Saturday, August 19, 2017

Schedule for Week of Aug 20, 2017

by Bill McBride on 8/19/2017 08:09:00 AM

The key economic reports this week are New and Existing Home sales for July.

Fed Chair Janet Yellen will speak at the Jackson Hole Economic Symposium on Friday.

----- Monday, Aug 21st -----

8:30 AM ET: Chicago Fed National Activity Index for July. This is a composite index of other data.

----- Tuesday, Aug 22nd -----

9:00 AM ET: FHFA House Price Index for June 2017. This was originally a GSE only repeat sales, however there is also an expanded index.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for August.

10:00 AM, Expected: Q2 MBA National Delinquency Survey.

----- Wednesday, Aug 23rd -----

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

New Home Sales10:00 AM ET: New Home Sales for July from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the May sales rate.

The consensus is for 610 thousand SAAR, unchanged from 610 thousand in June.

During the day: The AIA's Architecture Billings Index for July (a leading indicator for commercial real estate).

----- Thursday, Aug 24th -----

8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 236 thousand initial claims, up from 232 thousand the previous week.

Existing Home Sales10:00 AM: Existing Home Sales for July from the National Association of Realtors (NAR). The consensus is for 5.57 million SAAR, up from 5.52 million in June.

The graph shows existing home sales from 1994 through the report last month.

Housing economist Tom Lawler expects the NAR to report sales of 5.38 million SAAR for July.

Three days (Thursday, Friday and Saturday): The 2017 Jackson Hole Economic Symposium, "Fostering a Dynamic Global Economy, will take place Aug. 24-26, 2017.  (The program will be available at 6 p.m., MT, Aug. 24, 2017)."

11:00 AM: the Kansas City Fed manufacturing survey for August.

----- Friday, Aug 25th -----

8:30 AM: Durable Goods Orders for July from the Census Bureau. The consensus is for a 5.7% decrease in durable goods orders.

10:00 AM, Speech by Fed Chair Janet L. Yellen, Financial Stability, At the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming

Friday, August 18, 2017

Oil Rigs "Rigs counts are now off the peak"

by Bill McBride on 8/18/2017 05:03:00 PM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on Aug 18, 2017:

• Rigs counts are now off the peak

• Total US oil rigs were down 5 to 763

• Horizontal oil rigs were down 4 at 650
• Expect rigs counts to roll off for the next three months or so, with oil prices languishing in the $46-49 range typically.
Oil Rig CountClick on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.

Sacramento Housing in July: Sales up Slightly YoY, Active Inventory down 18% YoY

by Bill McBride on 8/18/2017 02:57:00 PM

During the recession, I started following the Sacramento market to look for changes in the mix of houses sold (equity, REOs, and short sales). For several years, not much changed. But in 2012 and 2013, we saw some significant changes with a dramatic shift from distressed sales to more normal equity sales.

Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In July, total sales were up 0.7% from July 2016, and conventional equity sales were up 5.0% compared to the same month last year.

In July, 2.4% of all resales were distressed sales. This was down from 3.2% last month, and down from 4.9% in July 2016.

The percentage of REOs was at 1.3%, and the percentage of short sales was 1.1%.

Sacramento Realtor Press Release: July sees decrease in sales volume; inventory, price increase

July ended with a 10.4% decrease in sales, down from 1,824 to 1,634. Compared with 2016, current number is .7% higher than the 1,622 sales for that month. Equity sales for the month reached a high point, accounting for 97.2% (1,588) of the sales this month. REO/bank‐owned and Short Sales made up the difference with 22 sales (1.3%) and 18 sales (1.1%) for the month, respectively.
The decrease in sales for the month and increase in active listings raises the Months of Inventory, which showed a 25% increase from 1.2 Months to 1.5 Months. A year ago the Months of inventory was 1.7. Total Active Listing Inventory increased 13.8% from 2,105 to 2,395. This current figure is down 14.5% from the 2,801 listings of July last year.

The Average DOM (days on market) remained at 18 from June to July.
emphasis added
Here are the statistics.

Sacramento Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional (equity) sales that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Active Listing Inventory for single family homes decreased 14.5% year-over-year (YoY) in June.  This was the 27th consecutive monthly YoY decrease in inventory in Sacramento.

Cash buyers accounted for 13.8% of all sales - this has been generally declining (frequently investors).

Summary: This data suggests a normal market with few distressed sales, and less investor buying - but with limited inventory.

Lawler: Early Read on Existing Home Sales in July

by Bill McBride on 8/18/2017 11:57:00 AM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports from across the country released through today, I project that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.38 million in July, down 2.5% from June’s preliminary pace and up 0.9% from last July’s seasonally adjusted pace.

On the inventory front, local realtor/MLS data suggest that the YOY decline in active listings last month was slightly less than in June, and I forecast that the NAR’s existing home inventory estimate for July will be 1.98 million, up 1.0% from June’s preliminary estimate and down 6.2% from last July’s estimate.

Finally, local realtor/MLS data suggest that the NAR’s estimate of the median exiting home sales price last month was up 6.1% from a year earlier.

CR Note: The NAR is scheduled to release existing home sales for July on Thursday, August 24th. The early consensus forecast is for sales of 5.56 million SAAR (take the under!).

BLS: Unemployment Rates Unchanged in 46 states in July, Two States at New Series Lows

by Bill McBride on 8/18/2017 10:13:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were higher in July in 3 states, lower in 1 state, and stable in 46 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Twenty-seven states had jobless rate decreases from a year earlier and 23 states and the District had little or no change. The national unemployment rate, 4.3 percent, was little changed from June but was 0.6 percentage point lower than in July 2016.
North Dakota and Colorado had the lowest unemployment rates in July, 2.2 percent and 2.4 percent, respectively. The rates in North Dakota (2.2 percent) and Tennessee (3.4 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 7.0 percent.
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State Unemployment Click on graph for larger image.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.

The size of the blue bar indicates the amount of improvement.   The yellow squares are the lowest unemployment rate per state since 1976.

Ten states have reached new all time lows since the end of the 2007 recession.  These ten states are: Arkansas, California, Colorado, Maine, Mississippi, North Dakota, Oregon, Tennessee, Washington, and Wisconsin.

The states are ranked by the highest current unemployment rate. Alaska, at 7.0%, had the highest state unemployment rate.

State UnemploymentThe second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently one state has an unemployment rate at or above 7% (light blue); Only two states and D.C. are at or above 6% (dark blue). The states are Alaska (7.0%) and New Mexico (6.3%).  D.C. is at 6.4%.

Thursday, August 17, 2017

Mortgage Rates Fall below 4%, Lowest since November 2016

by Bill McBride on 8/17/2017 07:22:00 PM

From Matthew Graham at Mortgage News Daily: Trump Administration Drama Pushing Rates Even Lower

Mortgage rates fell yesterday in response to a tweet about Trump disbanding his councils of CEOs.  Twitter was in play again today.  This time around it was Gary Cohn, Trump's economic advisor.  Rather, it was rumors of Cohn's departure that sent financial markets into a tail-spin.  Terror attacks in Spain may have played a supporting role.  The net effect was heavy losses for stocks and solid gains for bonds.  When bonds improve, rates fall.

Mortgage lenders continue to be slow to pass along the gains in bond markets in general, but they're certainly passing them along.  Multiple lenders issued positive reprices in the afternoon as bond markets rallied.  Conventional 30yr fixed rates are increasingly being quoted at 3.875% as opposed to 4.0% on top tier scenarios.  On average, rates are the lowest since November 2017--something we've been able to say for the 2nd straight day, and several times over the past few weeks.

Hotels: Occupancy Rate up Year-over-Year

by Bill McBride on 8/17/2017 02:16:00 PM

From STR: US hotel results for week ending 12 August

The U.S. hotel industry reported mostly positive year-over-year results in the three key performance metrics during the week of 6-12 August 2017, according to data from STR.

In comparison with the week of 7-13 August 2016, the industry recorded the following:

Occupancy: +0.7% to 73.6%
• Average daily rate (ADR): +1.5% to US$128.39
• Revenue per available room (RevPAR): +2.2% to US$94.46
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The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotel Occupancy RateThe red line is for 2017, dash light blue is 2016, dashed orange is 2015 (best year on record), blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels).

Currently the occupancy rate is tracking close to last year, and behind the record year in 2015.

Seasonally, the occupancy rate has peaked and will decline into the Fall.

Data Source: STR, Courtesy of

Earlier: Philly Fed Manufacturing Survey "region continued to advance" in August

by Bill McBride on 8/17/2017 10:36:00 AM

Earlier from the Philly Fed: August 2017 Manufacturing Business Outlook Survey

Manufacturing conditions in the region continued to advance in August, according to firms responding to this month’s Manufacturing Business Outlook Survey. The diffusion index for general activity fell slightly but continued to reflect growth. There was a notable improvement in the new orders and shipments indexes, and overall employment expansion continued among the reporting firms. The survey’s indexes of future activity indicate that firms expect a continuation of growth in the region’s manufacturing sector over the next six months.

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell slightly from 19.5 in July to 18.9 in August. The index has been positive for 13 consecutive months ... The survey’s indicators for labor market conditions suggest modest growth in employment. The percentage of firms reporting increases in employment (15 percent) was greater than the percentage reporting decreases (5 percent). The employment index held near steady at 10.1. Firms also reported overall increases in average work hours in August, and the workweek index was positive for the 10th consecutive month.
emphasis added
Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Fed Manufacturing Surveys and ISM PMI Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through August), and five Fed surveys are averaged (blue, through July) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through July (right axis).

This suggests the ISM manufacturing index will show somewhat faster, and solid expansion in August.

Industrial Production Increased 0.2% in July

by Bill McBride on 8/17/2017 09:23:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production rose 0.2 percent in July following an increase of 0.4 percent in June. In July, manufacturing output edged down 0.1 percent; the production of motor vehicles and parts fell substantially, but that decrease was mostly offset by a net gain of 0.2 percent for other manufacturing industries. Following a six-month string of increases beginning in September 2016, factory output was little changed, on net, between February and July. The indexes for mining and utilities in July rose 0.5 percent and 1.6 percent, respectively. At 105.5 percent of its 2012 average, total industrial production was 2.2 percent above its year-earlier level. Capacity utilization for the industrial sector was unchanged in July at 76.7 percent, a rate that is 3.2 percentage points below its long-run (1972–2016) average.
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Capacity Utilization Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 9.9 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 76.7% is 3.2% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

Industrial Production The second graph shows industrial production since 1967.

Industrial production increased in July to 105.5. This is 21.1% above the recession low, and above the pre-recession peak.

The increase was slightly below expectations.

Weekly Initial Unemployment Claims decrease to 232,000

by Bill McBride on 8/17/2017 08:32:00 AM

The DOL reported:

In the week ending August 12, the advance figure for seasonally adjusted initial claims was 232,000, a decrease of 12,000 from the previous week's unrevised level of 244,000. The 4-week moving average was 240,500, a decrease of 500 from the previous week's unrevised average of 241,000
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The previous week was unrevised.

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 240,500.

This was lower than the consensus forecast.

The low level of claims suggests relatively few layoffs.