by Bill McBride on 12/12/2013 08:33:00 PM
Thursday, December 12, 2013
As expected, the House passed the budget deal. From the WSJ: House Easily Passes Budget Agreement in 332-94 Vote
The bill passed by a wide bipartisan margin, 332-94. The bill drew a strong bipartisan majority: 169 Republicans and 163 Democrats voted for the measure. Voting in opposition were 62 Republicans and 32 Democrats.This isn't the end of "brinkmanship" or dumb political stunts, but those usually happen in odds years, as opposed to election years - so voters will forget.
There is no guarantee that this bipartisan budget deal signals the end of brinkmanship or that this episode of bipartisanship will reach into other areas.
• 8:30 AM ET, the Producer Price Index for November. The consensus is for a 0.1% decrease in producer prices (and 0.1% increase in core PPI).
Lawler on Hovnanian: Net Home Orders Slowed Significantly in Summer; Rebounded Modestly as Year-End Approached
by Bill McBride on 12/12/2013 06:46:00 PM
From housing economist Tom Lawler:
Hovnanian Enterprises reported that net orders (including jvs) in the quarter ended October 31, 2013 totaled 1,315, down 8.9% from the comparable quarter of 2012. The dip in orders came despite a YOY community-count increase of 6.9%. The company’s sales cancellation rate, expressed as a % of gross orders, was 23% last quarter, unchanged from a year ago. Home deliveries last quarter totaled 1,816, up 3.8% from the comparable quarter of 2012, at an average sales price of $371,401, up 13.8% from a year go. The company’s order backlog at the end of October was 2,392, up 11.5% from last October, at an average order price of $354,672, up 2.5% from a year ago.
Hovnanian said in its sales release that its “sales slowed from July through September due to the adverse impacts of higher mortgage rates, the sequester and the government shutdown,” but another factor was Hovnanian’s aggressive price increases (highlighted in last quarter’s presentation) in several markets, especially California. Hovnanian’s net orders in California last quarter were down 48.4% from a year ago, at an average contract price of $571,800, up 41.5% from a year ago.
Click on graph for larger image.
In its quarter presentation Hovnanian provided monthly net orders figures, including an estimate for November. Combined net orders for October and November were virtually unchanged from the same two months of 2012 (847 vs. 849) While in its press release Hovnanian said that November net orders exceed last November’s levels, its quarterly presentation showed a small YOY decline (382 vs. 385).
Hovnanian joined the vast bulk of publicly-traded large home builders reporting a significant drop in net home orders last quarter – consistent with Census’s estimate of a substantial decline in new home sales during that period.
by Bill McBride on 12/12/2013 03:06:00 PM
Two years ago I posted a graph with projections of when payroll employment would return to pre-recession levels (see: Sluggish Growth and Payroll Employment from November 2011).
In 2011, I argued we'd continue to see sluggish growth (back in 2011 many analysts were forecasting another US recession - those forecasts were wrong).
On the graph I posted two lines - one with payroll growth of 125,000 payroll jobs added per month (the pace in 2011), and another line with 200,000 payroll jobs per month. The following graph is an update with reported payroll growth through November 2013.
The dashed red line is 125,000 payroll jobs added per month. The dashed blue line is 200,000 payroll jobs per month. Both projections are from November 2011.
Click on graph for larger image.
So far the economy has tracked just below the blue line (200,000 payroll jobs per month).
Right now it appears payrolls will exceed the pre-recession peak in mid-2014.
Currently there are about 1.3 million fewer payroll jobs than before the recession started, and at the recent pace of job growth it will take about 7 months to reach the previous peak.
Of course this doesn't include population growth and new entrants into the workforce (the workforce has continued to grow).
Note: There are 760 thousand fewer private sector payroll jobs than before the recession started. At the recent pace of private sector job growth, the private sector could be back at the pre-recession peak in March 2014.
CoStar: Commercial Real Estate prices increase in October, Distress Sales Lowest Level in Five Years
by Bill McBride on 12/12/2013 11:56:00 AM
Here is a price index for commercial real estate that I follow.
From CoStar: Commercial Real Estate Prices Resume Upward Trend in October
The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—advanced by 1.1% and 1.4%, respectively, in October 2013. ... On an annual basis, the equal weighted CCRSI Composite Index has risen 7.4% while the value-weighted Composite CCRSI Index has advanced by 9.5%.Click on graph for larger image.
The percentage of commercial property selling at distressed prices dropped to 10.7% in October 2013 from nearly 20% one year earlier, the lowest level since December 2008. ... Distress levels vary widely by market, however. In housing bust markets including, Atlanta, Las Vegas and Orlando, distress deals still accounted for more than 20% of all sales activity in the third quarter of 2013, suggesting there is still significant room for price appreciation in those markets. Conversely, in healthier markets such as San Francisco, Boston, Los Angeles, Seattle and New York, the share of distressed sales fell into the single digits in the third quarter of 2013.
This graph from CoStar shows the Value-Weighted and Equal-Weighted indexes. CoStar reported that the Value-Weighted index is up 50.3% from the bottom (showing the earlier and stronger demand for higher end properties) and up 9.5% year-over-year. However the Equal-Weighted index is only up 17.0% from the bottom, and up 7.4% year-over-year.
Note: These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.
by Bill McBride on 12/12/2013 08:49:00 AM
On a monthly basis, retail sales increased 0.7% from October to November (seasonally adjusted), and sales were up 4.7% from November 2012. Sales in October were revised up from a 0.4% increase to 0.6%. From the Census Bureau report:
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $432.3 billion, an increase of 0.7 percent from the previous month, and 4.7 percent above November 2012. ... The September to October 2013 percent change was revised from +0.4 percent to +0.6 percent.
Click on graph for larger image.
This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).
Retail sales ex-autos increased 0.4%.
The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.
Retail sales ex-gasoline increased by 5.5% on a YoY basis (4.7% for all retail sales).
This was a solid report, and especially strong considering the upward revision to October sales.