by Bill McBride on 12/04/2013 09:05:00 PM
Wednesday, December 04, 2013
On the MBA Purchase Index: This morning I mentioned a WSJ article Smaller Mortgage Lenders Lead Field. This suggests that the MBA Purchase Index might be understating purchase activity if smaller lenders (not in the survey) are gaining share. MBA's Mike Fratantoni told me today:
[I]n the last couple of years ... independent mortgage bankers have accounted for a fast growing share of the purchase market ... We have actively recruited independents and smaller banks to get better coverage of the purchase market. ... It is likely that many of the lenders not in the survey have a higher purchase share and lower refi share.It appears these small independent lenders are focusing on the purchase market (probably marketing through real estate agents - and selling the loans to Fannie and Freddie). A result of this change in market share is the Purchase Index is probably understating the increase in purchase activity.
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 322 thousand from 316 thousand last week.
• Also at 8:30 AM, the is the second estimate of Q3 GDP from the BEA. The consensus is that real GDP increased 3.1% annualized in Q3, revised up from the advance estimate of 2.8%.
• At 10:00 AM, the Manufacturers' Shipments, Inventories and Orders (Factory Orders) for October. The consensus is for a 1.2% decrease in October orders.
by Bill McBride on 12/04/2013 06:04:00 PM
From Trulia this morning: Trulia Price Monitor: Hottest Housing Markets Cool, While Warm Markets Heat Up
In November, asking home prices rose 12.1 percent year-over-year (Y-o-Y), increasing in 98 of the 100 largest U.S. metro areas. Regaining a bit of steam since the slowdown began in July, asking prices rose 1.0 percent month-over-month (M-o-M) and 3.0 percent quarter-over-quarter (Q-o-Q). In fact, the quarterly increase is the fastest in five months, though still lower than in the spring.Note: These asking prices are SA (Seasonally Adjusted) - and adjusted for the mix of homes - and this suggests further house price increases over the next few months on a seasonally adjusted basis.
The slowing of asking home price gains is most apparent in the housing markets with the biggest price rebounds. The slowdown – measured as the difference in the Q-o-Q price changes between November and August – was more than two percentage points in Las Vegas, Oakland, Atlanta, Phoenix, Detroit, and Los Angeles.
The price slowdown happening nationally is really a sharp deceleration in price gains in the hottest markets. Among the 100 U.S. largest metros, the quarterly price increase in the 10 metros where prices rose more than 20 percent Y-o-Y fell from 6.1 percent in August to 3.7 percent in November. But in the 56 markets where prices rose by less than 10 percent Y-o-Y, price gains actually accelerated in the most recent quarter, rising 1.6 percent in November compared with 1.3 percent in August. Prices accelerated in Philadelphia, Pittsburgh, and Miami, for instance.
“The price slowdown – like everything about housing – is all local,” said Jed Kolko, Trulia’s Chief Economist. “Price gains are cooling in 2013’s hottest markets, like Las Vegas and Oakland, but heating up in markets that haven’t been in the limelight.” emphasis added
More from Kolko: Hottest Housing Markets Cool, But Warm Markets Heat Up
by Bill McBride on 12/04/2013 02:00:00 PM
Fed's Beige Book "Prepared at the Federal Reserve Bank of Cleveland and based on information collected on or before November 22, 2013. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials."
Reports from the twelve Federal Reserve Districts indicated that the economy continued to expand at a modest to moderate pace from early October through mid-November. Activity in the New York, Cleveland, Richmond, Atlanta, St. Louis, Minneapolis, and Dallas Districts grew at a moderate pace, while Philadelphia, Chicago, Kansas City, and San Francisco cited modest growth. Boston reported that economic activity continued to expand.And on real estate:
Residential real estate activity improved in Boston, Philadelphia, Chicago, St. Louis, Minneapolis, and San Francisco, while remaining steady or softening in other Districts. Some slowing in single-family home sales was attributed to seasonal factors. Nonetheless, sales remain largely above year-ago levels. Increasing demand, low to declining levels of inventory, and slowly rising new-home construction were cited by almost all Districts as reasons for a continued rise in home prices, but at a slower pace than was observed earlier in 2013. Historically low inventories of unsold homes were reported in Philadelphia, Richmond, Chicago, Kansas City, and Dallas. Chicago noted that the inventory of homes for sale is at a record low. In the Philadelphia, Cleveland, Kansas City, and San Francisco Districts, builders continued to face a scarcity of high-skilled trade workers. Boston, New York, Philadelphia, Cleveland, Richmond, and Chicago indicated that multifamily construction continued to experience moderate to strong growth, with strength concentrated in the apartment segment. Vacancy rates declined across most Districts.Overall this was similar to the previous beige book with economic activity increasing at a "modest to moderate" pace.
Commercial real estate activity remained stable or improved slightly across many Districts. Philadelphia, Cleveland, Richmond, Chicago, St. Louis, and Minneapolis all saw gains in industrial construction, while Boston, Chicago, and St. Louis cited a rise in hotel construction. The technology sector drove demand for commercial real estate in the San Francisco District, and Cleveland saw gains in affordable housing and shale-gas-related activity. The outlook of market participants is for continued improvement in the Philadelphia, Atlanta, Kansas City, and Dallas Districts, while contacts were cautiously optimistic in Boston and Cleveland.
by Bill McBride on 12/04/2013 11:35:00 AM
Catching up ... the November ISM Non-manufacturing index was at 53.9%, down from 55.4% in October. The employment index decreased in October to 52.5%, down from 56.2% in October. Note: Above 50 indicates expansion, below 50 contraction.
From the Institute for Supply Management: November 2013 Non-Manufacturing ISM Report On Business®
Economic activity in the non-manufacturing sector grew in November for the 47th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.Click on graph for larger image.
The report was issued today by Anthony Nieves, CPSM, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. "The NMI® registered 53.9 percent in November, 1.5 percentage points lower than October's reading of 55.4 percent. This indicates continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased to 55.5 percent, which is 4.2 percentage points lower than the 59.7 percent reported in October, reflecting growth for the 52nd consecutive month, but at a slower rate. The New Orders Index decreased slightly by 0.4 percentage point to 56.4 percent, and the Employment Index decreased 3.7 percentage points to 52.5 percent, indicating growth in employment for the 16th consecutive month, but at a slower rate. The Prices Index decreased 3.9 percentage points to 52.2 percent, indicating prices increased at a slower rate in November when compared to October. According to the NMI®, 11 non-manufacturing industries reported growth in November. Respondents' comments for the most part indicate the non-manufacturing sector is maintaining a steady course of incremental growth and a positive outlook for the upcoming months."
This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.
This was below the consensus forecast of 55.5% and indicates slower expansion in November than in October.
by Bill McBride on 12/04/2013 10:00:00 AM
Note: The New Home sales reports for September and October were both released today (delayed due to government shutdown).
The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 444 thousand, and sales in September were at a 354 thousand SAAR.
August sales were revised down from 421 thousand to 379 thousand, and July sales were revised down from 390 thousand to 373 thousand.
The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.
"Sales of new single-family houses in October 2013 were at a seasonally adjusted annual rate of 444,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 25.4 percent above the revised September rate of 354,000 and is 21.6 percent above the October 2012 estimate of 365,000."Click on graph for larger image in graph gallery.
The second graph shows New Home Months of Supply.
The months of supply decreased in October to 4.9 months from 6.4 months in September.
The all time record was 12.1 months of supply in January 2009.
This is now in the normal range (less than 6 months supply is normal).
"The seasonally adjusted estimate of new houses for sale at the end of October was 183,000. This represents a supply of 4.9 months at the current sales rate."On inventory, according to the Census Bureau:
"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.
This graph shows the three categories of inventory starting in 1973.
The inventory of completed homes for sale is near the record low. The combined total of completed and under construction is increasing, but still very low.
The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).
In October 2013 (red column), 35 thousand new homes were sold (NSA). Last year 29 thousand homes were sold in October. The high for October was 105 thousand in 2005, and the low for October was 23 thousand in 2010.
This was above expectations of 425,000 sales in October, but there were significant downward revisions to prior months (as expected based on builder reports).
I'll have more later today - but no worries - the housing recovery will continue!