Speak Your Mind 2 Cents at a Time
Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.
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The 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.
S&P/Case-Shiller released the monthly Home Price Indices for June ("June" is a 3-month average of April, May and June closing prices). April closing prices include some contracts signed in February, 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).
The MoM decrease in the seasonally adjusted (SA) Case-Shiller National Index was at -0.26% (a -3.1% annual rate). This was the fourth consecutive MoM decrease.
On a seasonally adjusted basis, prices increased month-to-month in just 3 of the 20 Case-Shiller cities. San Francisco has fallen 9.0% from the recent peak, Phoenix is down 4.4% from the peak, and Denver down 3.7%.
The S&P Cotality Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 1.9% annual gain for June, down from a 2.3% rise in the previous month. The 10 City Composite increased 2.6%, down from a 3.4% rise in the previous month. The 20-City Composite posted a year-over-year gain of 2.1%, down from a 2.8% increase in the previous month.
The pre-seasonally adjusted U.S. National Index saw a slight upward trend, rising 0.1%. The 10-City Composite and 20-City Composite Indices posted drops of -0.1% and -0.04%, respectively.
After seasonal adjustment, the U.S. National Index posted a decrease of -0.3%. The 10-City Composite Index posted a -0.1% decrease and the 20-City Composite Index fell -0.3%.
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"June's results mark the continuation of a decisive shift in the housing market, with national home prices rising just 1.9% year-over-year—the slowest pace since the summer of 2023," said Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices. "What makes this deceleration particularly noteworthy is the underlying pattern: The modest 1.9% annual gain masks significant volatility, with the first half of the period showing declining prices (-0.6%) that were more than offset by a 2.5% surge in the most recent six months, suggesting the housing market experienced a meaningful inflection point around the start of 2025.
"The geographic divergence has become the story's defining characteristic. New York's 7.0% annual gain stands as a stark outlier, leading all markets by a wide margin, followed by Chicago (6.1%) and Cleveland (4.5%). This represents a complete reversal of pandemic-era patterns, where traditional industrial centers now outpace former darlings like Phoenix (-0.1%), Tampa (-2.4%), and Dallas (-1.0%). Tampa's decline marks the worst performance among all tracked metros, while several Western markets including San Diego (-0.6%) and San Francisco (-2.0%) have joined the negative column—a remarkable transformation from their earlier boom years.
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The second graph shows the year-over-year change in all three indices.
From Matthew Graham at Mortgage News Daily: Mortgage Rates Edge Slightly Higher From Long-Term LowsAfter last week's Jackson Hole speech from Fed Chair Powell, rates fell to their lowest levels since October 3rd, 2024, narrowly surpassing the recent long-term low seen on August 13th. Powell tacitly suggested a stronger possibility of a September Fed rate cut due to growing concerns about the labor market.Tuesday:
Now today, the market correctly mildly back in the other direction. The average lender's conventional 30yr fixed rates moved back up ever-so-slightly (roughly 0.02%), but remain essentially in line with 10-month lows. [30 year fixed 6.54%]
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Intercontinental Exchange, Inc. (NYSE:ICE) ... today released its July 2025 ICE First Look at mortgage delinquency, foreclosure and prepayment trends. The data shows that U.S. mortgage performance remains remarkably strong compared to pre-pandemic norms, marked by delinquencies declining on an annual basis.
“If you are looking for signs of a faltering economy, you won’t find them in July’s mortgage performance data,” said Andy Walden, Head of Mortgage and Housing Market Research at ICE. “New delinquency inflows were down -13% from June and -5% from the same time last year, with the national delinquency rate improving on an annual basis for the second straight month, breaking what had been a 13-month streak of consecutive increases.”
Key takeaways from the ICE First Look include:
• National delinquency rate: The delinquency rate fell by eight basis points (bps) in July to 3.27%, a 9-basis-point improvement year over year (YoY) and still 58 basis points below its 2019 levels.
• Serious delinquencies: Loans 90+ days past due but not in foreclosure held steady overall. Also, while serious delinquencies are up 30,000 YoY, it is the smallest annual increase since November, as the impacts from recent wildfires and last year’s hurricanes continue to fade.
• FHA delinquencies: FHA loans remain the primary driver of stress in the market. While FHA delinquencies ticked down by 5 basis points in July, they are still 15 basis points above year-ago levels and now account for the majority (52%) of serious delinquencies nationwide.
• Foreclosure activity: Foreclosure inventory rose 10% YoY, with starts increasing annually for eight straight months and foreclosure sales up in each of the past five months. Even so, the national foreclosure rate remains 35% below pre-pandemic norms.
• Prepayment activity: Prepayments edged up slightly to 0.67% in July on a modest improvement in rates and are up more than 12% from a year ago.
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Click on graph for larger image.The Census Bureau reported New Home Sales in July were at a seasonally adjusted annual rate (SAAR) of 652 thousand. The previous three months were revised up.There is much more in the article.
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The next graph shows new home sales for 2024 and 2025 by month (Seasonally Adjusted Annual Rate). Sales in July 2025 were down 8.2% from July 2024.
New home sales, seasonally adjusted, have been down year-over-year for 7 consecutive months.
Sales of new single-family houses in July 2025 were at a seasonally-adjusted annual rate of 652,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6 percent below the June 2025 rate of 656,000, and is 8.2 percent below the July 2024 rate of 710,000.
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The months of supply was unchanged in July at 9.2 months from 9.2 months in June. "The seasonally-adjusted estimate of new houses for sale at the end of July 2025 was 499,000. This is 0.6 percent below the June 2025 estimate of 502,000, and is 7.3 percent above the July 2024 estimate of 465,000.Sales were above expectations of 630 thousand SAAR and sales for the three previous months were revised up. I'll have more later today.
This represents a supply of 9.2 months at the current sales rate. The months' supply is virtually unchanged from the June 2025 estimate of 9.2 months, and is 16.5 percent above the July 2024 estimate of 7.9 months."
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This second inventory graph is courtesy of Altos Research.The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.1 million units, up 1.0 million units from August 2024.
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“August new-vehicle sales are expected to climb 8.2% from a year ago, including a 7.8% increase in retail volume. A strong result, although the results should be viewed in the context of several unusual factors that are distorting typical monthly sales trends.
“First, federal credits of up to $7,500 on EVs will expire on Sept. 30, prompting many EV shoppers to accelerate purchases that otherwise would have occurred later this year. As a result, EV retail share in August is expected to reach an all-time high of 12.0%, compared with 9.5% a year ago.
“Second, Labor Day lands in the August sales reporting period this year. The Labor Day weekend is typically one of the highest sales volume weekends of the year, powered by elevated manufacturer promotional activity and elevated discounts. This year, manufacturers have kept incentives restrained due to tariffs. Normally, incentives as a percentage of MSRP increase by about half a point from January through late summer, but this year they’ve slipped to 6.2% in August from 6.3% in January, underscoring the effect of tariff-related cost pressures.
“Third, lease returns remain at historically low levels following the reduced leasing activity during the 2022 supply shortages. With fewer lease customers cycling back into the market, new-vehicle sales are facing added pressure compared with typical seasonal patterns.
“Finally, from a total sales perspective, fleet deliveries are expected to reach 199,854 units in August, up 11.2% primarily due to the low baseline recorded in August 2024. Fleet volume is forecast to represent 13.5% of total light-vehicle sales, an increase of 0.4 percentage points year over year.
“In sum, August’s retail sales results point to solid new vehicle demand. The results are unquestionably inflated by shoppers accelerating their electric vehicle purchases to take advantage of Federal EV credits—but the sales pace for non-EVs remains robust, especially given the modest discounts available on those vehicles.
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10:00 AM: New Home Sales for July from the Census Bureau. 
9:00 AM: S&P/Case-Shiller House Price Index for June.The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for July 2025. Over the past three months, the indexes increased in 41 states, decreased in eight states, and remained stable in one, for a three-month diffusion index of 66. Additionally, in the past month, the indexes increased in 38 states, decreased in five states, and remained stable in seven, for a one-month diffusion index of 66. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 0.5 percent over the past three months and 0.1 percent in July.Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:
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The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
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And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. We boosted our Q3 GDP tracking estimate by 0.1pp to +1.5% (quarter-over-quarter annualized). Our Q3 domestic final sales estimate stands at +0.3%. We left our past-quarter GDP tracking estimate unchanged at +3.1%. [August 21st estimate]And from the Atlanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 2.3 percent on August 19, down from 2.5 percent on August 15. After this morning’s housing starts release from the US Census Bureau, the nowcast of third-quarter real residential investment growth decreased from 1.1 percent to -5.9 percent. [August 19th estimate]
When I appeared at this podium one year ago, the economy was at an inflection point. Our policy rate had stood at 5-1/4 to 5-1/2 percent for more than a year. That restrictive policy stance was appropriate to help bring down inflation and to foster a sustainable balance between aggregate demand and supply. Inflation had moved much closer to our objective, and the labor market had cooled from its formerly overheated state. Upside risks to inflation had diminished. But the unemployment rate had increased by almost a full percentage point, a development that historically has not occurred outside of recessions.1 Over the subsequent three Federal Open Market Committee (FOMC) meetings, we recalibrated our policy stance, setting the stage for the labor market to remain in balance near maximum employment over the past year.
This year, the economy has faced new challenges. Significantly higher tariffs across our trading partners are remaking the global trading system. Tighter immigration policy has led to an abrupt slowdown in labor force growth. Over the longer run, changes in tax, spending, and regulatory policies may also have important implications for economic growth and productivity. There is significant uncertainty about where all of these polices will eventually settle and what their lasting effects on the economy will be.
Changes in trade and immigration policies are affecting both demand and supply. In this environment, distinguishing cyclical developments from trend, or structural, developments is difficult. This distinction is critical because monetary policy can work to stabilize cyclical fluctuations but can do little to alter structural changes.
The labor market is a case in point. The July employment report released earlier this month showed that payroll job growth slowed to an average pace of only 35,000 per month over the past three months, down from 168,000 per month during 2024 (figure 2).2 This slowdown is much larger than assessed just a month ago, as the earlier figures for May and June were revised down substantially.3 But it does not appear that the slowdown in job growth has opened up a large margin of slack in the labor market—an outcome we want to avoid. The unemployment rate, while edging up in July, stands at a historically low level of 4.2 percent and has been broadly stable over the past year. Other indicators of labor market conditions are also little changed or have softened only modestly, including quits, layoffs, the ratio of vacancies to unemployment, and nominal wage growth. Labor supply has softened in line with demand, sharply lowering the "breakeven" rate of job creation needed to hold the unemployment rate constant. Indeed, labor force growth has slowed considerably this year with the sharp falloff in immigration, and the labor force participation rate has edged down in recent months.
Overall, while the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.
At the same time, GDP growth has slowed notably in the first half of this year to a pace of 1.2 percent, roughly half the 2.5 percent pace in 2024 (figure 3). The decline in growth has largely reflected a slowdown in consumer spending. As with the labor market, some of the slowing in GDP likely reflects slower growth of supply or potential output.
Turning to inflation, higher tariffs have begun to push up prices in some categories of goods. Estimates based on the latest available data indicate that total PCE prices rose 2.6 percent over the 12 months ending in July. Excluding the volatile food and energy categories, core PCE prices rose 2.9 percent, above their level a year ago. Within core, prices of goods increased 1.1 percent over the past 12 months, a notable shift from the modest decline seen over the course of 2024. In contrast, housing services inflation remains on a downward trend, and nonhousing services inflation is still running at a level a bit above what has been historically consistent with 2 percent inflation (figure 4).
The effects of tariffs on consumer prices are now clearly visible. We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts. The question that matters for monetary policy is whether these price increases are likely to materially raise the risk of an ongoing inflation problem. A reasonable base case is that the effects will be relatively short lived—a one-time shift in the price level. Of course, "one-time" does not mean "all at once." It will continue to take time for tariff increases to work their way through supply chains and distribution networks. Moreover, tariff rates continue to evolve, potentially prolonging the adjustment process.
It is also possible, however, that the upward pressure on prices from tariffs could spur a more lasting inflation dynamic, and that is a risk to be assessed and managed. One possibility is that workers, who see their real incomes decline because of higher prices, demand and get higher wages from employers, setting off adverse wage–price dynamics. Given that the labor market is not particularly tight and faces increasing downside risks, that outcome does not seem likely.
Another possibility is that inflation expectations could move up, dragging actual inflation with them. Inflation has been above our target for more than four years and remains a prominent concern for households and businesses. Measures of longer-term inflation expectations, however, as reflected in market- and survey-based measures, appear to remain well anchored and consistent with our longer-run inflation objective of 2 percent.
Of course, we cannot take the stability of inflation expectations for granted. Come what may, we will not allow a one-time increase in the price level to become an ongoing inflation problem.
Putting the pieces together, what are the implications for monetary policy? In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate. Our policy rate is now 100 basis points closer to neutral than it was a year ago, and the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.
Monetary policy is not on a preset course. FOMC members will make these decisions, based solely on their assessment of the data and its implications for the economic outlook and the balance of risks. We will never deviate from that approach.
• Active inventory climbed 20.9% year over year
The number of homes active on the market climbed 20.9% year over year, easing slightly compared with the previous week for the ninth consecutive week. Nevertheless, last week was the 93rd consecutive week of annual gains in inventory. There were roughly 1.1 million homes for sale last week, marking the 16th week in a row over the million-listing threshold. Active inventory is growing significantly faster than new listings, an indication that more homes are sitting on the market for longer.
• New listings—a measure of sellers putting homes up for sale—rose 4.9% year over year
New listings rose 4.9% last week compared with the same period last year, a lower rate compared with the previous week, as the number of new listings remains below the spring and early summer norm. Homeowners are showing less urgency to list, as rising inventory and cautious buyer activity continue to temper the market.
• The median listing price was flat year over year
The median list price was flat compared with the same week in 2024. The median list price per square foot, which accounts for changes in home size, rose 0.1% year over year, extending its nearly two-year growth streak, though this represents the slowest growth rate over that period.
Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.The U.S. hotel industry reported mostly negative year-over-year comparisons, according to CoStar’s latest data through 16 August. ...The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.
10-16 August 2025 (percentage change from comparable week in 2024):
• Occupancy: 66.3% (-0.9%)
• Average daily rate (ADR): US$157.51 (+0.4%)
• Revenue per available room (RevPAR): US$104.50 (-0.5%)
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Click on graph for larger image.On prices, the NAR reported:There is much more in the article.• $422,400: Median existing-home price for all housing types, up 0.2% from one year ago ($421,400) – the 25th consecutive month of year-over-year price increases.Median prices are distorted by the mix (repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices).
The YoY change in the median price peaked at 25.2% for this cycle in May 2021 and bottomed at -3.0% in May 2023. Prices are now up 0.2% YoY.
On a month-over-month basis, median prices decreased 2.4% from the peak in June. This is more than the normal seasonal decrease in the median price for July. Typically, the NAR median price increases in the Spring, and tends to peak seasonally in the June report. The median price will likely decline until early 2026.
The median price tends to lead the Case-Shiller index, and this suggests a lower YoY increase in the Case-Shiller index as in May over the next couple of months.
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