by Calculated Risk on 6/05/2012 01:45:00 PM

I've been using inventory numbers from HousingTracker / DeptofNumbers to track changes in listed inventory. Tom Lawler mentioned this last year.

According to the deptofnumbers.com for (54 metro areas), inventory is off 22.0% compared to the same week last year. Unfortunately the deptofnumbers only started tracking inventory in April 2006.

This graph shows the NAR estimate of existing home inventory through April (left axis) and the HousingTracker data for the 54 metro areas through early June.

Click on graph for larger image.

Since the NAR released their revisions for sales and inventory, the NAR and HousingTracker inventory numbers have tracked pretty well.

On a seasonal basis, housing inventory usually bottoms in December and January and then starts to increase again through the summer. So inventory might increase a little over the next couple of months, but the forecasts for a "surge" in inventory this summer appear to be incorrect.

The second graph shows the year-over-year change in inventory for both the NAR and HousingTracker.

HousingTracker reported that the early June listings, for the 54 metro areas, declined 22.0% from the same period last year. So far in 2012, there has only been a small seasonal increase in inventory.

This decline in active inventory remains a huge story, and lower levels of inventory will help with the stabilization of house prices.

All current Existing Home Sales graphs

by Calculated Risk on 6/05/2012 12:43:00 PM

Press Release: Trulia Reports Flat Asking Prices in May After Three Straight Months of Increases, as Foreclosure Prices Decline

Based on the for-sale homes and rentals listed on Trulia, these monitors take into account changes in the mix of listed homes and reflect trends in prices and rents for similar homes in similar neighborhoods through May 31, 2012.

Asking prices on for-sale homes–which lead sales prices by approximately two or more months – were unchanged in May month-over-month, seasonally adjusted. Together with increases in April and March, asking prices in May rose nationally 1.6 percent quarter over quarter (Q-o-Q), seasonally adjusted. The price increase unadjusted for seasonality was even higher: 5.2 percent Q-o-Q, since prices typically jump in springtime. Year over year (Y-o-Y) asking prices fell slightly by 0.2 percent. Nationally, 41 out of the 100 largest metros had Y-o-Y price increases, and 86 out of the 100 largest metros had Q-o-Q price increases, seasonally adjusted.

More from Jed Kolko, Trulia Chief Economist: Home Prices Stall, Breaking 3-Month Streak of Rising Prices

On Rents:

In May, rents were 6.0 percent higher than they were a year ago, up from the 5.4 percent Y-o-Y rent increase in April, and 4.8 percent in March

Note that Trulia adjusts asking prices for both mix and seasonality. A 1.6% increase for the quarter is pretty significant.

by Calculated Risk on 6/05/2012 10:00:00 AM

The May ISM Non-manufacturing index was at 53.7%, up from 53.5% in April. The employment index decreased in May to 50.8%, down from 54.2% in April - the lowest level since November 2011. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: May 2012 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in May for the 29th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. "The NMI registered 53.7 percent in May, 0.2 percentage point higher than the 53.5 percent registered in April. This indicates continued growth this month at a slightly faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 55.6 percent, which is 1 percentage point higher than the 54.6 percent reported in April, reflecting growth for the 34th consecutive month. The New Orders Index increased by 2 percentage points to 55.5 percent, and the Employment Index decreased by 3.4 percentage points to 50.8 percent, indicating continued growth in employment at a slower rate. The Prices Index decreased 3.8 percentage points to 49.8 percent, indicating lower month-over-month prices for the first time since July 2009. According to the NMI, 13 non-manufacturing industries reported growth in May. The majority of the respondents' comments are positive and optimistic about business conditions and the direction of the economy."

Click on graph for larger image.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This was slightly above the consensus forecast of 53.5% and indicates faster expansion in May than in April.

by Calculated Risk on 6/05/2012 09:22:00 AM

Notes: This CoreLogic House Price Index report is for April. The Case-Shiller index released last week was for March. Case-Shiller is currently the most followed house price index, however CoreLogic is used by the Federal Reserve and is followed by many analysts. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® Home Price Index Shows Year-Over-Year Increase of Just Over One Percent

Home prices nationwide, including distressed sales, increased on a year-over-year basis by 1.1 percent in April 2012 compared to April 2011. This was the second consecutive year-over-year increase this year, and the first time two consecutive increases have occurred since June 2010. On a month-over-month basis, home prices, including distressed sales, increased by 2.2 percent in April 2012. This marks the second consecutive month-over-month increase this year.

Excluding distressed sales, prices increased 2.6 percent in April 2012 compared to March 2012, the third month-over-month increase in a row. The CoreLogic HPI also shows that year-over-year prices, excluding distressed sales, rose by 1.9 percent in April 2012 compared to April 2011. Distressed sales include short sales and real estate owned (REO) transactions.

Beginning with the April 2012 HPI report, CoreLogic is introducing a ... pending HPI that provides the most current indication of trends in home prices. The pending HPI indicates that house prices will rise by at least another 2.0 percent, from April to May. Pending HPI is based on Multiple Listing Service (MLS) data that measure price changes in the most recent month.

“We see the consistent month-over-month increases within our HPI and Pending HPI as one sign that the housing market is stabilizing,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “Home prices are responding to a restricted supply that will likely exist for some time to come—an optimistic sign for the future of our industry.”

Click on graph for larger image.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was up 2.2% in April, and is up 1.1% over the last year.

The index is off 32% from the peak - and is just above the post-bubble low set two months ago.

The second graph is from CoreLogic. The year-over-year comparison has turned positive.

Excluding the tax credit period, this is the first year-over-year increase since 2006 (March was revised up to a year-over-year increase too). This "stabilization" of house prices is a significant story.

by Calculated Risk on 6/05/2012 08:51:00 AM

From the WSJ: Spain Warns Market Access Being Shut

Spain's Budget Minister Cristobal Montoro on Tuesday urged euro-zone partners to act faster to help support its enfeebled banks, saying that the government has effectively lost access to capital markets because of steep risk premiums demanded by sovereign bond investors.

In making this dramatic admission, Mr. Montoro joined recent calls by the Spanish government for direct aid from European Union institutions for Spanish banks as the government hopes to avoid a full-blown bailout package ...

"What this premium tells us is that the state, and Spain as a whole, has a problem when it comes to accessing markets, when we need to refinance our debt," Mr. Montoro said in a radio interview. "What that premium says is that Spain doesn't have the market's door open, as such, the challenge is to open that door and regain the confidence of those markets, our creditors."

by Calculated Risk on 6/04/2012 10:16:00 PM

• At 9:00 AM ET, Ceridian-UCLA Pulse of Commerce Index will be released. This is the diesel fuel index for May (a measure of transportation).

• At 10:00 AM AM, the ISM non-manufacturing (service) index will be released. The consensus is for the index to be unchanged at 53.5.

• Also at 10:00 AM ET, the Trulia House Price & Rent Monitors for May. This is the new index from Trulia that uses asking prices adjusted both for the mix of homes listed for sale and for seasonal factors.



The focus will be on Europe and the "emergency" G7 talks. Also three Fed regional presidents will speak in the afternoon.

by Calculated Risk on 6/04/2012 06:31:00 PM

Gad Levanon at the Conference Board makes some interesting points: Why is Employment Growth Still Disappointing and When Will it be “Normal” Again?

In a typical recovery, rapid economic growth is driven by pent-up demand for consumer durable goods, housing, and business equipment. Also, in a typical recovery the government moderately adds jobs, and economies outside of the U.S. are enjoying robust growth, which helps boost American exports and raises the revenues of American multinationals. So what’s different this time? There are several combined factors that are dragging down the U.S. economy and labor market:

1) Government spending is shrinking. The hope was that the federal stimulus would create jobs while the private sector was in recession, and that this federal stimulus would eventually wind down while the private sector would pick up. This wind-down has occurred, but the private sector is not generating enough jobs by itself yet. At the same time, state and local governments... have been cutting back for several years now ... In the past year, state and local governments have slowed down their layoffs, but the number of employees in the federal government is still rapidly shrinking -- down by 1.8%. Overall, the public sector has reduced its workforce for three years in a row, cutting a total of about 700,000 workers.

2) The housing market has barely started recovering, and employers in related industries are barely adding jobs. This typically strong driver of growth during expansions is missing in this economy.

3) The global economy is weak. Many countries in Europe are in recession, and the main emerging countries’ economies are significantly slowing down. As a result, U.S. exports and revenues of multinationals and overall consumer and business confidence are suffering.

4) Commodity prices are now at a much higher level than two-to-three years ago. This has caused large price increases in food, energy, and other commodity related products. In the past 2 years, as a result of the price hikes and weakness in housing, the consumption of food, gasoline, public transportation, housing, and utilities have increased by just 0.5% of their annual rate.

Usually housing is an engine of recovery following a recession, but this time, due to the excess supply of vacant homes, housing has lagged the economy.

And usually government hiring contributes moderately to a recovery, but this time we've seen a significant decline in government employment. This decline has been mostly from state and local cutbacks, but the Federal government has been cutting back too.

And of course, as Levanon notes, the global economy is weak with several key countries in recession.

The little bit of good news is housing is finally starting to slowly recover, and perhaps state and local government layoffs might end mid-year. So far GDP growth has been heavily car driven, and that growth might slow - and, of course, the global economy is a drag.

It seems like one or two cylinders of the growth engine are always misfiring. This is why sluggish and choppy growth has been my general forecast for almost 3 years now.

by Calculated Risk on 6/04/2012 03:26:00 PM

From Reuters: G7 to hold emergency euro zone talks, Spain top concern

Finance chiefs of the Group of Seven leading industrialized powers will hold emergency talks on the euro zone debt crisis on Tuesday ...

Canadian Finance Minister Jim Flaherty said ministers and central bankers of the United States, Canada, Japan, Britain, Germany, France and Italy would hold a special conference call, raising pressure on the Europeans to act.

"The real concern right now is Europe of course - the weakness in some of the banks in Europe, the fact they're undercapitalized, the fact the other European countries in the euro zone have not taken sufficient action yet to address those issues of undercapitalization of banks and building an adequate firewall," Flaherty told reporters.

Over the weekend, I put together a short list of key dates this month for Europe. There will probably be plenty of "emergency" discussions too.

by Calculated Risk on 6/04/2012 01:30:00 PM

From the Bank for International Settlements (BIS): Quarterly Review(ht mp)

And from Mark Scott at the NY Times DealBook: Global Banks Cut Lending in Response to Economic Slowdown

International lending by global banks in the fourth quarter last year fell by the largest amount since the collapse of Lehman Brothers in 2008, according to the Bank for International Settlements, an association of the world’s central banks.

In total, financial firms cut overseas lending by $799 billion in the last three months of 2011, the latest figures available. Around 80 percent of the reduction came from the so-called interbank market where institutions lend money to one another.
...
As the ripple effects of the European debt crisis have been felt across the United States and emerging economies in Asia and Latin America, banks in both developed and emerging economies have been looking to pullback on credit to risky borrowers.

Attention has focused on Europe and its beleaguered banking system. In its quarterly review published on Monday, the Bank for International Settlements, based in Basel, Switzerland, said international banks had cut lending to financial firms in the so-called euro zone region by $364 billion in the fourth quarter last year. The reduction represents almost half of the global pullback in lending over the period.

This pullback in lending is global, but it is concentrated in Europe. However there appears to be some tightening in the U.S. too. In a research note on Friday, Goldman Sachs noted this:

US financial conditions have tightened by about 40bp since April, according to our GSFCI. If the current stress were sustained, the tightening would mechanically imply a 0.6% hit to real GDP. Our analysis suggests that perhaps half of this can be explained by the European crisis.

by Calculated Risk on 6/04/2012 09:09:00 AM

Oil prices have fallen sharply. West Texas Intermediate (WTI) futures are down to $82.36, and Brent is down to $96.93 per barrel.

Note on Europe: There are two main channels that could impact the U.S. economy: trade, and financial spillover / credit tightening. The impact on trade will probably be minimal, even as the euro falls sharply against the dollar, because a small percentage of U.S. GDP is from exports to Europe - and some of decline in trade will be offset by lower oil prices (and lower US interest rates). The financial channel is much more of an unknown, and that is the significant downside risk.

From the Indystar.com: Gasoline prices expected to continue to fall in Indiana, analyst says

“With significant downward pressure on oil last week, motorists will continue to see prices sliding east of the Rockies, and even the West Coast will start to get in on the action, thanks to a supply situation that appears to be turning around.”

Average retail gas prices in Indianapolis have dropped by 17 cents a gallon last week, averaging $3.53 Sunday and $3.52 this morning. That’s about 40 cents lower than last month and about half a dollar cheaper than last year, according to Gasbuddy.com.

The following graph shows the decline in gasoline prices. Gasoline prices are down significantly from the peak in early April, and should fall further following the steep decline in oil prices last week. Gasoline prices in the west have been impacted by refinery issues, but prices are now falling there too.

Note: The graph shows oil prices for WTI; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com