by Calculated Risk on 1/23/2013 10:09:00 AM

From the Federal Housing Finance Agency (FHFA): FHFA House Price Index Up 0.6 Percent in November

U.S. house prices rose 0.6 percent on a seasonally adjusted basis from October to November, according to the Federal Housing Finance Agency’s monthly House Price Index (HPI). The previously reported 0.5 percent increase in October was revised upward to a 0.6 percent increase. For the 12 months ending in November, U.S. prices rose 5.6 percent.

This monthly index is for loans owned or guaranteed by Fannie or Freddie.

It appears price were up around 6% in 2012 on the repeat sales indexes (Case-Shiller, Corelogic, etc).   The Case-Shiller index for November will be released next Tuesday, January 29th.

by Calculated Risk on 1/23/2013 08:58:00 AM

LPS released their First Look report for December today. LPS reported that the percent of loans delinquent increased in December compared to November, and declined about 9% year-over-year. Also the percent of loans in the foreclosure process declined further in December and were down significantly in 2012.

LPS reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) increased to 7.17% from 7.12% in November. Note: the normal rate for delinquencies is around 4.5% to 5%.

 The percent of loans in the foreclosure process declined to 3.44% in December from 3.51% in November. 

The number of delinquent properties, but not in foreclosure, is down about 11% year-over-year (465,000 fewer properties delinquent), and the number of properties in the foreclosure process is down 20% or 434,000 properties year-over-year.

The percent (and number) of loans 90+ days delinquent and in the foreclosure process is still very high, but the number of loans in the foreclosure process is now declining.

LPS will release the complete mortgage monitor for December in early February.

LPS: Percent Loans Delinquent and in Foreclosure Process
	Dec 2012	Nov 2012	Dec 2011
Delinquent	7.17%	7.12%	7.89%
In Foreclosure	3.44%	3.51%	4.20%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	2,031,000	1,999,000	2,250,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,545,000	1,584,000	1,791,000
Number of properties in foreclosure pre-sale inventory:	1,716,000	1,767,000	2,150,000
Total Properties	5,292,000	5,350,000	6,192,000

by Calculated Risk on 1/22/2013 09:07:00 PM

Earlier on Existing Home Sales:
• Existing Home Sales: Another Solid Report
• Existing Home Sales in December: 4.94 million SAAR, 4.4 months of supply
• Existing Home Sales graphs

And on apartments: NMHC Apartment Survey: Market Conditions Loosen Slightly

From CNBC: GOP Moves to Suspend Debt Ceiling Until May

House Speaker John Boehner indicated Tuesday that Republicans will vote on an extension of the federal debt ceiling to allow Treasury to borrow money until mid-May. ...

... the next moment of high political and market drama will occur when the so-called "sequester" or automatic across the board spending cuts, kicks in on March 1.

After the "sequester" comes the "continuing resolution" on March 27th. Note: Congress decided last September to extend spending authority for six months with a "continuing resolution".

I expect something will be worked out on the sequester, but there is a strong possibility the “continuing resolution" will lead to a government shutdown. A government shutdown would be disruptive, but probably not catastrophic since most of the government expenditures would continue.

Of course I think they should suspend the debt ceiling permanently (the debt ceiling is about paying the bills). From Ezra Klein: Suspending the debt ceiling is a great idea. Let’s do it forever!

Wednesday economic releases:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• 8:45 AM, LPS will released their "First Look" report on December mortgage performance

• At 10:00 AM, FHFA House Price Index for November 2012. This was original a GSE only repeat sales, however there is also an expanded index that deserves more attention. The consensus is for a 0.7% increase in house prices.

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

by Calculated Risk on 1/22/2013 06:11:00 PM

This is a minor indicator that I follow.

From ATA: ATA Truck Tonnage Index Jumped 2.8% in December

The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.8% in December after surging 3.9% in November. (The 3.9% gain in November was revised from a 3.7% increase ATA reported on December 18, 2012.) The back-to-back increases in November and December were by far the best of gains of 2012. As a result, the SA index equaled 121.6 (2000=100) in December versus 118.3 in November. Despite the solid monthly increase, compared with December 2011, the SA index was off 2.3%, the worst year-over-year result since November 2009. For all of 2012, tonnage was up 2.3%. In 2011, the index increased 5.8%.
...
“December was better than anticipated in light of the very difficult year-over-year comparison,” ATA Chief Economist Bob Costello said. In December 2011, the index surged 6.4% from the previous month. Costello anticipates more sluggishness in the index this year, especially early in the year, as the economy continues to face several headwinds.

“As paychecks shrink for all households due to higher taxes, I’m expecting a weak first quarter for tonnage and the broader economy” Costello said. “Since trucks account for the vast majority of deliveries in the retail supply chain, any reduction in consumer spending will have ramifications on truck tonnage levels.”
emphasis added

Note from ATA:

Trucking serves as a barometer of the U.S. economy, representing 67% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9.2 billion tons of freight in 2011. Motor carriers collected $603.9 billion, or 80.9% of total revenue earned by all transport modes.

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.

Overall the index has been mostly moving sideways this year due to the slowdown in manufacturing. The spike down in October was related to Hurricane Sandy.

by Calculated Risk on 1/22/2013 04:15:00 PM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for December 2012. In the past month, the indexes increased in 32 states, decreased in 10, and remained stable in eight for a one-month diffusion index of 44. Over the past three months, the indexes increased in 41 states, decreased in seven, and remained stable in two (New Mexico and Wisconsin) for a three-month diffusion index of 68. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index rose 0.2 percent in December and 0.6 percent over the past three months.

Note: These are coincident indexes constructed from state employment data. From the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In December, 36 states had increasing activity, down from 45 in November(including minor increases). This measure has been and up down over the last few years since the recovery has been sluggish.


Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession.

The map was all green early in 2012, than started to turn red, and is mostly green again.

by Calculated Risk on 1/22/2013 01:45:00 PM

From the National Multi Housing Council (NMHC): Expansion Moderates for Apartment Markets in January

After a seven-quarter run, expansion moderated for apartment markets according to the National Multi Housing Council’s (NMHC) January Quarterly Survey of Apartment Market Conditions. For the first time since 2010, two of the four indexes – Market Tightness (45) and Sales Volume (49) – dipped below 50, though just barely. The two financing indexes show continued improvement for the 8th consecutive quarter, as the Equity Financing (56) and Debt Financing (57) Indexes remained above the breakeven level of 50.

“The pace of improvement in the apartment industry is moderating, but the expansion remains solid,” said Mark Obrinsky, NMHC’s Vice President for Research and Chief Economist. “Lease-up demand is seasonally weak in January, which would fully explain the small drop in the Market Tightness Index. Beyond that, markets were quite tight three months ago, and remain tight today. New construction has picked up considerably since its 2009 low, but is still playing catch-up with the increase in demand for apartment residences.”
...
Market Tightness Index declined to 45 from 56. The change ends an 11-quarter run for the index at 50 or higher. Fifty-nine percent of respondents said that markets were unchanged, reflecting stable demand conditions. One quarter of respondents saw markets as looser, up from 14 percent in October, while 16 percent viewed markets as tighter.
emphasis added

Click on graph for larger image.

This graph shows the quarterly Apartment Tightness Index. Any reading above 50 indicates tightening from the previous quarter. This quarterly decline followed eleven consecutive quarters with tighter market conditions.

The recent Reis data showed apartment vacancy rates fell in Q4 2012 to 4.5%, down from 4.7% in Q3 2012. As Obrinsky noted, markets are still tight, but this might suggest the vacancy rate will stop declining (caveat: this is just one quarter of survey data and the index might bounce back).

On supply: Even though multifamily starts have been increasing, completions lag starts by about a year - so the builders are still trying to catch up. There will be many more completions in 2013 than in 2012, increasing the supply.

As I've mentioned before, this index helped me call the bottom for effective rents (and the top for the vacancy rate) early in 2010. This survey now suggests vacancy rates might stop falling - a possible significant market change - although apartment markets are still tight, so rents will probably continue to increase.

by Calculated Risk on 1/22/2013 12:14:00 PM

Here is how Reuters reported on existing home sales: Existing Home Sales Unexpectedly Fall 1 Percent

U.S. home resales unexpectedly fell in December as fewer people put their properties on the market, although not by enough to derail the boost housing will likely provide to the economy this year.

There is so much wrong with that sentence. First, for those reading the correct site, the forecast was for 4.97 million sales on a seasonally adjusted annual rate basis, and inventory decling to 1.87 million. The NAR reported sales of 4.94 million and inventory of 1.82 million. Hard to call that "unexpected" (although sales were below the less accurate "consensus" forecast).

But far more important is that flat or even declining existing home sales is the wrong place to look for a "housing recovery". As the number of distressed sales decline, the number of total sales might decline too - but the number of conventional sales is increasing! An increase in conventional sales would be good news, not bad news.  Although I have limited confidence in the NAR survey, the NAR reported:

Distressed homes - foreclosures and short sales - accounted for 24 percent of December sales ... below the 32 percent share in December 2011.

Using the NAR surveys and sales reports would suggest 3.75 million conventional sales in December 2012 (SAAR), up 26% from 2.98 conventional sales in December 2011. That is a significant increase.

Also fewer distressed sales probably means more housing starts and new home sales - and that is the key for housing providing a "boost" to the economy in 2013.

Finally, when we look at the existing home sales report, the key number is inventory. And inventory is at the lowest level since January 2001, and months-of-supply fell to 4.4 months - the lowest since May 2005.

For those looking at the correct numbers, this was the expected report - and it was solid.

Important note: The NAR reports active listings, and although there is some variability across the country in what is considered active, most "contingent short sales" are not included. "Contingent short sales" are strange listings since the listings were frequently NEVER on the market (they were listed as contingent), and they hang around for a long time - they are probably more closely related to shadow inventory than active inventory. However when we compare inventory to 2005, we need to remember there were no "short sale contingent" listings in 2005. In the areas I track, the number of "short sale contingent" listings is also down sharply year-over-year.

Click on graph for larger image.

This graph shows inventory by month since 2004. In 2005 (dark blue columns), inventory kept rising all year - and that was a clear sign that the housing bubble was ending.

This year (dark red for 2012) inventory is at the lowest level for the month of December since 2000, and inventory is sharply below the level in December 2005 (not counting contingent sales).   The months-of-supply has fallen to 4.4 months.  Since months-of-supply uses Not Seasonally Adjusted (NSA) inventory, and Seasonally Adjusted (SA) sales, I expect months-of-supply to start increasing in February.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Sales NSA in December (red column) are  above 2007 through 2011. Sales are well below the bubble years of 2005 and 2006.

Earlier:
• Existing Home Sales in December: 4.94 million SAAR, 4.4 months of supply
• Existing Home Sales graphs

by Calculated Risk on 1/22/2013 10:00:00 AM

The NAR reports: Existing-Home Sales Slip in December, Prices Continue to Rise; 2012 Totals Up

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.0 percent to a seasonally adjusted annual rate of 4.94 million in December from a downwardly revised 4.99 million in November, but are 12.8 percent above the 4.38 million-unit level in December 2011.

The preliminary annual total for existing-home sales in 2012 was 4.65 million, up 9.2 percent from 4.26 million in 2011. It was the highest volume since 2007 when it reached 5.03 million and the strongest increase since 2004.
...
Total housing inventory at the end of December fell 8.5 percent to 1.82 million existing homes available for sale, which represents a 4.4-month supply at the current sales pace, down from 4.8 months in November, and is the lowest housing supply since May of 2005 when it was 4.3 months, which was near the peak of the housing boom.

Listed inventory is 21.6 percent below a year ago when there was a 6.4-month supply. Raw unsold inventory is at the lowest level since January 2001 when there were 1.78 million homes on the market.

Click on graph for larger image.

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

Sales in December 2012 (4.94 million SAAR) were 1.0% lower than last month, and were 12.8% above the December 2011 rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory declined to 1.82 million in December down from 1.99 million in November. This is the lowest level of inventory since January 2001. 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 21.6% year-over-year in December from December 2011. This is the 22nd consecutive month with a YoY decrease in inventory.

Months of supply declined to 4.4 months in December, the lowest level since May 2005.

This was below expectations of sales of 5.10 million, but right at Tom Lawler's forecast. 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 1/22/2013 08:38:00 AM

The Chicago Fed released the national activity index (a composite index of other indicators): Economic Growth Moderated in December

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to +0.02 in December from +0.27 in November. Two of the four broad categories of indicators that make up the index decreased from November, and only two of the four categories made positive contributions to the index in December.

The index’s three-month moving average, CFNAI-MA3, edged up from –0.13 in November to –0.11 in December—its tenth consecutive reading below zero. December’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity "moderated" in December, and growth was slightly below trend (using the three-month average).

According to the Chicago Fed:

What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

by Calculated Risk on 1/21/2013 09:16:00 PM

The Asian markets are mixed tonight with the Nikkei index up 0.3% and the Shanghai Composite index down slightly.

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

Oil prices have moved up recently with WTI futures at $95.41 per barrel and Brent at 111.88 per barrel. Gasoline prices are moving sideways.

Tuesday economic releases:
• At 8:30 AM ET, Chicago Fed National Activity Index for December. This is a composite index of other data.

• At 10:00 AM, Existing Home Sales for December from the National Association of Realtors (NAR). The consensus is for sales of 5.10 million on seasonally adjusted annual rate (SAAR) basis. Economist Tom Lawler estimates the NAR will report sales at 4.97 million SAAR.

• Also at 10:00 AM, the Richmond Fed Survey of Manufacturing Activity for January. The consensus is for a a reading of 5 for this survey, unchanged from December (Above zero is expansion).