by Calculated Risk on 1/25/2012 10:00:00 AM

From the NAR: Pending Home Sales Decline in December, Remain Above a Year Ago

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 3.5 percent to 96.6 in December from 100.1 in November but is 5.6 percent above December 2010 when it was 91.5. The data reflects contracts but not closings.
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The PHSI in the Northeast declined 3.1 percent to 74.7 in December and is 0.8 percent below a year ago. In the Midwest the index rose 4.0 percent to 95.3 and is 13.3 percent higher than December 2010. Pending home sales in the South slipped 2.6 percent to an index of 101.1 in December but are 4.9 percent above a year ago. In the West the index fell 11.0 percent in December to 107.9 but is 3.7 percent higher than December 2010.

by Calculated Risk on 1/25/2012 08:38:00 AM

From the MBA: Mortgage Applications Fall by 5 percent in Latest MBA Weekly Survey

The Refinance Index decreased 5.2 percent from the previous week. The seasonally adjusted Purchase Index decreased 5.4 percent from one week earlier.

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

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.39 percent from 4.40 percent...

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

Click on graph for larger image.

The 4-week average of the purchase index increased slightly last week. This index has mostly moved sideways for the last 2 years, and is at about the same level as in 1997. The refinance index will probably increase later in February or in March at the HARP refinance program picks up.

by Calculated Risk on 1/24/2012 10:17:00 PM

Below is a graph that compares the Ceridian diesel fuel index and the ATA trucking index.

The ATA index showed a sharp increase in December: ATA Truck Tonnage Index Posts Largest Annual Gain in 13 Years

The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index jumped 6.8% in December after rising 0.3% in November 2011. The latest gain put the SA index at 124.5 (2000=100) in December, up from the November level of 116.6.

But the Ceridian index showed only a small increase: Pulse of Commerce Index Increased 0.2 Percent in December

The Ceridian-UCLA Pulse of Commerce Index® (PCI®), issued ... by the UCLA Anderson School of Management and Ceridian Corporation, rose 0.2 percent in December following the 0.1 percent increase in November and the 1.1 percent increase in October.

Click on graph for larger image.

Here is a graph comparing the two indexes. In general the two indexes move together, but there are periods when one index is strong than the other. As an example the ATA trucking index was moving sideways prior to the recession, but the Ceridian index was still increasing.

And recently the ATA index is showing a strong increase, but the Ceridian index is only increasing slightly. Perhaps rail traffic is the tie breaker: AAR: Rail Traffic increased 7.3 percent YoY in December

by Calculated Risk on 1/24/2012 08:55:00 PM

Transcript: 2012 SOTU. Not much on housing ...

I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won't add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust.
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And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.

Ezra Klein SOTU liveblogging

by Calculated Risk on 1/24/2012 06:56:00 PM

The State of the Union Address is at 9 PM tonight.

President Obama will probably mention some housing policy initiatives that do not require Congressional approval: 1) the updated HARP program (refinance activity will increase in March), 2) an REO to rental program for Fannie and Freddie, and 3) the mortgage settlement agreement.

On the possible REO to rental program, here is a story from Patrick Coolican at the Las Vegas Sun: Your next landlord in Las Vegas could be a hedge fund

Hedge funds could be the next big player in the Las Vegas real estate market. ...

“We’ve been contacted by a number of different groups who have never considered owning single-family residences as rental properties in their investment portfolios,” says Brian Krueger, vice president for strategic services at Coldwell Banker, the real estate firm.

They are organizing money and have started to come in and do due diligence,” he says.

Doug Brien, managing director and co-founder of Waypoint Homes, tells me he was in Las Vegas last week to survey the landscape. Waypoint, an Oakland, Calif.-based company, has bought 1,000 homes as rental properties in other markets.

However in many areas selling REO in bulk doesn't seem to make much sense - since there are so many small investors already buying. Here is an excerpt of a piece from economist Tom Lawler:

Contrary to what some espousers of “bulk” REO sales to large investors to rent our SF properties might suggest, the number and % of single-family detached homes occupied by renters increased significantly during the latter half of last decade, with the largest gains coming in “bubbly” areas. The table below is based on data from the American Community Survey. The 2000 data are from Census 2000, while the 2006-07 and 2008-09 averages are derived from the 5-year, 3-year, and 1-year ACS results for the 2006-10, 2008-10, and 2010 periods released this year.

Percent of Occupied SF Detached Homes Occupied by Renters
	2000	2006-07	2008-09	2010
US	13.2%	12.8%	14.3%	15.1%
Maricopa County	10.4%	13.5%	16.8%	19.8%
Clark County	12.5%	18.2%	22.0%	24.4%
Sacramento County	18.8%	16.7%	20.2%	22.4%
Lee County	10.6%	12.3%	14.6%	17.3%
Source: Decennial Census 2000, American Community Survey 5-, 3-, and 1-year Estimates

According to ACS estimates – which sadly are just estimates – for the US as a whole the % of occupied SF detached homes that were occupied by renters increased from an average of 12.8% in the 2006-07 period to 15.1% in 2010. That % increase translated into a 3,637,349 jump in the number of renters occupied SF detached homes. By comparison, the number of owners occupied SF detached homes declined by 1,333,747.

For “distressed” areas, the numbers were even more striking, as the above table suggests.

In Maricopa County (home of Phoenix), the estimated number of SF detached homes occupied by renters increased to about 182,251 on average in 2010 from about 123,553 on average during the two-year 2006-07 period.

Of course, SF homes lost to foreclosure rose sharply in Maricopa County in 2008, and remained at elevated levels through last year – though foreclosures in 2011 were down from 2010. Investor buying also appeared to pick up dramatically in 2008, as (NOT coincidentally) the all-cash share of home sales in the county.

The ACS data, combined with investor/all-cash shares, suggests by 2010 a SIGNIFICANT share of SF homes lost to foreclosure in 2008-2010 period (1) were purchased by “investors;” and (2) had by 2010 been successfully rented out.
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It is not clear why folks focusing on the rental market for SF housing have not actually looked at any data, much less analyzed or commented on the truly astounding increase in the rental share of the SF housing market in many parts of the country. The astounding increase in the number of foreclosed SF detached homes in Maricopa County occurred, of course, without any mandated program to have bulk sales of REO at discounts to “large” investors.

CR note: Foreclosures will probably pick up significantly once (and if) a mortgage settlement is reached. But right now it doesn't appear a bulk REO program is needed in most areas. Hopefully, if a program is announced, it will be limited to areas where small investors will be overwhelmed by the volumes (perhaps Las Vegas and parts of Florida).

by Calculated Risk on 1/24/2012 03:58:00 PM

From DataQuick: California Foreclosure Activity Drops

The number of California homes going into foreclosure dropped in the fourth quarter of 2011 to the second-lowest level in more than four years, the result of evolving lender and mortgage servicer policies as well as shifting market conditions, a real estate information service reported.

A total of 61,517 Notices of Default (NODs) were recorded at county recorders offices during the fourth quarter. That was down 13.7 percent from 71,275 for the prior three months, and down 11.9 percent from 69,799 in fourth-quarter 2010, according to San Diego-based DataQuick.

Last quarter's 61,517 NODs marked the lowest level since 56,633 NODs were filed in second-quarter 2011, and the second-lowest since 53,943 NODs were recorded in second-quarter 2007. New foreclosure filings (NODs) peaked in first-quarter 2009 at 135,431.

"We are certainly seeing a lower level of foreclosure activity than a year or two ago. The question is, how much of that decline is due to market conditions, and how much is due to policy changes that try to address economic distress and lower home values," said John Walsh, DataQuick president.

"Five years ago almost all mortgage payment delinquencies would have triggered a default notice after a certain amount of time. Strategies now include short sales, refinances, interest rate changes, principal reduction as well as just plain waiting longer. It will be interesting to see how this plays out as the economy improves and the housing market finds its footing," Walsh said.

As Walsh noted, some of the decline is probably due to process issues. California is a non-judicial state, and it still takes an average of 9.7 months to foreclose after the Notice of Default is filed (the shortest possible period is 3 months and 21 days).

Click on graph for larger image.

This graph shows the annual Notices of Default (NODs) filed in California.

California had a significant housing bust in the early '90s, with defaults peaking - and prices bottoming - in 1996. That bust was mild compared to the recent housing bust - and defaults are still way above the 1996 peak.

by Calculated Risk on 1/24/2012 01:15:00 PM

From ATA: ATA Truck Tonnage Index Posts Largest Annual Gain in 13 Years

The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index jumped 6.8% in December after rising 0.3% in November 2011. The latest gain put the SA index at 124.5 (2000=100) in December, up from the November level of 116.6.

For all of 2011, tonnage rose 5.9% over the previous year – the largest annual increase since 1998. Tonnage for the last month of the year was 10.5% higher than December 2010, the largest year-over-year gain since July 1998. November tonnage was up 6.1% over the same month last year.
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“While I’m not surprised that tonnage increased in December, I am surprised at the magnitude of the gain,” ATA Chief Economist Bob Costello said.
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“Not only did truck tonnage increase due to solid manufacturing output in December, but also from some likely inventory restocking. Inventories, especially at the retail level, are exceedingly lean, and I suspect that tonnage was higher than expected as the supply chain did some restocking during the month.” he said.

Click on graph for larger image.

Here is a long term graph that shows ATA's For-Hire Truck Tonnage index.

The dashed line is the current level of the index. This index stalled early in 2011, but increased sharply at the end of the year. From ATA:

Trucking serves as a barometer of the U.S. economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9 billion tons of freight in 2010. Motor carriers collected $563.4 billion, or 81.2% of total revenue earned by all transport modes.

All current Transportation Graphs

by Calculated Risk on 1/24/2012 10:55:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were slightly lower in December. Thirty-seven states and the District of Columbia recorded unemployment rate decreases, 3 states posted rate increases, and 10 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Forty-six states registered unemployment rate decreases from a year earlier, while four states and the District of Columbia experienced increases.
...
Nevada continued to record the highest unemployment rate among the states, 12.6 percent in December. California posted the next highest rate, 11.1 percent. North Dakota again registered the lowest jobless rate, 3.3 percent ...

Click on graph for larger image in graph gallery.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). Every state has some blue - indicating no state is currently at the maximum during the recession.

The states are ranked by the highest current unemployment rate. Only four states and the District of Columbia still have double digit unemployment rates. This is the fewest since early 2009. At the end of 2009, 18 states and D.C. had double digit unemployment rates.


All current employment graphs

by Calculated Risk on 1/24/2012 10:00:00 AM

From the Richmond Fed: Manufacturing Activity Picks Up the Pace in January; Expectations Upbeat

In January, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — increased nine points to 12 from December's reading of 3.

Labor market conditions at District plants strengthened in January. The manufacturing employment index moved up eight points to end at 4, and the average workweek indicator added one point to 4. Wage growth remained modest, matching its three-month average of 10.

In our January survey, our contacts were more bullish about their business prospects for the next six months. The index of expected shipments increased nine points to 36, expected orders gained eleven points to finish at 32, and backlogs added eight points to 14. The capacity utilization and vendor delivery times indexes each rose nine points to finish at 11 and 20, respectively. Moreover, readings for planned capital expenditures moved up eight points to finish at 15.

District manufacturers' hiring plans in January were somewhat more optimistic as well. The expected manufacturing employment index edged up three points to 20, while the average workweek indicator held steady at 7. The index of expected wages was virtually unchanged at 19.

This was above the consensus of a reading of 6. This follows the reports of somewhat faster expansion from the Philly Fed and Empire State surveys.

by Calculated Risk on 1/24/2012 08:39:00 AM

From the Athens News: Eurogroup rejects PSI deal

Eurozone finance ministers on Monday gave the thumbs-down to a plan for private sector involvement (PSI) in the writedown on Greek debt.
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"We told him [Venizelos] to continue the negotiations [with Dallara] until the interest rate comes down below 4 percent," Eurogroup chairman Jean-Claude Juncker told a news conference in Brussels late on Monday.

Juncker was referring to the average interest rate (annual coupon) of the new 30-year bonds that will be issued to bondholders after the haircut of 50 percent on the face value of their portfolio.

From the WSJ: EU Ministers Resume Crisis Talks

The International Monetary Fund and the euro zone's four triple-A-rated countries—Germany, the Netherlands, Finland and Luxembourg—are pushing for a low average interest rate on new bonds to be issued as part of the restructuring ...

"Obviously Greece and the banks have to do more in order to reach a sustainable debt level," Dutch Finance Minister Jan Kees de Jager said ... He said debt restructuring terms that ensure a sustainable debt level is "absolutely a precondition" for a second EU bailout package for Greece.

Of course Greece is a small part of the problem, also from the WSJ: Fears Mount That Portugal Will Need a Second Bailout