In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Wednesday, June 15, 2011

Misc: Q2 GDP Downgrades, Oil Prices decline, FHA REO Sales Surge

by Calculated Risk on 6/15/2011 10:39:00 PM

• Catherine Rampell at the NY Times Economix writes: The Great Growth Disappointment

Second verse, same as the first: The quarter when the economy was supposed to stage its comeback is looking just as bad as its disappointing predecessor.

... after a major bummer of an inflation report, Macroeconomic Advisers, the highly respected forecasting firm, lowered its annualized second quarter G.D.P. forecast to 1.9 percent.

For reference, when the quarter began, Macroeconomic Advisers was expecting 3.5 percent growth
Rampell provides a graph that shows Q2 estimates are tracking the same downward path as Q1 projections. Now it is all about the 2nd half ...

• Oil prices fell sharply today. WTI futures are down to $95.31 per barrel and Brent is down to $113.92. shows gasoline prices are now down almost 30 cents per gallon nationally from the recent peak at the beginning of May, and prices are still falling.

• In Q1, Fannie and Freddie were foreclosing at record levels - and selling REO (Real Estate Owned) even faster - so their REO inventory actually declined.

However, the FHA was apparently having REO inventory problems and the FHA's REO inventory increased in Q1. Apparently the problem has been solved since the FHA reported 7,410 Conveyances (REO acquired) in April, about the recent pace, but REO sales surged to 11,375 (an all time record). So the FHA's REO inventory declined in April - and will probably decline in Q2.

Just something to remember - the F's (Fannie, Freddie and the FHA) are now foreclosing and selling REO at a record pace. The REOs are not "piling up" at the lenders. This increase in REO selling is why distressed sales are a high percentage of sales again.

NAHB Builder Confidence index declines in June
Industrial Production edged up in May, Capacity Utilization unchanged
Empire State Survey indicates contraction
MBA: Mortgage Purchase Application activity increases