Saturday, September 20, 2014

Schedule for Week of September 21st

by Bill McBride on 9/20/2014 01:11:00 PM

The key reports this week are August New home sales on Wednesday, Existing home sales on Monday, and the third estimate of Q2 GDP on Friday.

For manufacturing, the September Richmond and Kansas City Fed surveys will be released this week.

----- Monday, September 22nd -----

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

Existing Home Sales10:00 AM: Existing Home Sales for August from the National Association of Realtors (NAR).

The consensus is for sales of 5.18 million on seasonally adjusted annual rate (SAAR) basis. Sales in July were at a 5.15 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 5.12 million SAAR.

A key will be the reported year-over-year increase in inventory of homes for sale.

----- Tuesday, September 23rd -----

9:00 AM: FHFA House Price Index for July. This was original a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.4% increase.

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

----- Wednesday, September 24th -----

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

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

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

The consensus is for an increase in sales to 430 thousand Seasonally Adjusted Annual Rate (SAAR) in August from 412 thousand in July.

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

----- Thursday, September 25th -----

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 300 thousand from 280 thousand.

8:30 AM: Durable Goods Orders for August from the Census Bureau. The consensus is for a 17.1% decrease in durable goods orders (last month durable goods orders were up 22.6% due to aircraft orders).

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

----- Friday, September 26th -----

8:30 AM: Gross Domestic Product, 2nd quarter 2014 (third estimate). The consensus is that real GDP increased 4.6% annualized in Q2, up from 4.2% in the second estimate.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for September). The consensus is for a reading of 84.6, unchanged from the preliminary reading of 84.6, and up from the August reading of 82.5.

Unofficial Problem Bank list unchanged at 435 Institutions

by Bill McBride on 9/20/2014 08:05:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Sept 19, 2014.

Changes and comments from surferdude808:

Only one addition and deletion to report this week to the Unofficial Problem Bank List. So the list count stays steady at 435 institutions but assets move down slightly to $137.4 billion. A year ago, the list held 692 institutions with assets of $242.9 billion. This is the fourth time since November 2012 the weekly list count has gone unchanged otherwise the week-to-week list count has been declining since August 10, 2012.

This week the OCC terminated its actions against The First National Bank and Trust, Atmore, AL ($130 million). Added this week was Fayette County Bank, St. Elmo, IL ($53 million). Notice of this action came from the Illinois Department of Financial & Professional Regulation, which is one of the few state banking departments in the nation to provide transparency around its enforcement actions against commercial banks. So we give them major props and wish that all of their state brethren be as transparent.

Next week, we anticipate the FDIC will provide an update on its enforcement action activities.
CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 435.

Friday, September 19, 2014

CoStar: Commercial Real Estate prices increased 11.9% year-over-year in July

by Bill McBride on 9/19/2014 04:56:00 PM

Here is a price index for commercial real estate that I follow. 

From CoStar: Commercial Real Estate Prices Advance in July amid Rising Transaction Volume and Improving Liquidity Measures

CoStar’s equal-weighted U.S. Composite Index increased by a strong 1.5% in July 2014 and 11.9% for the 12 months ending in July 2014. It has now advanced to within 20% of its prerecession peak reached in 2007, supported by increased investor interest beyond core properties in primary markets. The value-weighted U.S. Composite Index, which is more heavily influenced by higher-value trades, began to recover earlier and is nearly back to its peak levels reached in 2007. As a result, annual pricing gains have moderated slightly over the last several months. The value-weighted Composite Index advanced 0.8% in July 2014, and 8.0% for the 12 months ending in July 2014.
Trailing 12-month repeat sale deal volume increased 24% as of July 2014 over the prior 12-month period ending in July 2013, as healthy market fundamentals, low interest rates and increasing allocations to commercial real estate by major investors provide a healthy environment for real estate transactions.
Distress sales as a percentage of total sales continued to decline from a peak of over 35% in 2011 to 11% through the first seven months of 2014.
emphasis added
Commercial Real Estate Prices Click on graph for larger image.

This graph from CoStar shows the the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index indexes.

 The value weighted index is almost back to the pre-recession peak, but the equal weighted is still well below the pre-recession peak.

Commercial Real Estate Prices The second graph shows the percent of distressed "pairs".

The distressed share is down from over 35% at the peak.

Note: These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.

Mortgage Equity Withdrawal Still Negative in Q2 2014

by Bill McBride on 9/19/2014 12:45:00 PM

Note: This is not Mortgage Equity Withdrawal (MEW) data from the Fed. The last MEW data from Fed economist Dr. Kennedy was for Q4 2008.

The following data is calculated from the Fed's Flow of Funds data (released this morning) and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity - hence the name "MEW", but there is little MEW right now - and normal principal payments and debt cancellation.

For Q2 2014, the Net Equity Extraction was minus $45 billion, or a negative 1.4% of Disposable Personal Income (DPI). 

Mortgage Equity Withdrawal Click on graph for larger image.

This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method.

There are smaller seasonal swings right now, perhaps because there is a little actual MEW (this is heavily impacted by debt cancellation right now).

The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding decreased by $7 billion in Q2. Compared to recent years, this was a small decrease in mortgage debt.

The Flow of Funds report also showed that Mortgage debt has declined by over $1.3 trillion since the peak. This decline is mostly because of debt cancellation per foreclosures and short sales, and some from modifications. There has also been some reduction in mortgage debt as homeowners paid down their mortgages so they could refinance. With residential investment increasing, and a slower rate of debt cancellation, it is possible that MEW will turn positive again soon.

For reference:

Dr. James Kennedy also has a simple method for calculating equity extraction: "A Simple Method for Estimating Gross Equity Extracted from Housing Wealth". Here is a companion spread sheet (the above uses my simple method).

For those interested in the last Kennedy data included in the graph, the spreadsheet from the Fed is available here.

BLS: State unemployment rates little changed in August

by Bill McBride on 9/19/2014 10:43:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were generally little changed in August. Twenty-four states and the District of Columbia had unemployment rate increases from July, 15 states had decreases, and 11 states had no change, the U.S. Bureau of Labor Statistics reported today. Forty-five states and the District of Columbia had unemployment rate decreases from a year earlier, three states had increases, and two states had no change.
Georgia had the highest unemployment rate among the states in August, 8.1 percent. North Dakota again had the lowest jobless rate, 2.8 percent.
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 states are ranked by the highest current unemployment rate. Georgia had the highest unemployment rate in August at 8.1%.

State UnemploymentThe second graph shows the number of states with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 10 states with an unemployment rate at or above 11% (red).

One state has an unemployment rate at or above 8% (light blue), and 11 states are still at or above 7% (dark blue).

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