by Calculated Risk on 1/19/2012 08:30:00 AM

The DOL reports:

In the week ending January 14, the advance figure for seasonally adjusted initial claims was 352,000, a decrease of 50,000 from the previous week's revised figure of 402,000. The 4-week moving average was 379,000, a decrease of 3,500 from the previous week's revised average of 382,500.

The previous week was revised up to 402,000 from 399,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 379,000.

The 4-week moving average is well below 400,000.

And here is a long term graph of weekly claims:



This is the lowest level for weekly claims since April 2008.

All current Employment Graphs

by Calculated Risk on 1/19/2012 12:01:00 AM

• From the LA Times: SOPA blackout: Bills lose three co-sponsors amid protests

Three co-sponsors of the SOPA and PIPA antipiracy bills have publicly withdrawn their support as Wikipedia [,hoocoodanode.org] and thousands of other websites blacked out their pages Wednesday to protest the legislation.

Sen. Marco Rubio (R-Fla.) withdrew as a co-sponsor of the Protect IP Act in the Senate, while Reps. Lee Terry (R-Neb.) and Ben Quayle (R-Ariz.) said they were pulling their names from the companion House bill, the Stop Online Piracy Act.

• NAHB Builder Confidence index increases in January

• Industrial Production increased 0.4% in December, Capacity Utilization increased

• AIA: Architecture Billings Index indicated expansion in December

• MBA: Mortgage Refinance Applications increase sharply

• Residential Remodeling Index declines seasonally in November

by Calculated Risk on 1/18/2012 06:15:00 PM

Note: The Case-Shiller House Price index for November will be released Tuesday, Jan 31st. CoreLogic has already reported that prices declined 1.4% in November (NSA, including foreclosures).

• Today from FNC: November Home Prices Decline 0.4%

Based on the latest data on non-distressed home sales (existing and new homes) through November, FNC’s national RPI shows that single-family home prices fell in November to a seasonally unadjusted rate of 0.4%. As a gauge of underlying home value, the RPI excludes sales of foreclosed homes, which are frequently sold with large price discounts reflecting poor property conditions.

All three RPI composites (the National, 30-MSA, and 10-MSA indices) show month-to-month declines in November, ranging from -0.4% at the national level to -0.9% across the nation’s top 10 housing markets. ... The two broader indices indicate a nearly 5.0% decline in the 12-month period between November 2010 and November 2011, or -0.4% per month on an annualized basis. The 10-MSA composite index lost about 4.0% during the period, or -0.3% per month annualized.

The FNC index tables for three composite indexes and 30 cities are here.

• Last week From Zillow: U.S. Home Values Unchanged in November

TThe Zillow Real Estate Market Reports, released today, show home values remained essentially flat from October to November falling only 0.1 percent to $147,800, representing a 4.6 percent decline on a year-over-year basis. ... Home values are back to late 2003 levels and mortgage rates are still below 4 percent for a 30-year fixed rate mortgage.

In nominal terms, Case-Shiller and CoreLogic show prices are back to 2003 levels too. In real terms (and as a price-to-rent ratio), prices are back to 2000 levels.

Even though there are some differences between the indexes, on a year-over-year basis they are fairly close with CoreLogic down 4.3%, FNC down 4.9%, and Zillow down 4.6%.

by Calculated Risk on 1/18/2012 03:21:00 PM

From the WSJ: U.S., Banks Near 'Robo-Signing' Settlement

Administration officials and attorneys general are "very close" to a settlement with major banks of the so-called robo-signing issues after about a year of negotiations, [Housing and Urban Development Secretary Shaun Donovan] said at a conference of U.S. mayors meeting in Washington.

The reductions in borrowers' principal balances contained in the settlement, Mr. Donovan said, will be "far and away the largest principal reduction of the [housing] crisis" ...

For months, officials have said that a settlement is close, only to be frustrated by new hurdles. ... Meanwhile, regional banks are also preparing for an agreement. U.S. Bancorp Inc. said Wednesday that it took a $130 million fourth-quarter charge tied to matters that involve collecting mortgage payments and foreclosing on delinquent home owners.

The settlement was "close" last year, and now it is "very close". The story mentions some regional banks taking charges that appear related to the settlement - and that suggests "very close" is probably means the next month or two.

by Calculated Risk on 1/18/2012 12:11:00 PM

Note: This index is a leading indicator for new Commercial Real Estate (CRE) investment.

From AIA: Architecture Billings Index Positive for Second Straight Month

After showing struggling business conditions for most of 2011, the Architecture Billings Index (ABI) has now reached positive terrain in consecutive months. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI score was 52.0, following the exact same mark in November. This score reflects an overall increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 64.0, down just a point from a reading of 65.0 the previous month.

“We saw nearly identical conditions in November and December of 2010 only to see momentum sputter and billings fall into negative territory as we moved through 2011, so it’s too early to be sure that we are in a full recovery mode,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Nevertheless, this is very good news for the design and construction industry and it’s entirely possible conditions will slowly continue to improve as the year progresses.”

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was unchanged at 52.0 in December. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So this suggests further declines in CRE investment in early 2012, but perhaps stabilizing later in 2012.

All current Commercial Real Estate graphs

by Calculated Risk on 1/18/2012 10:00:00 AM

The National Association of Home Builders (NAHB) reports the housing market index (HMI) increased in January to 25 from 21 in December. Any number under 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Rises Fourth Consecutive Time in January

Builder confidence in the market for newly built, single-family homes continued to climb for a fourth consecutive month in January, rising four points to 25 on the NAHB/Wells Fargo Housing Market Index (HMI), released today. This is the highest level the index has attained since June of 2007.
...
“Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011,” noted NAHB Chief Economist David Crowe. “That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market.”
...
Each of the HMI’s three component indexes registered a fourth consecutive month of improvement in January. The component gauging current sales conditions rose three points to 25, which was its highest point since June of 2007. The component gauging sales expectations in the next six months also rose three points, to 29 -- its highest point since September 2009. And the component gauging traffic of prospective buyers rose three points to 21, its highest point since June of 2007.

The HMI also posted gains in all four regions in January, including a nine-point gain to 23 in the Northeast, a one-point gain to 24 in the Midwest, a two-point gain to 27 in the South and a five-point gain to 21 in the West.

Click on graph for larger image.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the January release for the HMI and the November data for starts (December housing starts will be released tomorrow).

Both confidence and housing starts had been moving sideways at a very depressed level for several years - but confidence has been moving up.

This is still very low, but this is the highest level since June 2007.
All Housing Graphs

by Calculated Risk on 1/18/2012 09:15:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production increased 0.4 percent in December after having fallen 0.3 percent in November. For the fourth quarter as a whole, industrial production rose at an annual rate of 3.1 percent, its 10th consecutive quarterly gain. In the manufacturing sector, output advanced 0.9 percent in December with similarly sized gains for both durables and nondurables. The output of utilities fell 2.7 percent, as unseasonably warm weather reduced the demand for heating; the output of mines moved up 0.3 percent. At 95.3 percent of its 2007 average, total industrial production in December was 2.9 percent above its level of a year earlier. The capacity utilization rate for total industry rose to 78.1 percent, a rate 2.3 percentage points below its long-run (1972--2010) average.

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 10.8 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.1% is still 2.3 percentage points below its average from 1972 to 2010 and below the pre-recession levels of 81.3% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production increased in December to 95.3, and previous months were revised up slightly.

The consensus was for a 0.5% increase in Industrial Production in December, and for an increase to 78.1% for Capacity Utilization. This was close to consensus.


All current manufacturing graphs

by Calculated Risk on 1/18/2012 08:33:00 AM

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

The Refinance Index increased 26.4 percent from the previous week to its highest level since August 8, 2011. The seasonally adjusted Purchase Index increased 10.3 percent from one week earlier to its highest level since December 12, 2011.

"Interest rates dropped last week due to continuing anxieties regarding the fragile economic situation in Europe," said Michael Fratantoni, MBA's Vice President of Research and Economics. Fratantoni continued, "With mortgage rates reaching new lows, refinance volume jumped and MBA's refinance index reached its highest level in the last six months. Purchase activity also increased as buyers returned to the market after the holiday season."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.06 percent from 4.11 percent ...

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.40 percent from 4.34 percent
...

The following graph shows the MBA Purchase Index and four week moving average since 1990.

Click on graph for larger image.

The purchase index increased last week, and the 4-week average also increased. This index has mostly been sideways for the last 2 years - and even with the recent increase, this is at about the same level as in 1997.

by Calculated Risk on 1/18/2012 12:23:00 AM

The BuildFax Residential Remodeling Index was at 137.9 in November, down from 147.6 in October, but up 33.5% from November 2010. This is based on the number of properties pulling residential construction permits in a given month.

From BuildFax Remodeling Index

The Residential BuildFax Remodeling Index rose 33.5% year-over-year in November--for the twenty-fifth straight month of growth--to 137.9. However, this also marked the first month-over-month drop since February, likely due to seasonal factors. Residential remodels in November were down month-over-month 9.7 points (6.6%) from the October value of 147.6, and up year-over-year 34.6 points from the November 2010 value of 103.3.
...
"Residential remodeling in 2011 grew substantially above 2010 rates and remained strong through the end of the year," said Joe Emison, Vice President of Research and Development at BuildFax. "However, we do expect to see the number of remodeling permits decrease on a month-over-month basis for the duration of the winter."

Click on graph for larger image.

Although the index declined in November, this is the highest level for a November since the index started in 2004, even above the levels from 2004 through 2006 during the home equity ("home ATM") withdrawal boom.

Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

Since there is a strong seasonal pattern for remodeling, the second graph shows the year-over-year change from the same month of the previous year.

The remodeling index is up 33.5% from November 2010. This is the 25th consecutive month with a year-over-year increase.

Even though new home construction is still moving sideways, two other components of residential investment probably increased in 2011: multi-family construction and home improvement.

Data Source: BuildFax, Courtesy of Index.BuildFax.com

by Calculated Risk on 1/17/2012 07:43:00 PM

From the WSJ: From Bottom Up, Signs of Housing Recovery (ht Brian)

Across Westchester, the number of buyers in contract to buy homes priced less than $500,000 at the end of 2011 rose by nearly 40% compared to a year earlier, according to a market report issued by the broker Houlihan Lawrence. Sales weakened at higher price points.

Analysts have noted a similar pattern in New Jersey. Sales have picked up due to buyers of properties priced less than $400,000, according to data compiled by the Otteau Valuation Group. The number of such contracts signed during the fourth quarter rose by 11.3% compared to the same period a year earlier.

Analysts said housing-market recoveries often begin at the bottom.

"It is nice when you get the high end of the market doing well," said Chris Meyers, chief operating officer of Houlihan Lawrence, the largest residential brokerage in Westchester, "but in our experience the strong markets get healthy from the bottom up."

The article doesn't discuss the role of investors buying, and investor buying is at record levels in California and other bubble states.

Also the article doesn't mention the higher conforming loan limits from Fannie and Freddie in Westchester. But there is some truth to the quote "markets get healthy from the bottom up".