by Calculated Risk on 11/19/2012 10:00:00 AM

The NAR reports: Existing-Home Sales Rise in October with Ongoing Price and Equity Gains

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million in October from a downwardly revised 4.69 million in September, and are 10.9 percent above the 4.32 million-unit level in October 2011.
...
Total housing inventory at the end of October fell 1.4 percent to 2.14 million existing homes available for sale, which represents a 5.4-month supply at the current sales pace, down from 5.6 months in September, and is the lowest housing supply since February of 2006 when it was 5.2 months. Listed inventory is 21.9 percent below a year ago when there was a 7.6-month supply.

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in October 2012 (4.79 million SAAR) were 2.1% higher than last month, and were 10.9% above the October 2011 rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory declined to 2.14 million in October down from 2.17 million in September. Inventory is not seasonally adjusted, and usually inventory decreases from the seasonal high in mid-summer to the seasonal lows in December and January.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory decreased 21.9% year-over-year in October from October 2011. This is the 20th consecutive month with a YoY decrease in inventory.

Months of supply declined to 5.4 months in October.

This was slightly above expectations of sales of 4.74 million. For existing home sales, the key number is inventory - and the sharp year-over-year decline in inventory is a positive for housing. I'll have more later ...

All current Existing Home Sales graphs

by Calculated Risk on 11/19/2012 08:41:00 AM

Update: Here is the national report: Continued Progress: A Report from the National Mortgage Settlement

From Alejandro Lazo and Scott Reckard at the LA Times: Most aid from mortgage settlement in [California] going to short sales

Short sales, which allow underwater borrowers to sell their homes for less than they owe, have become the dominant type of relief offered in California by the big banks, according to a report on the settlement expected to be made public Monday.

Under the settlement, banks were required to give homeowners aid in the form of principal reduction, short sales and other modifications. Banks get credit for both principal reductions and short sales under the agreement, but must give 60% of the relief nationally through principal reduction to families who keep their homes. ...

Through Sept. 30, the three banks had provided $8.4 billion, according to data from [UC Irvine law professor Katherine Porter's] office, putting them well on track to fulfill their obligations. About 68% of that money went toward providing short sales for homeowners. Principal reductions on first and second mortgages made up the rest of the California aid.

Short sales were becoming more frequent prior to the mortgage settlement, but this is probably why short sales now out number foreclosures in many areas.

by Calculated Risk on 11/18/2012 09:00:00 PM

First on the recession in the Euro Zone from Jim Hamilton: Europe in recession

The Business Cycle Dating Committee of the Centre for Economic Policy Research (the European counterpart of the U.S. NBER) last week issued a declaration that Europe entered a new recession a year ago, dating the business cycle peak at 2011:Q3.

This was pretty obvious a year ago.

Monday:
• At 10:00 AM ET, Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for sales of 4.74 million on seasonally adjusted annual rate (SAAR) basis. Sales in September 2012 were 4.75 million SAAR.  Economist Tom Lawler estimates the NAR will report sales at 4.84 million SAAR. Goldman Sachs is forecasting a decline in sales to 4.67 million, and Merrill Lynch is forecasting 4.60 million.

• Also at 10:00 AM, the NAHB will release their November homebuilder survey. The consensus is for a reading of 41, unchanged from October. Although this index has been increasing lately, any number below 50 still indicates that more builders view sales conditions as poor than good.

The Asian markets are green tonight, with the Nikkei up 1.5%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 6 and DOW futures are up 46.

Oil prices are up slightly with WTI futures at $87.48 per barrel and Brent at $109.46 per barrel. Gasoline prices are still falling a little.

Weekend:
• Summary for Week Ending Nov 16th
• Schedule for Week of Nov 18th

And on mortgage delinquencies:
• Press Release: Q3 National Delinquency Survey
• Q3 MBA National Delinquency Survey Graph and Comments
• Mortgage Delinquencies by Loan Type in Q3
• Serious Mortgage Delinquencies and In-Foreclosure by State
• Percent of Mortgage Seriously Delinquent over time, Selected States

Two more questions this week for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 11/18/2012 05:26:00 PM

Economist Tom Lawler sent me the table below of short sales and foreclosures for a few selected cities in October. Keep this table in mind when the NAR releases existing home sales tomorrow.

The NAR headline number will probably be close to the 4.75 million SAAR in September, but there are other signs of significant change in the housing market. First, inventory has declined sharply, and there is very little inventory in many areas. Second, it appears that the share of conventional sales in certain markets has increased significantly (these are normal sales - not foreclosures or short sales). Both the decline in inventory, and the increase in conventional sales, are signs of moving towards a more normal housing market.

Look at the right two columns in the table below (Total "Distressed" Share for Oct 2012 compared to Oct 2011). In every area that reports distressed sales, the share of distressed sales is down year-over-year - and down significantly in most areas. The NAR will release some distressed sales measurements tomorrow from an unscientific survey of Realtors - and I have little confidence in the survey results - but these local reports suggest distressed sales have fallen sharply in many areas.

Also there has been a decline in foreclosure sales just about everywhere. Look at the middle two columns comparing foreclosure sales for Oct 2012 to Oct 2011. Foreclosure sales have declined in all these areas, and some of the declines have been stunning (the Nevada sales were impacted by a new foreclosure law).

Also there has been a shift from foreclosures to short sales. In most areas, short sales now far out number foreclosures, although Minneapolis is an exception with more foreclosures than short sales.

Imagine that the number of total sales doesn't change over the next year - some people would argue that is "bad" news and the housing market isn't recovering. But also imagine that the share of distressed sales declines 25%, and conventional sales increase to make up the difference. That would be a positive sign! As I noted a week ago, conventional sales in Sacramento were up 55% year-over-year in October (there were 2 more selling days in Oct 2012, but that is still a stunning increase). Too bad we don't have better national numbers on the share of distressed / conventional sales, but this table suggests some improvement.

Table from Tom Lawler:

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share
	12-Oct	11-Oct	12-Oct	11-Oct	12-Oct	11-Oct
Las Vegas	44.7%	25.4%	11.6%	48.1%	56.3%	73.5%
Reno	40.0%	32.0%	12.0%	38.0%	52.0%	70.0%
Phoenix	26.2%	29.2%	12.9%	35.6%	39.1%	64.8%
Sacramento	35.7%	26.8%	12.0%	37.3%	47.7%	64.1%
Minneapolis	10.5%	12.6%	25.1%	33.6%	35.6%	46.2%
Mid-Atlantic (MRIS)	11.7%	15.2%	9.1%	16.0%	20.7%	31.2%
California (DQ)*	26.0%	24.9%	17.4%	34.0%	43.4%	58.9%
Lee County, FL***	20.4%	19.8%	16.4%	33.7%	36.8%	53.5%
Hampton Roads VA					28.3%	33.2%
Northeast Florida					44.7%	48.4%
Chicago					42.5%	43.6%
Charlotte					13.2%	17.4%
Spokane WA			8.4%	20.4%
Memphis*			26.3%	30.8%
Birmingham AL			30.8%	35.5%
Metro Detroit			32.5%	38.3%
*share of existing home sales, based on property records
*** SF only

by Calculated Risk on 11/18/2012 01:32:00 PM

A key question is: What has happened to the mortgage delinquency rate over time by state?

For the graph below I plotted the serious delinquency rate for several states over time (states selected by serious delinquency rate in Q1 2010 - at the national peak). Although the national delinquency rate has been steadily declining, the state level data shows different patterns. There has been dramatic improvement in some non-judicial states, like Arizona and California - and some judicial foreclosure states are still seeing the seriously delinquent rate increase, like New Jersey and New York.

Previous posts on Q3 delinquencies:
• Press Release: Q3 National Delinquency Survey
• Q3 MBA National Delinquency Survey Graph and Comments
• Mortgage Delinquencies by Loan Type in Q3
• Serious Mortgage Delinquencies and In-Foreclosure by State

Click on graph for larger image in graph gallery.

I picked the states with the highest serious delinquency rate in Q1 2010 (Serious delinquencies peaked nationally in Q1 2010).

The red column for each state is the Q1 2010 data.

The light blue column was for Q2 2007. This was just as the serious delinquency rate started to increase nationally. Even then, the serious delinquency rate was elevated in some states like Michigan, Ohio and Indiana.

The states that have seen the most improvement - Arizona, California, Michigan, Nevada - are all non-judicial states. Florida is a judicial state that has seen some decline in the seriously delinquent rate. However the serious delinquency rate in New Jersey and New York has increased since Q1 2010.

The national data is useful, but with the different foreclosure processes, we also need to look at state and local data. Some states will be back to a "normal" delinquency rate soon - other states will take years.

by Calculated Risk on 11/18/2012 10:15:00 AM

Last week the MBA released the results of their Q3 National Delinquency Survey. One of the key points was the difference in the number of mortgages in the foreclosure process between judicial and non-judicial foreclosure states.

The first graph below (repeat) is from the MBA and shows the percent of loans in the foreclosure process by state.

The second graph shows all stages of delinquency (and in-foreclosure) by states, sorted by the percent seriously delinquent (90+ days plus in-foreclosure).

Previous posts on Q3 delinquencies:
• Q3 MBA National Delinquency Survey Graph and Comments
• Mortgage Delinquencies by Loan Type in Q3

Click on graph for larger image in graph gallery.

This graph is from the MBA and shows the percent of loans in the foreclosure process by state. Posted with permission.

The top states are Florida (13.04% in foreclosure down from 13.70% in Q2), New Jersey (8.87% up from 7.65%), Illinois (6.83% down from 7.11%), New York (6.46% down from 6.47%) and Nevada (the only non-judicial state in the top 13 at 5.93% down from 6.09%).

California (2.63% down from 3.07%) and Arizona (2.51% down from 3.24%) are now well below the national average.

The second graph includes all delinquent loans (sorted by percent seriously delinquent).

Florida and New Jersey have the highest percentage of serious delinquent loans, followed by Nevada, Illinois, New York, Maine and Maryland. Nevada still leads with the highest percent of loans 90+ days delinquent.

Previous high delinquency states like California and Arizona are now well down the list.

by Calculated Risk on 11/17/2012 09:20:00 PM

Recently I've been talking to a few friends from around the country, and they all seemed unaware that the California economy is clearly improving. California is seeing a pickup in employment, the delinquency rate is falling, and I wouldn't be surprised if California reports a balanced budget soon.

Note: when the MBA quarterly delinquency data was released earlier this week,  Mike Fratantoni, MBA’s Vice President of Research and Economics, said there has been "dramatic" improvement in California and Arizona.

From California's Employment Development Department: California’s unemployment rate decreases to 10.1 percent, Nonfarm payroll jobs increase by 45,800

California’s unemployment rate decreased to 10.1 percent in October, and nonfarm payroll jobs increased by 45,800 during the month for a total gain of 574,900 jobs since the recovery began in February 2010, according to data released today by the California Employment Development Department (EDD) from two separate surveys.

This is the lowest unemployment rate for California since Jan 2009. There are only three states still with double digit unemployment: Nevada, Rhode Island, and California.

The BLS will release data for all states on Tuesday.

Earlier:
• Summary for Week Ending Nov 16th
• Schedule for Week of Nov 18th

by Calculated Risk on 11/17/2012 04:34:00 PM

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining recently.

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Nov 16, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

As anticipated, the OCC released its latest actions this Friday, which contributed to many changes to the Unofficial Problem Bank List. This week, there were seven removals and four additions that leave the list at 857 institutions with assets of $329.2 billion. A year ago, the list held 903 institutions with assets of $419.6 billion.

The OCC or the Federal Reserve terminated actions against The Citizens National Bank, Putnam, CT ($354 million Ticker: CTZR); Bankers' Bank of the West, Denver, CO ($348 million); North Cascades National Bank, Chelan, WA ($333 million); Incommons Bank, N.A., Mexia, TX ($98 million); Prairie National Bank, Stewardson, IL ($54 million); and Butte State Bank, Butte, NE ($42 million). Amazingly, the FDIC closed another bank in Georgia -- Hometown Community Bank, Braselton, GA ($134 million), which is the 84th failure in the state since 2008.

Additions this week include Roma Bank, Robbinsville, NJ ($1.7 billion); First National Bank, Ronceverte, WV ($262 million); Interamerican Bank, A FSB, Miami, FL ($240 million); and St Tammany Homestead Savings and Loan Association, Covington, LA ($96 million).

We wish all readers a Happy Thanksgiving as the next update will be published after the holiday. As such, it is likely to be a quiet weekend as the FDIC will take the long weekend off from closings and they will likely not publish their latest actions until Friday the 30th.

Earlier:
• Summary for Week Ending Nov 16th
• Schedule for Week of Nov 18th

by Calculated Risk on 11/17/2012 01:11:00 PM

Earlier:
• Summary for Week Ending Nov 16th

This is a short week (Happy Thanksgiving!), but there are several key releases early in the week.

On Monday, the NAR will release existing home sales for October, and the NAHB will release their homebuilder confidence survey. On Tuesday, Housing Starts for October will be released. Housing has been the bright spot for the U.S. economy recently.

Also on Tuesday, Fed Chairman Ben Bernanke will speak on "The Economic Recovery and Economic Policy".

----- Monday, Nov 19th-----
10:00 AM: Existing Home Sales for October from the National Association of Realtors (NAR).

The consensus is for sales of 4.74 million on seasonally adjusted annual rate (SAAR) basis. Sales in September 2012 were 4.75 million SAAR.

Economist Tom Lawler estimates the NAR will report sales at 4.84 million SAAR. Goldman Sachs is forecasting a decline in sales to 4.67 million, and Merrill Lynch is forecasting 4.60 million.

A key will be inventory and months-of-supply.

10:00 AM: The November NAHB homebuilder survey. The consensus is for a reading of 41, unchanged from October. Although this index has been increasing lately, any number below 50 still indicates that more builders view sales conditions as poor than good.

----- Tuesday, Nov 20th -----
8:30 AM: Housing Starts for October.

Total housing starts were at 872 thousand (SAAR) in September, up 15.0% from the revised August rate of 758 thousand (SAAR). Single-family starts increased 11.0% to 603 thousand in September.

The consensus is for total housing starts to decline to 840,000 (SAAR) in October, down from 872,000 in September.

Goldman Sachs is forecasting a decline in starts to 840,000, and Merrill Lynch is forecasting 815,000.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for October 2012

12:15 PM: Speech by Fed Chairman Ben Bernanke, The Economic Recovery and Economic Policy, At the Economic Club of New York, New York, New York

----- Wednesday, Nov 21st -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 400 thousand from 439 thousand. Note: Claims increased sharply last week due to Hurricane Sandy.

9:00 AM: The Markit US PMI Manufacturing Index Flash. This is a new release and might provide hints about the ISM PMI for November.  This index was at 51.5 in October.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for November). The consensus is for no change from the preliminary reading of 84.9. Goldman Sachs is forecasting a decline in confidence to 81.0, and Merrill Lynch is forecasting a decline to 83.

10:00 AM: Conference Board Leading Indicators for October. The consensus is for a 0.2% decrease in this index.

During the day: The AIA's Architecture Billings Index for October (a leading indicator for commercial real estate).

----- Thursday, Nov 22nd -----
All US markets will be closed in observance of the Thanksgiving Day Holiday.

Europe: Two day EU Leaders Summit Meeting

----- Friday, Nov 23rd -----
SIFMA recommends US markets close at 2:00 PM ET following the Thanksgiving Day Holiday. The NYSE will close at 1:00 PM ET.

by Calculated Risk on 11/17/2012 05:01:00 AM

Hurricane Sandy impacted the economic data released last week, especially retail sales, industrial production and initial weekly unemployment claims.  The Fed reported that Sandy "reduced the rate of change in total output by nearly 1 percentage point".  Also the Philly Fed and Empire State manufacturing surveys were weak due to Sandy.  Since we are usually looking for the trend in the data, we have to be careful to look through short term event driven increases or decreases in the data. Overall I'd expect the data to return to trend fairly quickly.

Most of the discussion last week was related to the "fiscal slope", or more accurately, how much austerity the US should enact in 2013. This will be an ongoing discussion, and I expect some reasonable compromise to be reached - although I expect taxes will increase on just about everyone in 2013 with a combination of the payroll tax cut expiring and tax rates for higher income earners increasing.

Fed Chairman Ben Bernanke spoke this week and expressed concern that mortgage lending standards might be "overly tight". Also the FOMC minutes suggested the Fed is considering setting unemployment rate and inflation thresholds for raising the Fed Funds rate. I'll have more on thresholds before the FOMC meeting in December.

There was some good news on mortgage delinquencies. The MBA reported that delinquencies declined again in Q3, although they believe there is several years of "in foreclosure" inventory that still needs to be resolved.

Here is a summary of last week in graphs:

• Retail Sales declined 0.3% in October

Click on graph for larger image.

On a monthly basis, retail sales declined 0.3% from September to October (seasonally adjusted), and sales were up 3.8% from October 2011.  Sales for September were revised up to a 1.3% increase (from 1.1% increase).

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

This was below the consensus forecast for retail sales of a 0.2% declined in October. However the increase in September was revised up, and most of this decline was related to Hurricane Sandy (there should be some bounce back soon).

• Industrial Production decreased 0.4% in October due to Hurricane Sandy, Capacity Utilization decreased

The Fed reported: "Hurricane Sandy, which held down production in the Northeast region at the end of October, is estimated to have reduced the rate of change in total output by nearly 1 percentage point."

This graph shows Capacity Utilization. This series is up 10.9 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 77.8% is still 2.5 percentage points below its average from 1972 to 2010 and below the pre-recession level of 80.6% in December 2007.

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

 This  graph shows industrial production since 1967.

Industrial production decreased in October to 96.6. This is 15% above the recession low, but still 4.1% below the pre-recession peak.

IP was slightly below expectations due to the impact of Hurricane Sandy. We will probably see some bounce back over the next couple of months.

All current manufacturing graphs
• Weekly Initial Unemployment Claims increased sharply to 439,000

The DOL reported: "In the week ending November 10, the advance figure for seasonally adjusted initial claims was 439,000, an increase of 78,000 from the previous week's revised figure of 361,000."

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 383,750.

This sharp increase is due to Hurricane Sandy as claims increased significantly in the impacted areas. Note the spike in 2005 related to hurricane Katrina - we are seeing a similar impact, although on a smaller scale.

Weekly claims were higher than the consensus forecast.

All current Employment Graphs
• Key Measures show low inflation in October

This graph shows the year-over-year change for four key measures of inflation. On a year-over-year basis, the median CPI rose 2.2%, the trimmed-mean CPI rose 1.9%, the CPI rose 2.2%, and the CPI less food and energy rose 2.0%. Core PCE is for September and increased 1.7% year-over-year.

On a monthly basis, two of these measure were above the Fed's target; median CPI was at 2.3% annualized, core CPI increased 2.2% annualized. However trimmed-mean CPI was at 1.7% annualized, and core PCE for September increased 1.4% annualized. These measures suggest inflation is close to the Fed's target of 2% on a year-over-year basis.

The Fed's focus will probably be on core PCE and core CPI, and both are at or below the Fed's target on year-over-year basis.

• MBA: Mortgage Delinquencies decreased in Q3

The MBA reported that 11.47 percent of mortgage loans were either one payment delinquent or in the foreclosure process in Q3 2012 (delinquencies seasonally adjusted). This is down from 11.85 percent in Q2 2012.

From the MBA: Mortgage Delinquency and Foreclosure Rates Decreased During Third Quarter

This graph shows the percent of loans delinquent by days past due.

Loans 30 days delinquent increased to 3.25% from 3.18% in Q2. This is just above 2007 levels and around the long term average.

Delinquent loans in the 60 day bucket decreased to 1.19% in Q3, from 1.22% in Q2.

The 90 day bucket decreased to 2.96% from 3.19%. This is still way above normal (around 0.8% would be normal according to the MBA).

The percent of loans in the foreclosure process decreased to 4.07% from 4.27% and is now at the lowest level since Q1 2009.