by Calculated Risk on 7/22/2014 08:35:00 AM

From the Bureau of Labor Statistics (BLS): Consumer Price Index - June 2014

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in June on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.1 percent before seasonal adjustment.

In contrast to the broad-based increase last month, the June seasonally adjusted increase in the all items index was primarily driven by the gasoline index. It rose 3.3 percent and accounted for two-thirds of the all items increase.
...
The index for all items less food and energy also decelerated in June, increasing 0.1 percent after a 0.3 percent increase in May.
emphasis added

On a year-over-year basis, CPI is up 2.1 percent, and core CPI is up also up 1.9 percent.  This was close to the consensus forecast of a 0.3% increase for CPI, and a 0.2% increase in core CPI.

Note: CPI-W (used for cost of living adjustment, COLA) is up 2.0% year-over-year in June.  The COLA is calculated using the average Q3 data (July, August, and September).

I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 7/21/2014 08:01:00 PM

Here is a followup on an earlier article concerning short sale fraud, from E. Scott Reckard at the LA Times: Former BofA short-sales employee gets prison term for taking bribes

A former Bank of America mortgage employee was sentenced to 30 months in prison for pocketing $1.2 million in payoffs to approve sales of distressed properties for far less than their actual value.
...
Plea agreements filed by three other defendants at the time of Lauricella's arrest indicated that the manipulation of Southland home sales for illicit profit was widespread.

"It's part of a large, ongoing investigation," Katzenstein said. "There are a large number of related cases."

Short sale fraud was widespread, especially in the 2009 through 2012 period. Fraud has always been a key problem with short sales (the agent represents the "seller" who has no equity in the home - and this creates an obvious agency problem with unscrupulous agents).

There are many types of short sales fraud (money under the table to either seller or agent, agents not actually marketing property, etc.), and unfortunately most of the fraud will never be prosecuted - but we can still hope some more of them will be caught.

Tuesday:
• At 8:30 AM ET, the Consumer Price Index for June. The consensus is for a 0.3% increase in CPI in June and for core CPI to increase 0.2%.

• At 9:00 AM, the FHFA House Price Index for May. This was original a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.3% increase.

• At 10:00 AM, Existing Home Sales for June from the National Association of Realtors (NAR). The consensus is for sales of 4.99 million on seasonally adjusted annual rate (SAAR) basis. Sales in May were at a 4.89 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 4.96 million SAAR.

• Also at 10:00 AM, the Richmond Fed Survey of Manufacturing Activity for July. The consensus is for a reading of 5.5, up from 3 in June.

by Calculated Risk on 7/21/2014 04:30:00 PM

From housing economist Tom Lawler:

NVR, Inc. the fourth largest US home builder with a heavy concentration in the Mid-Atlantic region, reported that net home orders in the quarter ended June 30, 2014 totaled 3,415, up 4.2% from the comparable quarter of 2013. Net orders per active community were down 4.7% YOY. NVR’s average net order price last quarter was $368,000, up 1.9% from a year ago, but virtually unchanged from the previous quarter.

For the first two quarters of 2014 NVR’s net home orders were down 0.7% from the first half of 2013, while net orders per active community were down 9.5%. Home settlements last quarter totaled 2,943, up 2.3% from the comparable quarter of 2013, at an average sales price of $368,200, up 6.8% from a year ago and up 1.9% from the previous quarter. Home settlements in the first half of 2014 were virtually unchanged from the first half of 2013.

 The company’s order backlog at the end of June was 6,513, down 1.3% from last June, at an average order price of $374,100, up 4.3% from last June but virtually unchanged from the previous quarter. NVR controlled (owned or optioned) 67,500 lots at the end of June, up 10.3% from a year earlier and up 22.7% from two years earlier.

by Calculated Risk on 7/21/2014 01:42:00 PM

CR Note: If you want to understand subprime lending, I strongly suggest the following post from my former co-blogger Doris "Tanta" Dungey. This was written in 2007, but the concepts are forever. Read it all.

What Is "Subprime"?

For other Tanta posts, see: The Compleat UberNerd and Compendium of Tanta's Posts

by Calculated Risk on 7/21/2014 11:05:00 AM

Here is another weekly update on housing inventory ...

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then usually peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data released was for May and indicated inventory was up 6.0% year-over-year).   Existing home sales for June will be released tomorrow.

Fortunately Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data, for 54 metro areas, for the last several years.

Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

In 2013 (Blue), inventory increased for most of the year before declining seasonally during the holidays.  

Inventory in 2014 (Red) is now 15.0% above the same week in 2013. (Note: There are differences in how the data is collected between Housing Tracker and the NAR).

Inventory is also about 2.7% above the same week in 2012.  According to several of the house price indexes, house prices bottomed in early 2012, and low inventories were a key reason for the subsequent price increases.  Now that inventory is back above 2012 levels, I expect house price increases to slow (and possibly decline in some areas).

Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess was inventory would be up 10% to 15% year-over-year at the end of 2014 based on the NAR report.  Right now it looks like inventory might increase more than I expected.