by Calculated Risk on 5/07/2013 01:16:00 PM

Weekly Update: One of key questions for 2013 is Will Housing inventory bottom this year?. Since this is a very important question, I'm tracking inventory weekly in 2013. 

In normal times, there is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data was for March).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years. This is displayed on the graph below as a percentage change from the first week of the year (to normalize the data).

In 2010 (blue), inventory mostly followed the normal seasonal pattern, however in 2011 and 2012, there was only a small increase in inventory early in the year, followed by a sharp decline for the rest of the year.

Click on graph for larger image.

Note: the data is a little weird for early 2011 (spikes down briefly).

In 2010, inventory was up 15% by the end of March, and close to 20% by the end of April.

For 2011 and 2012, inventory only increased about 5% at the peak and then declined for the remainder of the year.

So far in 2013, inventory is up 12.2%. This is well above the peak percentage increases for 2011 and 2012 and suggests to me that inventory is near the bottom. It is possible that inventory could bottom this year - especially if inventory is up 15% to 18% from the seasonal lows by mid-to-late summer.

It will probably be close.  Inventory might have already bottomed in early 2013, or might bottom in early 2014.   This will be important for price increases ... once inventory starts to increase (more than seasonal), buyer urgency will wane, and I expect price increases will slow.

by Calculated Risk on 5/07/2013 11:46:00 AM

Press Release: Asking Home Prices Soared 8.3 Percent Year-Over-Year Nationwide, While Rents Rose Only 2.4 Percent

With the Spring house hunting season well underway, asking home prices rose 8.3 percent nationally year-over-year (Y-o-Y) in April. This time last year, asking prices fell 1.6 percent Y-o-Y. Seasonally adjusted, asking prices rose 1.3 percent month-over-month and 4.3 percent quarter-over-quarter. Regionally, asking prices were higher than one year ago in 95 of the 100 largest metros.

Strong job growth and the housing recovery go hand-in-hand. Nationally, job growth increased 1.5 percent Y-o-Y in March. In San Jose, Orange County, San Francisco, and Phoenix – where asking prices rose more than 18 percent Y-o-Y – job growth was well above the national average. In fact, only the Detroit suburb of Warren-Troy-Farmington Hills, MI was among the list of top 10 markets with the highest price gains without above average job growth.

Rents rose 2.4 percent Y-o-Y nationally, but rent growth has slowed. In 19 of the 25 largest rental markets, rent gains Y-o-Y was slower in April than in January. In some markets, rents and prices are moving in the opposite direction, or nearly so: the four metros with the slowest rent growth or even declines – San Francisco, Las Vegas, Sacramento, and Seattle – all had price gains of more than 15 percent Y-o-Y.

“Although some of the home-price growth is a bounce back from the housing bust, job growth is boosting housing demand and lifting home prices,” said Jed Kolko, Trulia’s Chief Economist. “Investors don’t deserve all the thanks – or blame – for rising prices. Households are doing their part, too, as the economy recovers and more people go back to work and get on more solid financial footing. Local markets with strong job growth will see home prices continue to recover even after investors decide to cash out their gains and exit the market.”

On rents, this is similar to the quarterly Reis report on apartments. It appears that rent increases are slowing.

More from Jed Kolko: Not Just Investors: Local Job Growth Also Supporting Home Price Gains

Note: These asking prices are SA (Seasonally Adjusted) - and adjusted for the mix of homes - and this suggests further house price increases over the next few months on a seasonally adjusted basis.

by Calculated Risk on 5/07/2013 10:11:00 AM

From the BLS: Job Openings and Labor Turnover Summary

There were 3.8 million job openings on the last business day of March, little changed from 3.9 million in February, the U.S. Bureau of Labor Statistics reported today. The hires rate (3.2 percent) and separations rate (3.1 percent) were little changed in March....
...
Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. ... The number of quits (not seasonally adjusted) was little changed over the 12 months ending in March for total nonfarm, total private, and government.

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for March, the most recent employment report was for April.

Click on graph for larger image.

Notice that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings decreased in March to 3.844 million, down from 3.899 million in February. The number of job openings (yellow) has generally been trending up, but openings are unchanged year-over-year compared to March 2012. 

Quits were down in March, and quits are mostly unchanged year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Not much changes month-to-month in this report - and the data is noisy month-to-month, but the general trend suggests a gradually improving labor market.

by Calculated Risk on 5/07/2013 09:01:00 AM

Notes: This CoreLogic House Price Index report is for March. The recent Case-Shiller index release was for February. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic Home Price Index Rises by 10.5 Percent Year Over Year in March

Home prices nationwide, including distressed sales, increased 10.5 percent on a year-over-year basis in March 2013 compared to March 2012. This change represents the biggest year-over-year increase since March 2006 and the 13th consecutive monthly increase in home prices nationally. On a month-over-month basis, including distressed sales, home prices increased by 1.9 percent in March 2013 compared to February 2013.

Excluding distressed sales, home prices increased on a year-over-year basis by 10.7 percent in March 2013 compared to March 2012. On a month-over-month basis, excluding distressed sales, home prices increased 2.4 percent in March 2013 compared to February 2013. Distressed sales include short sales and real estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that April 2013 home prices, including distressed sales, are expected to rise by 9.6 percent on a year-over-year basis from April 2012 and rise by 1.3 percent on a month-over-month basis from March 2013. Excluding distressed sales, April 2013 home prices are poised to rise 12 percent year over year from April 2012 and by 2.7 percent month over month from March 2013.
...
“For the first time since March 2006, both the overall index and the index that excludes distressed sales are above 10 percent year over year,” said Dr. Mark Fleming, chief economist for CoreLogic. “The pace of appreciation has been accelerating throughout 2012 and so far in 2013 leading into the home buying season.”

Click on graph for larger image.

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

The index was up 1.9% in March, and is up 10.5% over the last year.

The index is off 25.1% from the peak - and is up 11.9% from the post-bubble low set in February 2012.

The second graph is from CoreLogic. The year-over-year comparison has been positive for thirteen 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.

This was another very strong month-to-month increase.  I expect more inventory to come on the market and slow the price increases.

by Calculated Risk on 5/06/2013 09:47:00 PM

The recent controversy surrounding historian Niall Ferguson reminds me of this post some time ago by Invictus: Open Mouth, Insert Foot: Going Viral?

This post [is] about [Ferguson's] recent Bloomberg TV interview with Erik Schatzker and Sara Eisen. And, in particular, one very specific part of that interview where Ferguson makes what is well beyond what I could even charitably refer to as a rookie mistake.
...
At 3:55 into the clip, Sara asks Ferguson about the private sector job gains versus the massive public sector job losses we’ve seen under Obama. ...

Here’s what, by my transcription, Ferguson had to say (emphasis mine):

Well, that’s not really a part of the argument I made in the piece. The point I made in the piece was that the stimulus had a very short-term effect, which is very clear if you look , for example, at the Federal employment numbers there’s a huge spike in early 2010 and then it falls back down.

Niall, babe, I got one word for you: Census (pdf).

So basically Ferguson thought incorrectly the short term hiring for Census 2010 was related to the stimulus (back then I was reporting the jobs report using both the headline number and the ex-Census number). Very amusing ...

Tuesday economic releases:
• At 10:00 AM ET, the BLS will release the Job Openings and Labor Turnover Survey for March. The number of job openings has generally been trending up, and openings were up 11% year-over-year in February.  That was most job openings since May 2008. 

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

• At 3:00 PM, the Fed will release Consumer Credit for March. The consensus is for credit to increase $15.0 billion in March.

by Calculated Risk on 5/06/2013 02:50:00 PM

From the Federal Reserve: The April 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices

The April 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and demand for, bank loans to businesses and households over the past three months. This summary is based on responses from 68 domestic banks and 21 U.S. branches and agencies of foreign banks. In the April survey, domestic banks, on balance, reported having eased their lending standards and having experienced stronger demand in several loan categories over the past three months.

The survey results generally indicated that banks’ policies regarding lending to businesses eased over the past three months and demand increased, on balance. In particular, a relatively large fraction of domestic respondents reported having eased standards on C&I loans, and moderate to large net fractions of such respondents reportedly eased many terms on C&I loans to firms of all sizes. ...

On the household side, the survey results were more mixed. On balance, a few domestic banks reported having eased standards on prime residential mortgages over the past three months. For the fifth consecutive survey, respondents reported that demand for prime residential mortgage loans had strengthened on net. A small net fraction of respondents reported that they had eased standards on credit card and auto loans over the past three months, while standards on other consumer loans had remained about unchanged. On balance, banks reported having eased selected terms on auto loans, but terms on credit card and other consumer loans were reportedly little changed. emphasis added

In general this survey indicates lending standards are still tight, but some banks are loosening a little - and there is also increasing demand for certain loans. Here are some graphs from the Fed of lending standards and loan demand over time for various categories.

by Calculated Risk on 5/06/2013 12:07:00 PM

By request, here is an update to four key indicators used by the NBER for business cycle dating: GDP, Employment, Industrial production and real personal income less transfer payments.

Note: The following graphs are all constructed as a percent of the peak in each indicator. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.

These graphs show that some major indicators are still below the pre-recession peaks.

Click on graph for larger image.

This graph is for real GDP through Q1 2013.

Real GDP returned to the pre-recession peak in Q4 2011, and has hit new post-recession highs for six consecutive quarters.

At the worst point - in Q2 2009 - real GDP was off 4.7% from the 2007 peak.

This graph shows real personal income less transfer payments as a percent of the previous peak through the March report.

This measure was off 11.2% at the trough in October 2009.

Real personal income less transfer payments returned to the pre-recession peak in December, but that was due to a one time surge in income as some high income earners accelerated earnings to avoid higher taxes in 2013.   Real personal income less transfer payments declined sharply in January, and were 3.3% below the previous peak in March.

Real personal income less transfer payments might be the last major indicator to return to pre-recession levels (excluding the spike last December).

The third graph is for industrial production through March 2013.

Industrial production was off over 17% at the trough in June 2009, and has been one of the stronger performing sectors during the recovery.

However industrial production is still 1.3% below the pre-recession peak.  This indicator will probably return to the pre-recession peak in 2013.

The final graph is for employment and is through April 2013.  This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.

Payroll employment is still 1.9% below the pre-recession peak and will probably be back to pre-recession levels in 2014.

All of these indicators collapsed in 2008 and early 2009, and only real GDP is back to the pre-recession peak (personal income returned to the previous peak in December due to a one time increase in income). 

by Calculated Risk on 5/06/2013 08:38:00 AM

LPS released their Mortgage Monitor report for March today. According to LPS, 6.59% of mortgages were delinquent in March, down from 6.80% in February.

LPS reports that 3.37% of mortgages were in the foreclosure process, down from 4.19% in March 2012.

This gives a total of 9.96% delinquent or in foreclosure. It breaks down as:

• 1,842,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 1,466,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 1,689,000 loans in foreclosure process.

For a total of ​​4,997,000 loans delinquent or in foreclosure in March. This is down from 5,589,000 in March 2012.

Click on graph for larger image.

The first graph from LPS shows the number of non-current loans by delinquency bucket (30-60 days, 60-90 days, 90+ days, and in-foreclosure). The number of problem loans fell below 5 million for the first time since 2008.

Also note that short term delinquencies are close to normal - and LPS reports new problem loans are at the lowest level in 6 years - but there still 3 million loans that are 90+ days delinquent or in-foreclosure. This is still very high.

From LPS:

The March Mortgage Monitor report released by Lender Processing Services found that new problem loan rates (seriously delinquent mortgages that were current six months ago) have fallen below 1 percent for the first time since 2007. At 0.84 percent, the March new problem loan rate is approaching pre-crisis levels, and nearing the conditions of 2000-2004 when the rate averaged 0.55 percent. However, as LPS Applied Analytics Senior Vice President Herb Blecher explained, a borrower’s equity position is still a key indicator of his or her propensity to default.

“There has always been a clear correlation between higher levels of negative equity and new problem loan rates,” Blecher said. “Looking at the March data, we see that borrowers with equity are actually outperforming the national average -- at 0.6 percent, this group is quite close to pre-crisis norms. The further underwater a borrower gets, the higher those problem rates rise. Borrowers with loan-to-value (LTV) ratios of just 100-110 percent are actually defaulting at more than twice the national average. For those 50 percent or more underwater, we see new problem rates of 4 percent.

“Still, the overall equity trend has been a very positive one,” Blecher continued. “LPS’ latest data shows that the share of loans with LTVs greater than 100 percent has fallen 41 percent from a year ago. In total, there were approximately 9 million such loans, or about 18 percent of active mortgages. Some states, including the so-called ‘sand states’ (Arizona, Florida, Nevada and California), are still well above the national level, at an average 28 percent, but they, too, have seen improvement over the last year, with negative equity dropping over 40 percent across those four states since January 2012.”

There is much more in the mortgage monitor.

by Calculated Risk on 5/05/2013 09:35:00 PM

Monday economic releases:
• Early, the LPS March Mortgage Monitor report. This is a monthly report of mortgage delinquencies and other mortgage data.

• 2:00 PM ET, the April 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve. This might show some slight loosening in lending standards.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P and Dow futures are mostly flat (fair value).

Oil prices were up over the last week with WTI futures at $96.91 per barrel and Brent at $105.33 per barrel.

According to Gasbuddy.com (see graph at bottom), gasoline prices are down to a national average of $3.51 per gallon. Using the calculator from Professor Hamilton, and the current price of Brent crude oil, the national average should be around $3.47 per gallon. That is just below the current level according to Gasbuddy.com. A year ago gasoline was at $3.85 per gallon.

Note: 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

by Calculated Risk on 5/05/2013 03:57:00 PM

From Bloomberg: France Declares Austerity Over as Germany Offers Wiggle Room

“We’re witnessing the end of the dogma of austerity” as the only tool to fight the euro debt crisis, [French Finance Minister Pierre] Moscovici said today on Europe 1 radio. “We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.” ...

With German Chancellor Angela Merkel campaigning for a third term in a Sept. 22 vote, policy making among Europe’s elected leaders has ground to a crawl ...

There probably will not be any major changes in Europe until after Merkel's reelection.

More from Reuters: French finance minister says Europe's deficit move marks end of "austerity dogma"

The European Commission on Friday gave France two more years to meet its budget deficit target because of the country's poor economic outlook within the recession-hit euro zone.

"This is decisive, it's a turn in the history of the European project since the start of the euro," Moscovici told French radio Europe 1 in an interview. "We have witnessed the ending of a certain form of financial austerity and the end of the austerity dogma."

I doubt that the era of austerity is over - some policymakers in Europe and the US have invested their entire reputations on austerity - but maybe Europe will slow down the adjustment period.