Thursday, August 23, 2012

Misc: Negative Equity declines, FHFA house prices increase, Flash PMI

by Calculated Risk on 8/23/2012 04:44:00 PM

• From Zillow: Negative Equity Falls in Second Quarter; Nearly Half of Borrowers Under 40 Remain Underwater

Negative equity declined in the second quarter, with 30.9 percent of U.S. homeowners with mortgages – or 15.3 million – underwater, according to the second quarter Zillow® Negative Equity Report. That was down from 31.4 percent of homeowners with mortgages, or 15.7 million, underwater in the first quarter.

The total amount of negative equity in the country declined by $42 billion in the second quarter to $1.15 trillion.
That is a decline of about 400,000 borrowers (I expect a larger decline when CoreLogic reports). Zillow chief economist Stan Humphries has more: Negative Equity Declines Slightly on the Back of Modest Home Value Gains
While roughly one out of every three homeowners with mortgages is underwater, 91 percent of these homeowners are current on their mortgage and continue to make payments.
Zillow Negative Equity Click on graph for larger image.

Humphries provided this chart of Zillow's estimate of the Loan-to-Value (LTV) for homeowners with a mortgage. From Humphries:
Over 40 percent of underwater homeowners (12.5 percent of all homeowners with a mortgage), owe between 1 and 20 percent more than their home is worth. On the other end of the spectrum, about 2.2 million underwater homeowners (4.5 percent of all homeowners with mortgages) owe more than double what their home is worth
The biggest concern are those homeowners deep underwater.

• From the FHFA: U.S. House Prices Rose 1.8 Percent From First Quarter to Second Quarter 2012
U.S. house prices rose 1.8 percent from the first quarter to the second quarter of 2012 according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI). The HPI is calculated using home sales price information from Fannie Mae and Freddie Mac mortgages. Seasonally adjusted house prices rose 3.0 percent from the second quarter of 2011 to the second quarter of 2012. FHFA’s seasonally adjusted monthly index for June was up 0.7 percent from May.

“Although some housing markets are still facing significant challenges, house prices were quite strong in most areas in the second quarter,” said FHFA Principal Economist Andrew Leventis. “The strong appreciation may partially reflect fewer homes sold in distress, but declining mortgage rates and a modest supply of homes available for sale likely account for most of the price increase.”
The Case-Shiller index will for June will be released this coming Tuesday.

• From MarkIt: PMI continues to signal weak manufacturing expansion in August
The preliminary ‘flash’ PMI reading which is based on around 85% of usual monthly replies rose slightly from 51.4 in July to 51.9 ... Employment in the manufacturing sector rose further in August, but the rate of job creation slowed for the fifth month running to the weakest since December 2010.
This was weak, but better than the expected 51.0.

New Home Sales increase in July to 372,000 Annual Rate
New Home Sales and Distressing Gap
New Home Sales graphs