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Thursday, May 21, 2015

Friday: CPI, Yellen

by Calculated Risk on 5/21/2015 07:03:00 PM

Earlier from the Philly Fed: May Manufacturing Survey

Manufacturing activity in the region increased modestly in May, according to firms responding to this month’s Manufacturing Business Outlook Survey. Indicators for general activity, new orders, and shipments were positive but remain at low readings. Employment increased at the reporting firms, but the employment index moderated compared with April. Firms reported continued price reductions in May, with indicators for prices of inputs and the firms’ own products remaining negative. The survey’s indicators of future activity suggest that firms expect continuing growth in the manufacturing sector over the next six months.
...
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 7.5 in April to 6.7 in May. ...

Firms’ responses suggest some weakening in labor market conditions this month compared with April. ... The current employment index, however, fell 5 points, to 6.7.
emphasis added
This was below the consensus forecast of a reading of 8.0 for May.

Also the Kansas City Fed reported: Tenth District Manufacturing Activity Declined More Sharply
“Factories in our region saw an even sharper decline in May than in March or April, as exports fell further and energy-related producers saw another drop in orders,” said [Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City] “However, firms’ overall still plan a modest increase in employment over the next six to twelve months.”
...
Tenth District manufacturing activity declined more sharply in May than in previous months and producers’ expectations also fell, with both reaching their lowest levels since mid-2009. ... The month-over-month composite index was -13 in May, down from -7 in April and -4 in March ... Production fell most sharply in energy-producing states like Oklahoma and New Mexico, but it was also down in most other District states.
ISM PMI Click on graph for larger image.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The yellow line is an average of the NY Fed (Empire State) and Philly Fed surveys through May. The ISM and total Fed surveys are through April.

The average of the Empire State and Philly Fed surveys increased slightly in May, and this suggests a another weak ISM report for May.

Friday:
• At 8:30 AM ET, the Consumer Price Index for April from the BLS. The consensus is for a 0.1% increase in prices, and a 0.1% increase in core CPI.

• At 1:00 PM, Speech by Fed Chair Janet L. Yellen, U.S. Economic Outlook, At the Greater Providence Chamber of Commerce Economic Outlook Luncheon, Providence, Rhode Island

Lawler: Updated Table of Distressed Sales and Cash buyers for Selected Cities in April

by Calculated Risk on 5/21/2015 03:26:00 PM

Economist Tom Lawler sent me the updated table below of short sales, foreclosures and cash buyers for several selected cities in April.

On distressed: Total "distressed" share is down in most of these markets mostly due to a decline in short sales (Mid-Atlantic is up year-over-year because of an increase in foreclosures in Baltimore).

Short sales are down in these areas.

The All Cash Share (last two columns) is declining year-over-year. As investors pull back, the share of all cash buyers has been declining.

  Short Sales ShareForeclosure Sales Share Total "Distressed" ShareAll Cash Share
Apr-15Apr-14Apr-15Apr-14Apr-15Apr-14Apr-15Apr-14
Las Vegas7.2%12.4%8.3%11.4%15.5%23.8%30.4%41.4%
Reno**6.0%15.0%5.0%6.0%11.0%21.0%   
Phoenix2.5%4.0%3.8%6.5%6.3%10.5%25.3%32.2%
Sacramento5.6%9.5%6.6%7.5%12.2%17.0%18.4%21.9%
Minneapolis2.9%5.1%9.2%16.0%12.0%21.1%   
Mid-Atlantic4.5%5.9%12.9%10.0%17.3%15.9%17.2%19.5%
Orlando4.8%9.1%24.7%23.7%29.5%32.8%37.4%42.4%
Florida SF4.0%6.9%19.1%21.1%23.1%28.0%37.2%43.4%
Florida C/TH2.0%4.5%14.6%15.6%16.6%20.1%65.4%70.9%
Miami MSA SF6.2%10.5%18.4%16.5%24.7%27.0%37.8%44.4%
Miami MSA C/TH2.3%5.5%18.2%17.5%20.6%23.0%68.9%73.4%
Tampa MSA SF4.5%7.0%20.3%23.2%24.8%30.1%34.5%41.6%
Tampa MSA C/TH2.9%4.6%15.5%18.8%18.4%23.3%60.8%66.7%
So. California*4.4%5.0%4.5%5.2%8.9%10.2%   
Chicago (city)        20.3%27.3%   
Hampton Roads        22.2%24.4%   
Northeast Florida        28.9%38.0%   
Hampton Roads        22.2%24.4%   
Tucson            27.1%30.5%
Toledo            30.2%33.4%
Wichita            19.8%25.1%
Des Moines            13.8%17.1%
Peoria            17.3%21.2%
Georgia***            21.6%34.3%
Omaha            16.4%22.3%
Pensacola            32.3%35.6%
Knoxville            23.1%25.3%
Richmond VA MSA    11.5%15.4%    18.2%22.5%
Memphis    16.1%17.3%       
Springfield IL**    10.3%13.2%    17.9%N/A
*share of existing home sales, based on property records
**Single Family Only
***GAMLS

Lawler: Existing Home Sales Dipped in April; Sales in South Seem Low

by Calculated Risk on 5/21/2015 01:33:00 PM

From housing economist Tom Lawler:

The National Association of Realtors reported that US existing home sales ran at an estimated seasonally adjusted annual rate of 5.04 million in April, down 3.3% from March’s upwardly-revised pace and up 6.1% from last March’s seasonally adjusted pace. The NAR’s estimate was below both my projection based on regional tracking and the “consensus” forecast. Relative to March, April sales (seasonally adjusted) were up 1.7% in the Midwest, but down 1.7% in the West, down 3.3% in the Northeast, and down a sizable 6.8% in the South.

In terms of my tracking, my “miss” was almost entirely in the South. According to the NAR’s estimates, existing home sales in the South last month (not seasonally adjusted) were up just 2.9% from last April, which seems way too low based on realtor/MLS reports from the South. For example, MLS-based reports show that home sales registered double-digit YOY gains in the broad Mid-Atlantic region (mainly most of Maryland, DC and Northern Virginia), Florida, Georgia, South Carolina, Alabama, and much of Kentucky and Arkansas (my coverage in those states is limited). MLS-based reports in most other states suggest YOY sales gains in the 5% (e.g., Texas) to 9% (e.g., North Carolina) range. To be sure, some areas in the region saw YOY declines in sales (e.g., Oklahoma at -2%, and Jackson, Mississippi at -13%). But for the region as a whole, local realtor/MLS reports would have suggested YOY sales growth for the region as a whole well above 2.9%.

Often when my projection for the NAR sales number is off, it turns out that realtor/MLS reports released subsequent to my projection (e.g., today) show significantly different sales numbers than I had had been assuming. That was not the case this month. Based on local realtor/MLS reports released through today (which included quite a few, including Florida and Texas), the NAR’s estimate for existing home sales in the South for April look way too low. The NAR’s estimates for the other regions, in contrast, look reasonable.

The NAR also reported that its preliminary estimate of the number of existing homes for sale at the end of April was 2.21 million, down 10.0% from March’s upwardly-revised (to 2.10 million from 2.00 million) level, and down 0.9% from last April’s level. This inventory number was just slightly below my projection.

Finally, the NAR estimated that the median existing SF home sales price in April, $221,200, up 10.0% from last April, and well above my projection based on regional tracking. The YOY % change in the median existing SF home sales price for March was revised downward to 7.9% from 8.7%.

A Few Comments on April Existing Home Sales

by Calculated Risk on 5/21/2015 11:37:00 AM

Inventory is still very low (and down 0.9% year-over-year in April). More inventory would probably mean smaller price increases and slightly higher sales, and less inventory means lower sales and somewhat larger price increases. This will be important to watch over the next few months during the Spring buying season.

Also, the NAR reported total sales were up 6.1% from April 2014, however normal equity sales were up even more, and distressed sales down sharply.  From the NAR (from a survey that is far from perfect):

Distressed sales — foreclosures and short sales — were 10 percent of sales in April, unchanged from March and below the 15 percent share a year ago. Seven percent of April sales were foreclosures and 3 percent were short sales.
Last year in April the NAR reported that 15% of sales were distressed sales.

A rough estimate: Sales in April 2014 were reported at 4.75 million SAAR with 15% distressed.  That gives 712 thousand distressed (annual rate), and 4.04 million equity / non-distressed.  In April 2015, sales were 5.04 million SAAR, with 10% distressed.  That gives 504 thousand distressed - a decline of about 29% from April 2014 - and 4.54 million equity.  Although this survey isn't perfect, this suggests distressed sales were down sharply - and normal sales up around 12%.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Existing Home Sales NSAClick on graph for larger image.

Sales NSA in April (red column) were just below April 2013 (NSA).

Earlier:
Existing Home Sales in April: 5.04 million SAAR, Inventory down 0.9% Year-over-year

Existing Home Sales in April: 5.04 million SAAR, Inventory down 0.9% Year-over-year

by Calculated Risk on 5/21/2015 10:10:00 AM

The NAR reports: Existing-Home Sales Lose Momentum in April

Total existing–home sales, which are completed transactions that include single–family homes, townhomes, condominiums and co–ops, declined 3.3 percent to a seasonally adjusted annual rate of 5.04 million in April from an upwardly revised 5.21 million in March. Despite the monthly decline, sales have increased year–over–year for seven consecutive months and are still 6.1 percent above a year ago. ...

Total housing inventory at the end of April increased 10.0 percent to 2.21 million existing homes available for sale, but is still 0.9 percent below a year ago (2.23 million). Unsold inventory is at a 5.3–month supply at the current sales pace, up from 4.6 months in March.
Existing Home SalesClick on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in April (5.04 million SAAR) were 3.3% lower than last month, and were 6.1% above the April 2014 rate.

The second graph shows nationwide inventory for existing homes.

Existing Home Inventory According to the NAR, inventory increased to 2.21 million in April from 2.01 million in March.   Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The third graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Year-over-year Inventory Inventory decreased 0.9% year-over-year in April compared to April 2014.  

Months of supply was at 5.3 months in April.

This was below expectations of sales of 5.20 million.  For existing home sales, a key number is inventory - and inventory is still low.    I'll have more later ...