by Calculated Risk on 1/15/2013 09:55:00 AM

Notes: This CoreLogic House Price Index report is for November. The recent Case-Shiller index release was for October. 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 Rises 7.4 Percent Year Over Year in November

Home prices nationwide, including distressed sales, increased on a year-over-year basis by 7.4 percent in November 2012 compared to November 2011. This change represents the biggest increase since May 2006 and the ninth consecutive increase in home prices nationally on a year-over-year basis. On a month-over-month basis, including distressed sales, home prices increased by 0.3 percent in November 2012 compared to October 2012. The HPI analysis shows that all but six states are experiencing year-over-year price gains.
...
Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 6.7 percent in November 2012 compared to November 2011. On a month-over-month basis excluding distressed sales, home prices increased 0.9 percent in November 2012 compared to October 2012. Distressed sales include short sales and real estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that December 2012 home prices, including distressed sales, are expected to rise by 7.9 percent on a year-over-year basis from December 2011 and fall by 0.5 percent on a month-over-month basis from November 2012 reflecting a seasonal winter slowdown.
...
“As we close out 2012 the pending index suggests prices will remain strong," said Mark Fleming, chief economist for CoreLogic. “Given the recently released QM rules issued by the CFPB are not expected to significantly restrict credit availability relative to today, the gains made in 2012 will likely be sustained into 2013.”

Click on graph for larger image.

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

The index was up 0.3% in November, and is up 7.4% over the last year.

The index is off 26.8% from the peak - and is up 9.6% from the post-bubble low set in February 2012 (the index is NSA, so some of the increase is seasonal).

The second graph is from CoreLogic. The year-over-year comparison has been positive for nine consecutive months suggesting house prices bottomed early in 2012 on a national basis (the bump in 2010 was related to the tax credit).

This is the largest year-over-year increase since 2006.

Since this index is not seasonally adjusted, it was expected to decline on a month-to-month basis in November - instead the index increased, and, considering seasonal factors, this month-to-month increase was very strong.

by Calculated Risk on 1/15/2013 08:44:00 AM

On a monthly basis, retail sales increased 0.5% from November to December (seasonally adjusted), and sales were up 4.7% from December 2011. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $415.7 billion, an increase of 0.5 percent from the previous month and 4.7 percent above December 2011. ... The October to November 2012 percent change was revised from +0.3 percent to +0.4 percent.

Click on graph for larger image.

Sales for November were revised up to a 0.4% gain.

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

Retail sales are up 25.4% from the bottom, and now 9.7% above the pre-recession peak (not inflation adjusted)


The second graph shows the same data, but just since 2006 (to show the recent changes).

 Retail sales ex-autos increased 0.3%.

Excluding gasoline, retail sales are up 22.5% from the bottom, and now 10.0% above the pre-recession peak (not inflation adjusted).

The third graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 5.1% on a YoY basis (4.7% for all retail sales).

This was above the consensus forecast of a 0.3% increase, and suggests the initial "soft" reports for December were too pessimistic. 

by Calculated Risk on 1/14/2013 09:03:00 PM

From the NY Times: Obama Says G.O.P. Won’t Get ‘Ransom’ to Lift Debt Limit

“They will not collect a ransom in exchange for not crashing the American economy,” Mr. Obama vowed in the East Room, a week before his second inauguration. “The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.”

CR note: The "debt limit" is not about spending - it is about paying the bills.

The key in the short term is to NOT reduce the deficit too quickly (the fiscal agreement will probably add a 1.5% drag to the economy in 2013).  The key in the long term is put the debt on a sustainable path. These are not contradictory, and right now we are on a path to reduce the deficit to about 3% of GDP in 2015.  That is about the right pace following the financial crisis.  That gives policymakers time to address the long run issues.

Tuesday economic releases:
• At 8:30 AM ET, Retail sales for December will be released. There have been a number of reports of "soft" holiday retail sales. The consensus is for retail sales to increase 0.2% in December, and to increase 0.3% ex-autos..

• Also at 8:30 AM, the BLS will release the Producer Price Index for December. The consensus is for a 0.1% decrease in producer prices (0.2% increase in core).

• Also at 8:30 AM, the NY Fed Empire Manufacturing Survey for January will be released. The consensus is for a reading of 0.0, up from minus 8.1 in December (below zero is contraction).

• Also at 8:30 AM, Corelogic will release their House Price Index for November 2012.

• At 10:00 AM, the Manufacturing and Trade: Inventories and Sales (business inventories) report will be released.

by Calculated Risk on 1/14/2013 05:35:00 PM

Fed Chairman Ben Bernanke was very clear. The "debt ceiling" is about paying the bills, not about new spending. He urged congress to do their job, raise the debt ceiling, and pay the bills. His preference was to abolish the "debt ceiling" since it is redundant.

From the WSJ: Bernanke Calls on Congress to Raise Debt Ceiling

"It’s very, very important that Congress take the necessary action to raise the debt ceiling to avoid the situation where the government doesn’t pay its bills,” said Mr. Bernanke ... “Raising the debt ceiling gives the government the ability to pay its existing bills–it doesn’t create new spending,” he said.

At another point, Bernanke said the "debt ceiling" has "symbolic value", but he prefers eliminating it. He was very clear that Congress should do their job and raise the debt ceiling.

Bernanke also expressed concern about the long run sustainability of the debt (over decades), but that we also shouldn't cut the deficit too quickly and impact the "fragile recovery". He thought the fiscal cliff deal would subtract about 1.5% from GDP this year.

CR Note: As I've noted before, the "debt ceiling" sounds virtuous, but it is really just about paying the bills. Not paying the bills is reckless and irresponsible.

By stalling, Congress is scaring people and is probably already negatively impacting the economy. Congress should do their job.  Today.  I remain confident Congress will authorize paying the bills, but this delaying is embarrassing.

by Calculated Risk on 1/14/2013 03:35:00 PM

At 4 PM ET, Fed Chairman Ben Bernanke will speak at the University of Michigan's Rackham Auditorium.

The event will be streamed live here, and Bernanke will take questions on Twitter: #fordschoolbernanke

Note: Also streaming here.

If there are prepared remarks, I'll post the text at 4 PM.

by Calculated Risk on 1/14/2013 01:30:00 PM

From San Francisco Fed President John Williams: The Economy and Monetary Policy in Uncertain Times. On the economic outlook:

As far as my outlook is concerned, I expect the economic expansion to gain momentum over the next few years. When final numbers come in, I expect growth in real gross domestic product—the nation’s total output of goods and services—to register about 1¾ percent in 2012. My forecast calls for GDP growth to rise to about 2½ percent this year and a little under 3½ percent in 2014. That pace is sufficient to bring the unemployment rate down gradually over the next few years. Specifically, I anticipate that the unemployment rate will stay at or above 7 percent at least through the end of 2014. And I expect inflation to remain somewhat below the Fed’s 2 percent target for the next few years as labor costs and import prices remain subdued. My forecast takes into account both the fiscal cliff agreement and the various stimulus measures the Fed has put in place.
emphasis added

And on uncertainty:

The economy has been growing in fits and starts for the past three-and-a-half years. Every time economic growth appears to be picking up steam, something happens that brings it back down again. Sometimes the barriers to growth are natural, like the tsunami of 2011, and the drought and Superstorm Sandy last year. Other times they are man-made, like the crisis in Europe and our own fiscal cliff drama. ...

But the direct hangover from the financial crisis is not the only reason for sluggish growth. Most banks and other financial institutions have largely returned to health, and many nonfinancial businesses have been piling up cash. Their balance sheets look exceptionally strong. For businesses that can get credit, interest rates have rarely, if ever, been lower. You would think this is a great time to expand your business. Yet, many businesspeople appear to be locked in a paralyzing state of anxiety. As one of my business contacts said recently, “They’re just not willing to stick their necks out.”

What’s going on? The terrifying financial crisis followed by a bumpy recovery, the crisis and recession in Europe, the budget mess in the United States, questions about taxes and health-care reform—these and other factors have combined to undermine the confidence of Americans and make them suspicious about the durability of the economic recovery. Indeed, an index of policy uncertainty developed by academic economists recently soared to the highest level recorded in over 25 years. In a pattern reminiscent of the debt ceiling debate in the summer of 2011, the recent rise in uncertainty has been accompanied by a sharp drop-off in business and consumer confidence.

CR comment: I think the main reason businesses aren't investing more is lack of demand, as opposed to "uncertainty". But it doesn't help having these self-inflicted wounds.

by Calculated Risk on 1/14/2013 10:27:00 AM

In addition to Case-Shiller, CoreLogic, FHFA and LPS, I'm also watching the FNC, Zillow and several other house price indexes.

From FNC: Home Prices Up 0.3% in November; Price Increase Expected to Continue

Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the FNC 100-MSA composite index shows that home prices nationally were up 0.3% in November. This was the ninth consecutive month that prices moved higher, leading to a total appreciation rate of 5.3% year to date. For the 12 months ending in November, home prices rose 4.2%, the largest year-over-year increase since October 2006. All three composite indices show similar trends of price recovery. ...

Two-thirds of the component markets tracked by the FNC 30-MSA composite index show continued price improvement in November. Las Vegas recorded the largest month-to-month increase, up 3.4% from October. Low inventory has contributed to the city’s rapidly rising prices in recent months. Chicago continues to lag behind other major cities in the housing recovery; home prices declined 0.8% in the 12 months ending in November. The city’s foreclosure sales remain at elevated levels; one in three homes sold are foreclosures or short sales. The recovery in Phoenix continues to significantly outpace the rest of the country. Home prices have surged 23.6% year to date. Foreclosure sales continue to shrink rapidly, making up only 13.0% of total home sales in November.

The year-over-year change continued to increase in November, with the 100-MSA composite up 4.2% compared to November 2011. The FNC index turned positive on a year-over-year basis in July - that was the first year-over-year increase in the FNC index since year-over-year prices started declining in early 2007 (over five years ago).

Click on graph for larger image.

This graph from FNC shows their Composite 10, 20, and 100 indexes, and the year-over-year change (light blue) in the composite 100 index. Note: The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

The key is the indexes are now showing a year-over-year increase indicating prices probably bottomed early in 2012.

by Calculated Risk on 1/14/2013 08:45:00 AM

LPS released their Mortgage Monitor report for November today. According to LPS, 7.12% of mortgages were delinquent in November, up from 7.03% in October, and down from 7.83% in November 2011.

LPS reports that 3.51% of mortgages were in the foreclosure process, down from 3.61% in October, and down from 4.20% in November 2011.

This gives a total of 10.63% delinquent or in foreclosure. It breaks down as:

• 1,999,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 1,584,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 1,767,000 loans in foreclosure process.

For a total of ​​5,350,000 loans delinquent or in foreclosure in November. This is up slightly from 5,300,000 in October, and down from 6,172,000 in November 2011.

This following graph from LPS shows the total delinquent and in-foreclosure rates since 1995.

Click on graph for larger image.

Even though delinquencies were up slightly in November, it was mostly seasonal. However there was a large increase in delinquencies in the areas impacted by Hurricane Sandy, From LPS:

The November data also showed that the impact of Hurricane Sandy continued in ZIP codes hit hardest by the storm. While national delinquencies are moving in line with seasonal trends – that is, tending to rise slightly through the remainder of the calendar year – mortgage delinquencies increased sharply in those areas affected by Sandy. Whereas the national delinquency rate has increased 3.7 percent since August of this year, delinquencies in Sandy-impacted ZIPs have risen at more than threefold that pace – climbing 15.4 percent in Conn., 15.2 percent in N.J. and 14.8 percent in N.Y.

The second graph from LPS shows foreclosure starts were off sharply. From LPS:

The November Mortgage Monitor report released by Lender Processing Services shows the national foreclosure inventory dropped to 3.51 percent in November, representing an almost 10 percent decline from September 2012, when newly instituted National Mortgage Settlement requirements began to influence the pace of first-time foreclosure starts. As noted in last month’s Mortgage Monitor release, LPS expects foreclosure starts to rebound as mortgage servicers incorporate the new procedural requirements into their operations in the coming months.

There is much more in the mortgage monitor.

by Calculated Risk on 1/13/2013 09:23:00 PM

Monday:
• At 8:45 AM ET, LPS will release their Mortgage Monitor report for November.

• At 4:00 PM Fed Chairman Ben Bernanke will speak at the University of Michigan's Rackham Auditorium. Here is the topic: "Chairman Bernanke visits the University of Michigan for a conversation with Ford School Dean Susan M. Collins on monetary policy, recovery from the global financial crisis, and long-term challenges facing the U.S. economy". The event will be streamed live, and Bernanke will take questions on Twitter: #fordschoolbernanke

Weekend:
• Schedule for Week of Jan 13th
• Summary for Week Ending Jan 11th

The Asian markets are mixed tonight; the Shanghai Composite index is up slightly.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 3 and DOW futures are up 25 (fair value).

Oil prices have moved sideways recently WTI futures at $94.03 per barrel and Brent at $110.83 per barrel. Gasoline prices are down slightly over the last couple of days.

by Calculated Risk on 1/13/2013 02:23:00 PM

Another update on gasoline prices. From the EIA (Energy Information Administration):

EIA expects that the Brent crude oil spot price, which averaged $112 per barrel in 2012, will fall to an average of $105 per barrel in 2013 and $99 per barrel in 2014. The projected discount of West Texas Intermediate (WTI) crude oil to Brent, which averaged $18 per barrel in 2012, falls to an average of $16 per barrel in 2013 and $8 per barrel in 2014, as planned new pipeline capacity lowers the cost of moving Mid-continent crude oil to the Gulf Coast refining centers.

EIA expects that falling crude prices will help national average regular gasoline retail prices fall from an average $3.63 per gallon in 2012 to annual averages of $3.44 per gallon and $3.34 per gallon in 2013 and 2014, respectively.
emphasis added

Click on graph for larger image.

This graph shows the EIA forecasts for crude and gasoline. There are some seasonal factors for gasoline with prices rising during the summer. This forecast is mostly just some small changes to current prices, and as we all know, there can be wild event driven swings for oil and gasoline prices.

Below is a graph from Gasbuddy.com showing the roller coaster ride for gasoline prices last year. Prices are up a little this year, but still near the recent low.

If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com