by Calculated Risk on 4/12/2013 11:17:00 AM

From Realtor.com: Realtor.com March data indicates that the amount of homes on the market showed a modest increase since February 2013

In March, the total number of single-family homes, condos, townhomes and co-ops for sale in the U.S. (1,529,432) increased by 2.36 percent month-over-month. On an annual basis, however, inventory decreased by 15.22 percent.

The median age of inventory of for sale listings fell to 78 days in March, down 20.41 percent from February and 12.35 percent below the median age one year ago (March 2012).

California continues to lead the list ... with largest year-over-year decline in for-sale inventories. Seattle is the only market outside of California in the top 10, and experienced a decline of 40.17 percent in for-sale inventories year-over-year. The 10 markets with the largest year-over-year declines in inventory are Stockton-Lodi, Sacramento, Orange County, Oakland, San Jose, Los Angeles-Long Beach, Ventura, San Diego, Riverside-San Bernardino and Seattle. Of the 146 markets realtor.com monitors, only nine experienced an increase in for-sale inventory.

Note: Realtor.com reports the average number of listings in a month, whereas the NAR uses an end-of-month estimate.

Inventory decreased year-over-year in 134 of the 146 markets realtor.com tracks,  and inventory decreased by 20% or more year-over-year in 55 markets.

The NAR is scheduled to report March existing home sales and inventory on Monday, April 22nd.

by Calculated Risk on 4/12/2013 09:59:00 AM

Click on graph for larger image.

The preliminary Reuters / University of Michigan consumer sentiment index for April declined to 72.3 from the March reading of 78.6.

This was well below the consensus forecast of 79.0. There are a number of factors that impact sentiment including unemployment, gasoline prices and, for 2013, the payroll tax increase and even politics (sequestration, default threats, etc).

Sentiment is mostly moving sideways at a fairly low level (with ups and downs).

by Calculated Risk on 4/12/2013 08:49:00 AM

On a monthly basis, retail sales decreased 0.4% from February to March (seasonally adjusted), and sales were up 2.8% from March 2012. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $418.3 billion, a decrease of 0.4 percent from the previous month, but 2.8 percent above March 2012. ... The January to February 2013 percent change was revised from +1.1 percent to +1.0 percent (±0.2%).

Click on graph for larger image.

Sales for January were revised down too.

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 26.2% from the bottom, and now 11.2% above the pre-recession peak (not inflation adjusted)

Retail sales ex-autos decreased 0.4%. Retail sales ex-gasoline decreased 0.2%.

Excluding gasoline, retail sales are up 23.5% from the bottom, and now 10.4% above the pre-recession peak (not inflation adjusted).

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

Retail sales ex-gasoline increased by 3.3% on a YoY basis (2.8% for all retail sales).

This was below the consensus forecast of no change in retail sales.  Lower gasoline prices subtracted from retail sales - after boosting sales in February.

by Calculated Risk on 4/11/2013 08:01:00 PM

Congratulations to Laura Fromme, the 2013 recipient of the Doris "Tanta" Dungey scholarship!

Click on picture for larger image.

Note: For new readers, Tanta was my co-blogger from from Dec 2006 through November 2008. Please see: Sad News: Tanta Passes Away, NY Times: Doris Dungey, Prescient Finance Blogger, Dies at 47 and much more at In Memoriam: Doris "Tanta" Dungey and on the scholarship.

Friday economic releases:
• 8:30 AM ET, Retail sales for March will be released. The consensus is for retail sales to be unchanged in March (following the large increases in January and February), and to increase 0.1% ex-autos.

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

• At 9:55 AM, the preliminary Reuter's/University of Michigan's Consumer sentiment index for April will be released. The consensus is for a reading of 79.0, up from 78.6.

• At 10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for February. The consensus is for a 0.4% increase in inventories.

• At 12:30 PM, Speech by Fed Chairman Ben Bernanke, Creating Resilient Communities, At the 2013 Federal Reserve System Community Development Research Conference, Washington, D.C.

by Calculated Risk on 4/11/2013 04:45:00 PM

From Freddie Mac today: Mortgage Rates Edge Down for Second Week

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates edging down for the second consecutive week following weak employment reports.

30-year fixed-rate mortgage (FRM) averaged 3.43 percent with an average 0.8 point for the week ending April 11, 2013, down from last week when it averaged 3.54 percent. Last year at this time, the 30-year FRM averaged 3.88 percent.

15-year FRM this week averaged 2.65 percent with an average 0.7 point, down from last week when it averaged 2.74 percent. A year ago at this time, the 15-year FRM averaged 3.11 percent.

Click on graph for larger image.

This graph shows the MBA's refinance index (monthly average) and the the 30 year fixed rate mortgage interest rate from the Freddie Mac Primary Mortgage Market Survey®.

The Freddie Mac survey started in 1971 and mortgage rates are currently near the record low for the last 40 years.

by Calculated Risk on 4/11/2013 01:53:00 PM

The Case-Shiller house price indexes for February will be released Tuesday, April 30th. Zillow has started forecasting the Case-Shiller a month early - and I like to check the Zillow forecasts since they have been pretty close.

Zillow Zillow Anticipates Strengthening Appreciation in February Case-Shiller Index

[W]e predict that next month’s Case-Shiller data (February 2013) will show that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) increased 8.9 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) increased 8.0 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from January to February will be 0.7 percent for the 20-City Composite and 0.6 percent for the 10-City Composite Home Price Indices (SA). All forecasts are shown in the table below. Officially, the Case-Shiller Composite Home Price Indices for February will not be released until Tuesday, April 30.
...
To forecast the Case-Shiller indices we use past data from Case-Shiller, as well as the Zillow Home Value Index (ZHVI), which is available more than a month in advance of Case-Shiller numbers, paired with foreclosure resale numbers, which we also have available more than a month prior to Case-Shiller numbers. ...

The ZHVI does not include foreclosure resales and shows home values for February 2013 up 5.8 percent from year-ago levels. We expect home value appreciation to moderate in 2013, rising only 3.2 percent from February 2013 to February 2014. Further details on our forecast can be found here ...

Zillow also just released their city by city forecasts for the next year: Zillow Home Value Forecast for February 2014

The following table shows the Zillow forecast for February.

Zillow February Forecast for Case-Shiller Index
		Case Shiller Composite 10		Case Shiller Composite 20
		NSA	SA	NSA	SA
Case Shiller (year ago)	Feb 2012	146.64	149.46	134.09	136.98
Case-Shiller (last month)	Jan 2013	158.72	160.73	146.14	147.86
Zillow Forecast	YoY	8.0%	8.0%	8.9%	8.9%
	MoM	-0.2%	0.6%	-0.1%	0.7%
Zillow Forecasts1		158.4	161.4	146.0	149.0
Current Post Bubble Low		146.46	149.46	134.07	136.77
Date of Post Bubble Low		Mar-12	Feb-12	Mar-12	Jan-12
Above Post Bubble Low		8.1%	8.0%	8.9%	9.0%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts

by Calculated Risk on 4/11/2013 11:58:00 AM

From a research note by Goldman Sachs chief economist Jan Hatzius: The Rapidly Shrinking Federal Deficit

The federal budget deficit is shrinking rapidly. ...[I]n the 12 months through March 2013, the deficit totaled $911 billion, or 5.7% of GDP. In the first three months of calendar 2013--that is, since the increase in payroll and income tax rates took effect on January 1--we estimate that the deficit has averaged just 4.5% of GDP on a seasonally adjusted basis. This is less than half the peak annual deficit of 10.1% of GDP in fiscal 2009.

There are three main reasons for the sharp reduction in the deficit:

1. Lower spending. On a 12-month average basis, federal outlays have fallen by a total of 4% in the past two years, the first decline in nominal dollar terms over a comparable period since the demobilization from the Korean War in the mid-1950s.

2. Higher tax rates. The increase in payroll tax rates in January 2013 has boosted federal receipts by around $120 billion (annualized), or about 0.8% of GDP.

3. Economic improvement. Although real GDP has only grown at a sluggish 2%-2.5% pace since the end of the 2007-2009 recession, this has been enough to generate a sizable improvement in tax receipts, over and above the more recent impact of higher tax rates. Even prior to the tax hike that took effect in early 2013, total federal receipts had grown by 7% (annualized) from the 2009 bottom, nearly twice the growth rate of nominal GDP.

We expect the deficit to continue to decline and are forecasting a deficit of 3% of GDP or less in fiscal 2015. Some of this is policy-related. ... But the more important reason, in our view, is that there is still a great deal of room for the economic recovery to reduce the deficit for cyclical reasons. ...

In our view, the most important implication from the reduction in the budget deficit for the near-term economic outlook is reduced pressure for further fiscal retrenchment. Partly for this reason, we expect the drag from fiscal policy on real GDP growth to decline sharply from around 2% of GDP in 2013 to around 0.5% in coming years. This is a key reason for our expectation that real GDP growth will accelerate from around 2% (annualized) in Q2/Q3 2013 to 3%-3.5% in 2014-2016.

It shocks people when I tell them the deficit as a percent of GDP is already close to being cut in half (this doesn't seem to ever make headlines). As Hatzius notes, the deficit is currently running under half the peak of the fiscal 2009 budget and will probably decline further over the next few years with no additional policy changes.

by Calculated Risk on 4/11/2013 08:36:00 AM

The DOL reports:

In the week ending April 6, the advance figure for seasonally adjusted initial claims was 346,000, a decrease of 42,000 from the previous week's revised figure of 388,000. The 4-week moving average was 358,000, an increase of 3,000 from the previous week's revised average of 355,000.

The previous week was revised up from 385,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 358,000 - the highest level since February.

Weekly claims were below the 365,000 consensus forecast.  

by Calculated Risk on 4/10/2013 08:59:00 PM

An update on the California budget: Controller Releases March Cash Update

State Controller John Chiang today released his monthly report covering California's cash balance, receipts and disbursements in March 2013. Total revenues for the month were $395.5 million above (7.2 percent) estimates found in the Governor's proposed 2013-14 State budget.

Total revenues for the fiscal year through the end of March were $4.7 billion ahead of the Governor’s estimates.

“While the first nine months of revenue far exceeded expectation, income tax deposits over the next two weeks will show whether that uptick is solid or fleeting,” Chiang said. “The Governor and lawmakers have exercised discipline by waiting to make spending decisions until we can explain whether this surge reflects economic growth, or simply means that taxpayers paid their taxes earlier than usual.”

So far so good, although as Chiang noted, the next two weeks are worth watching to see if the "uptick is solid".  The Controller has a website showing daily income tax collections compared to last year ...

Thursday economic releases:
• 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 365 thousand from 385 thousand last week. The "sequester" budget cuts appear to be impacting weekly claims.

by Calculated Risk on 4/10/2013 06:34:00 PM

LPS released their Mortgage Monitor report for February today. According to LPS, 6.80% of mortgages were delinquent in February, down from 7.03% in January, and down from 7.28% in February 2012.

LPS reports that 3.38% of mortgages were in the foreclosure process, down from 3.41% in January, and down from 4.20% in February 2012.

This gives a total of 10.18% delinquent or in foreclosure. It breaks down as:

• 1,927,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 1,483,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 1,694,000 loans in foreclosure process.

For a total of ​​5,104,000 loans delinquent or in foreclosure in February. This is down from 5,854,000 in February 2012.

This following graph from LPS shows Foreclosure Starts and Foreclosure Sales.

Click on graph for larger image.

From LPS:

The February Mortgage Monitor report released by Lender Processing Services found an increase in loan “cure” rates (those loans that were delinquent in the prior month and are now current). The majority of cures were on loans one-to-two months delinquent, with approximately 500,000 loans curing in February alone. As LPS Applied Analytics Senior Vice President Herb Blecher explained, these cures were not unusual, but rises seen in loans three-to-five months delinquent and foreclosure-initiated categories were unexpected.

“Historically, we see these seasonal increases in cure rates in February and March each year,” Blecher said. “What stood out in this month’s data was where that increase was centered. February’s rise in cures was driven almost entirely by FHA loans, representing a 29 percent increase from January, and likely driven by revived modification activity related to the revisions to the FHA’s Loss Mitigation Home Retention options released late last year.

“We also looked at loan modification data released in the Office of the Comptroller of the Currency’s Mortgage Metrics report (aggregated by LPS) and saw that, after two years of steady decline, modification volume increased substantially in the last half of 2012, with about 280,000 modifications occurring during that time,” Blecher continued. “The majority of the increases in both Q3 and Q4 occurred in proprietary modifications as opposed to through the Home Affordable Modification Program. Given the current FHA activity, along with the FHFA’s recent announcement of its Streamlined Modification Initiative, we could see continued strength in modification volumes in the future.”

The second graph from LPS shows 90 day default percentage by vintage.  Clearly new loans are performing much better than the loans made during the bubble years.  This is even true for loans with similar risk attributes (same credit score, LTV).   Of course it helps that new borrowers are not "under water".

From LPS:

• More restrictive underwriting guidelines have led to extremely low default rates relative to “bubble” vintages

• The improvement in recent vintages extends to loans with similar risk attributes

• FHA is still supporting lower quality borrowers with higher default rates as a result

There is much more in the mortgage monitor.