year

Today, in the Calculated Risk Real Estate Newsletter: Asking Rents Down 1.2% Year-over-year

A brief excerpt:
Tracking rents is important for understanding the dynamics of the housing market. For example, the sharp increase in rents helped me deduce that there was a surge in household formation in 2021 (See from September 2021: Household Formation Drives Housing Demand).

The surge in household formation has been confirmed (mostly due to work-from-home), and this led to the supposition that household formation would slow sharply in 2023 (mostly confirmed) and that asking rents might decrease in 2023 on a year-over-year basis (now negative year-over-year).

Recent data suggests household formation has slowed sharply and asking rents are declining year-over-year.
Case-Shiller House Prices IndicesHere is a graph of the year-over-year (YoY) change for these measures since January 2015. Most of these measures are through August 2023, except CoreLogic is through July and Apartment List is through September 2023.
With slow household formation, more supply coming on the market and a rising vacancy rate, rents will be under pressure all year. See: Forecast: Multifamily Starts will Decline Sharply
There is much more in the article. You can subscribe at Reports Weekly Active Inventory Down 3.7% YoY; New Listings Down 7.5% YoY has monthly and weekly data on the existing home market. Here is their weekly report from Jiayi Xu: Weekly Housing Trends View — Data Week Ending Sep 23, 2023
Active inventory declined, with for-sale homes lagging behind year ago levels by 3.7%. During the past week, we observed the 14th successive drop in the number of homes available for sale when compared to the previous year. This decline showed a slight improvement compared to the previous week’s -4.4% figure.

New listings–a measure of sellers putting homes up for sale–were down again this week, by 7.5% from one year ago. Over the past 64 weeks, we’ve consistently seen a decline in the number of newly listed homes compared to the same period one year ago. While this gap in new listings was gradually narrowed over the past few weeks, in the most recent week, the decrease in newly listed homes was -7.5% compared to the previous year, lower from the -6.0% decline in the week prior.
Realtor YoY Active ListingsHere is a graph of the year-over-year change in inventory according to

Inventory was down 3.7% year-over-year - this was the fourteenth consecutive week with a YoY decrease following 58 consecutive weeks with a YoY increase in inventory.  
The YoY declines in inventory have been getting smaller recently but will likely stay down YoY for the remainder of 2023 since inventory was increasing late into the year last year.

NAR: Pending Home Sales Decrease 7.1% in August; Down 18.7% Year-over-year

From the NAR: Pending Home Sales Tumbled 7.1% in August
Pending home sales slid 7.1% in August, according to the National Association of REALTORS®. All four U.S. regions posted monthly losses and year-over-year declines in transactions.

"Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers," said Lawrence Yun, NAR chief economist. "Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets."

The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – sank 7.1% to 71.8 in August. Year over year, pending transactions fell by 18.7%. An index of 100 is equal to the level of contract activity in 2001.
The Northeast PHSI declined 0.9% from last month to 62.6, a reduction of 18.2% from August 2022. The Midwest index dropped 7.0% to 71.3 in August, down 19.1% from one year ago.

The South PHSI fell 9.1% to 86.5 in August, dipping 17.6% from the prior year. The West index retreated 7.7% in August to 56.3, sinking 21.4% from August 2022.
emphasis added
This was way below expectations of a 1.0% decrease for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in August and September.

Q2 GDP Growth at 2.1% Annual Rate

From the BEA: Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), Second Quarter 2023 and Comprehensive Update
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2023, according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.2 percent (revised).

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in GDP was also 2.1 percent. The update primarily reflected a downward revision to consumer spending that was partly offset by upward revisions to nonresidential fixed investment, exports, and inventory investment. Imports, which are a subtraction in the calculation of GDP, were revised down (refer to “Updates to GDP”).

The increase in real GDP reflected increases in nonresidential fixed investment, consumer spending, and state and local government spending that were partly offset by a decrease in exports. Imports decreased.
emphasis added
Here is a Comparison of Third and Second Estimates. PCE growth was revised down from 1.7% to 0.8%. Residential investment was revised up from -3.6% to -2.2%.

Click on graph for larger image.

The BEA also released the Comprehensive Update.
This graph shows the change in quarterly GDP from the 2023 comprehensive update of the National Economic Accounts (seasonally adjusted annual rate) for the last 5 years.

Note that Q2 and Q3 2020 are off the chart due to the pandemic and are labeled.

Weekly Initial Unemployment Claims Increase to 204,000

The DOL reported:
In the week ending September 23, the advance figure for seasonally adjusted initial claims was 204,000, an increase of 2,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 201,000 to 202,000. The 4-week moving average was 211,000, a decrease of 6,250 from the previous week's revised average. The previous week's average was revised up by 250 from 217,000 to 217,250.
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 decreased to 211,000.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

Thursday: Q2 GDP, Unemployment Claims, Pending Home Sales, Fed Chair Powell

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

• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 206 thousand initial claims, up from 201 thousand last week.

• Also at 8:30 AM, Gross Domestic Product, 2nd Quarter 2023 (Third Estimate), and Corporate Profits (Revised) The consensus is that real GDP increased 2.2% annualized in Q2, up from the second estimate of 2.1%. "BEA will release initial results from the 2023 comprehensive update of the National Economic Accounts, which include the National Income and Product Accounts as well as the Industry Economic Accounts, on September 28, 2023."

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

• At 11:00 AM, the Kansas City Fed manufacturing survey for September. This is the last of the regional surveys for September.

• At 4:00 PM, Conversation with Fed Chair Powell: A Teacher Town Hall Meeting "Federal Reserve Board Chair Jerome H. Powell will host a town hall with educators in Washington, D.C. and nationwide via webcast ... The Chair will respond to questions from the in-person audience and virtual participants from across the country."

A few comments on the Seasonal Pattern for House Prices

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.  This was because distressed sales (at lower price points) happened at a steady rate all year, while regular sales followed the normal seasonal pattern.  This made for larger swings in the seasonal factor during the housing bust.

House Prices month-to-month change NSA 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 2023). 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 more recent price surge changed the month-over-month pattern.

Case Shiller Seasonal FactorsThe 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 were decreasing following the bust but have increased again recently - this time without a surge in distressed sales.
This raises an interesting question: Why are prices weaker in the off-season than usual?

A Few Comments on the Likely Government Shutdown

First, shutdowns are expensive, and many government employees continue to work (like the military), but don't get paid. This time President Biden and Speaker McCarthy agreed on a plan, but the Speaker has been unable to deliver. So, the path forward isn't clear.

Second, there will be an impact on GDP from Goldman Sachs:
A government shutdown this year has looked likely for several months, and we now think the odds have risen to 90%. ... We continue to think a shutdown would last 2-3 weeks.

We have estimated a shutdown would subtract 0.2pp from Q4 GDP growth for each week it lasts ... We expect all data releases from federal agencies to be postponed until after the government reopens, except for releases from the Federal Reserve, which does not rely on congressional funding.
And from Nick Timiraos at the WSJ: Shutdown Would Blindfold Fed in Piloting Course on Rates. We will all be flying mostly blind without reports on employment, inflation, housing starts and more.  However, there will be some private data to fill the gap.

For housing, depending on the length of the shutdown, the impact would be on existing home closings in October. If the shutdown lasts for the entire month, I'd expect about a 10% decline in seasonally adjusted sales in October. If the shutdown only lasts a couple of weeks, there would probably be little impact. Some issues could be Tax transcripts, Flood Certs, and SS# Authorization.
Also, a shutdown increases uncertainty, and that might push up mortgage rates (investors hate uncertainty).
This is one of the "Four Horseman of the Q4 GDP Drag" (don't call it an "apocalypse", it probably won't be that bad) 1) UAW Strike 2) Likely Government Shutdown 3) Student Loan Payments Resume 4) Higher energy prices (oil up 14% YoY)And for housing, 7.5% 30-year fixed mortgage rates.

Inflation Adjusted House Prices 3.4% Below Peak; Price-to-rent index is 7.4% below recent peak

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 3.4% Below Peak; Price-to-rent index is 7.4% below recent peak

It has been over 17 years since the bubble peak. In the June Case-Shiller house price index released yesterday, the seasonally adjusted National Index (SA), was reported as being 66% above the bubble peak in 2006. However, in real terms, the National index (SA) is about 9% above the bubble peak (and historically there has been an upward slope to real house prices).  The composite 20, in real terms, is at the bubble peak.

People usually graph nominal house prices, but it is also important to look at prices in real terms.  As an example, if a house price was $200,000 in January 2000, the price would be $360,000 today adjusted for inflation (80% increase).  That is why the second graph below is important - this shows "real" prices.

The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the Case-Shiller National Index.
There is much more in the article. You can subscribe at

MBA: Mortgage Applications Decreased in Weekly Survey

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey
Mortgage applications decreased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 22, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week and was 21 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 27 percent lower than the same week one year ago.

“Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week. The 30-year fixed mortgage rate increased to 7.41 percent, the highest rate since December 2000, and the 30-year fixed jumbo mortgage rate increased to 7.34 percent, the highest rate in the history of the jumbo rate series dating back to 2011,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which drove the increase in Treasury yields. Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates. The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year’s pace. Refinance activity was down over 20 percent from last year and accounted for approximately one third of applications, as many homeowners have little incentive to refinance.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.41 percent, the highest level since December 2000, from 7.31 percent, with points decreasing to 0.71 from 0.72 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
Mortgage Purchase IndexClick on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is down 27% year-over-year unadjusted.  
Red is a four-week average (blue is weekly).  

Mortgage Refinance IndexThe second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index declined sharply in 2022 - and has mostly flat lined at a low level since then.

Wednesday: Durable Goods

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

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

• 8:30 AM, Durable Goods Orders for August from the Census Bureau. The consensus is for a 1.6% decrease in durable goods orders.

New Home Sales decrease to 675,000 Annual Rate in August; Median New Home Price is Down 13% from the Peak

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales decrease to 675,000 Annual Rate in August

Brief excerpt:
The Census Bureau reports New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 675 thousand. The previous three months were revised up, combined.
Active InventoryThe next graph shows new home sales for 2022 and 2023 by month (Seasonally Adjusted Annual Rate). Sales in August 2023 were up 5.8% from August 2022. Year-to-date sales are up 1.8% compared to the same period in 2022.

As expected, new home sales were up year-over-year in August, and it is fairly certain there will be more sales in 2023 than in 2022 - although 7%+ mortgage rates will likely slow sales.
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New Home Sales decrease to 675,000 Annual Rate in August

The Census Bureau reports New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 675 thousand.

The previous three months were revised up, combined.
Sales of new single‐family houses in August 2023 were at a seasonally adjusted annual rate of 675,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.7 percent below the revised July rate of 739,000, but is 5.8 percent above the August 2022 estimate of 638,000.
emphasis added
New Home SalesClick 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 close to pre-pandemic levels.

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply increased in August to 7.8 months from 7.0 months in July.

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 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 436,000. This represents a supply of 7.8 months at the current sales rate."
Sales were below expectations of 700 thousand SAAR, however, sales for the three previous months were revised up, combined. I'll have more later today.

Comments on July Case-Shiller and FHFA House Prices

Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller: National House Price Index Up 1.0% year-over-year in July; New all-time High

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). July closing prices include some contracts signed in March, so there is a significant lag to this data. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

Case-Shiller MoM House PricesThe MoM increase in the seasonally adjusted Case-Shiller National Index was at 0.65%. This was the sixth consecutive MoM increase following seven straight MoM decreases.

On a seasonally adjusted basis, prices increased in all of the 20 Case-Shiller cities on a month-to-month basis. Seasonally adjusted, San Francisco has fallen 9.7% from the recent peak, Seattle is down 8.8% from the peak, Las Vegas is down 8.3%, and Phoenix is down 7.6%.
There is much more in the article. You can subscribe at