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Wednesday, December 17, 2014

BLS: CPI decreased 0.3% in November, Core CPI increased 0.1%

by Calculated Risk on 12/17/2014 08:33:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.3 percent in November on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.3 percent before seasonal adjustment.
...
The gasoline index posted its sharpest decline since December 2008 and was the main cause of the decrease in the seasonally adjusted all items index. The indexes for fuel oil and natural gas also declined, and the energy index fell 3.8 percent. ...

The index for all items less food and energy increased 0.1 percent in November. ...

The all items index increased 1.3 percent over the last 12 months, a notable decline from the 1.7 percent figure from the 12 months ending October. The index for all items less food and energy has increased 1.7 percent over the last 12 months, compared to 1.8 percent for the 12 months ending October.
emphasis added
I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI. This was below the consensus forecast of a 0.1% decrease for CPI, and at the forecast of a 0.1% increase in core CPI.

Energy prices have also declined significantly in December, and CPI will fall further - but the key is to focus on the core measures.

MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

by Calculated Risk on 12/17/2014 07:01:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 3.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 12, 2014. ...

The Refinance Index remained unchanged from the previous week. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.06 percent, the lowest level since May 2013, from 4.11 percent, with points decreasing to 0.21 from 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
Mortgage Refinance Index Click on graph for larger image.


The first graph shows the refinance index.

The refinance index is down 72% from the levels in May 2013.

Even with the general decline in mortgage rates, refinance activity is very low this year and 2014 will be the lowest since year 2000.  As I've noted before - rates would have to decline significantly for there to be a large refinance boom.


Mortgage Purchase Index The second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is down about 5% from a year ago.

Tuesday, December 16, 2014

Wednesday: FOMC, CPI

by Calculated Risk on 12/16/2014 08:04:00 PM

Oil prices and the Russian financial crisis are the big stories ... from the WSJ: Russia’s Economic Pain Is Just Beginning, Bank Group Warns

Russia’s economy is likely already in recession with the ruble tumbling to new lows. But the country’s pain is just starting, says one of the world’s largest banking groups.

“There is complete panic in the financial markets” in Russia, said Lubomir Mitov, chief Europe economist at the Institute of International Finance, a banking industry group in Washington that represents more than 500 of the world’s largest private financial firms.
...
Russia’s economy is verging on collapse for two major reasons: oil and sanctions
Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, Consumer Price Index for November. The consensus is for a 0.1% decrease in CPI in October, and for core CPI to increase 0.1%.

• At During the day, The AIA's Architecture Billings Index for November (a leading indicator for commercial real estate).

• At 2:00 PM, FOMC Meeting Statement. The FOMC is expected to make no change to policy, however the phrase "considerable period" will probably be changed in the statement.

• At 2:00 PM, FOMC Forecasts.  This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

• At 2:30 PM, Fed Chair Janet Yellen holds a press briefing following the FOMC announcement.

"Mortgage Rates Back to Pre-Taper-Tantrum Levels"

by Calculated Risk on 12/16/2014 04:44:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Back to Pre-Taper-Tantrum Levels

Mortgage rates fell decisively today, bringing some lenders back in line with rate sheets seen on May 22nd, 2013. That's significant because it was arguably the first day of the 'Taper Tantrum,' when markets began pricing in the effects of a reduction in Fed asset purchases. On a more quantitative note, it was significant because it was one of the most abruptly negative days in modern mortgage rate history--one of several that would be seen in the ensuing months.

Simply put, for more than a full year, borrowers and mortgage professionals would have been thrilled with the chance to go back in time to lock May 22nd, 2013 rates. In more than a few cases, now they can.

The most prevalently-quoted conforming 30yr fixed rate for top tier borrowers is now in transit between 3.875% and 3.75%.
Here is a table from Mortgage News Daily:


DataQuick: "Bay Area Home Sales Slowest in Six Years" in November

by Calculated Risk on 12/16/2014 02:24:00 PM

From DataQuick: Bay Area Home Sales Slowest in Six Years; Single-Digit Price Increase

Home sales dropped to the lowest level for the month of November since 2008, the result of a limited number of homes for sale, cautious buyers, a challenging mortgage market and a quirk of the calendar that resulted in a relatively low number days for recording deals. ... A total of 6,003 new and resale houses and condos sold in the nine-county Bay Area in November 2014. That was down 22.0 percent from 7,693 in October of this year and down 9.9 percent from 6,659 in November 2013, according to CoreLogic DataQuick data.

A decline in sales from October to November is normal for the season. It’s likely that this November’s sales decline from October was especially sharp because of a calendar issue: There were only 17 days on which home sales could be recorded at county recorders’ offices this November, compared with 22 or 23 days in October, depending on the county. Over the last decade, there has been an average of about 19 days for such recordings in the month of November.
...
“Each calendar month has its own set of characteristics, its own personality. November is always kind of an interlude month, and the statistics aren’t really very good for predicting upcoming activity. That said, we did see a continuation of long-term trends: Low supply levels, a dysfunctional mortgage market and dormant market categories. This could change fast, and the big question then will be just how much pent-up demand is out there. No one knows,” said John Karevoll, CoreLogic DataQuick analyst.
...
Foreclosure resales accounted for 2.8 percent of all resales in November, unchanged from a revised 2.8 percent in October, and down from 3.7 percent in November 2013. Foreclosure resales in the Bay Area peaked at 52.0 percent in February 2009, while the monthly average over the past 17 years is 9.7 percent. Foreclosure resales are purchased homes that had been previously foreclosed upon in the prior 12 months.

Short sales made up an estimated 4.3 percent of Bay Area resales in November, up from an estimated 3.4 percent in October and down from 7.2 percent in November 2013. Short sales are transactions in which the sale price fell short of what was owed on the property.
emphasis added
Note: I live in California, and in my area it seems like a large number of homes went "pending" during the last few weeks. If that is happening elsewhere, then we will see an increase in sales in December and January (seasonally adjusted).  But November was soft.