by Bill McBride on 12/13/2013 02:32:00 PM
Friday, December 13, 2013
From HotelNewsNow.com: STR: US results for week ending 7 December
The U.S. hotel industry reported increases in the three key performance metrics during the week of 1-7 December 2013, according to data from STR.The 4-week average of the occupancy rate is close to normal levels.
In year-over-year comparisons, occupancy rose 0.2 percent to 55.4 percent; average daily rate was up 1.9 percent to US$109.70; and revenue per available room increased 2.1 percent to US$60.82.
Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average for the year 2000 through 2013.
Click on graph for larger image.
The red line is for 2013 and black is for 2009 - the worst year since the Great Depression for hotels.
Note: Although 2009 was the worst year since the Depression, there was a brief period in 2001 when the occupancy rate was even lower than in 2009 due to the attacks on 9/11. In 2005, the occupancy rate was very high at the end of the year due to Hurricanes Katrina and Rita.
Through December 7th, the 4-week average of the occupancy rate is slightly higher than the same period last year and is tracking at pre-recession levels.
This has been a solid year for the hotel industry and will be the best year for the hotel industry since 2007 (right before the recession).
Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com
by Bill McBride on 12/13/2013 10:53:00 AM
Update: FHA ISSUES ANNUAL FINANCIAL STATUS REPORT TO CONGRESS
Nick Timiraos at the WSJ has some details: Audit Shows FHA Faces $1.3 Billion Deficit
The Federal Housing Administration ran a projected shortfall of $1.3 billion at the end of September, down from a much larger projected deficit of $16.3 billion one year earlier, according to the agency's independent financial review, released Friday.
In September, the FHA received a $1.7 billion infusion from the U.S. Treasury, its first such injection in its 79-year history. The agency is required to maintain enough cash to pay for projected losses on the more than $1 trillion in loans that it guarantees. A separate report next year from White House budget officials will determine whether the FHA needs additional taxpayer money.
Most of the agency's losses stem from loans made between 2007 and 2009, when the housing bust deepened. Loans made since 2010 are profitable, the report found.
by Bill McBride on 12/13/2013 08:55:00 AM
The Producer Price Index for finished goods edged down 0.1 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods decreased 0.2 percent in October and 0.1 percent in September.This slight decline was expected, and was mostly due to a decline in energy products. However this is another indicator showing little inflation.
In November, the decrease in the finished goods index can be traced to a 0.4-percent decline in prices for finished energy goods. By contrast, prices for finished goods less foods and energy advanced 0.1 percent.
A key question for the Fed next week is if the below target "rate of inflation experienced so far this year has become ingrained in the economy" (using some of Bernanke's words from 2011 when he argued a small increase in inflation was transitory - and Bernanke was correct then).
To start to reduce asset purchases next week, the FOMC would probably have to argue that the current low inflation is transitory.
Thursday, December 12, 2013
by Bill McBride on 12/12/2013 08:33:00 PM
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.