by Calculated Risk on 9/13/2013 09:55:00 AM

Click on graph for larger image.

The preliminary Reuters / University of Michigan consumer sentiment index for September was at 76.8, down from the August reading of 82.1.

This was below the consensus forecast of 82.0. Sentiment has generally been improving following the recession - with plenty of ups and downs - and one big spike down when Congress threatened to "not pay the bills" in 2011.  This decline could be related to the situation in Syria ... it is probably too early to see the impact of the threats by Congress to "not pay the bills" in October.

by Calculated Risk on 9/13/2013 08:53:00 AM

On a monthly basis, retail sales increased 0.2% from July to August (seasonally adjusted), and sales were up 4.7% from August 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 August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $426.6 billion, an increase of 0.2 percent from the previous month, and 4.7 percent above August 2012. ... The June to July 2013 percent change was revised from +0.2 percent to +0.4 percent.

Click on graph for larger image.

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 28.7% from the bottom, and now 12.8% above the pre-recession peak (not inflation adjusted)

Retail sales ex-autos increased 0.1%. 

Excluding gasoline, retail sales are up 25.8% from the bottom, and now 13.3% 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 5.4% on a YoY basis (4.7% for all retail sales).

This was below the consensus forecast of 0.5% increase in retail sales, however sales for July were revised up.

by Calculated Risk on 9/12/2013 08:30:00 PM

Off topic: Elvis has left the building ... from the LA Times: NASA confirms Voyager 1 has left the solar system

NASA confirmed Thursday that after 36 years of space travel and months of heated debate among scientists, Voyager 1 has indeed left our solar system and had entered interstellar space more than a year ago.

"Voyager has boldly gone where no probe has gone before, marking one of the most significant technological achievements in the annals of the history of science," said John Grunsfeld, NASA's associate administrator for the Science Mission Directorate.

At a Thursday news conference in Washington, D.C., officials said the belated confirmation was based on new "key" evidence involving space plasma density. The evidence was outlined in a paper published online Thursday in the journal Science.

Lead author Don Gurnett, a University of Iowa plasma physicist and a Voyager project scientist, said the data showed conclusively that Voyager 1 had exited the heliopause — the bubble of hot, energetic particles that surrounds our sun and planets — and entered into a region of cold, dark space called the interstellar medium.

A small step on to the future colonization of the Milky Way.

Friday:
• At 8:30 AM ET, the Retail sales report for August will be released. The consensus is for retail sales to increase 0.5% in August, and to increase 0.3% ex-autos.

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

• At 9:55 AM, the Reuter's/University of Michigan's Consumer sentiment index (preliminary for September). The consensus is for a reading of 82.0, down from 82.1 in August.

• At 10:00 AM, the Manufacturing and Trade: Inventories and Sales (business inventories) report for July. The consensus is for a 0.3% increase in inventories.

by Calculated Risk on 9/12/2013 06:10:00 PM

From Freddie Mac today: Mortgage Rates Hold Steady

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates relatively unchanged from last week following a mixed employment report, and holding steady near their highs for the year. ...

30-year fixed-rate mortgage (FRM) averaged 4.57 percent with an average 0.8 point for the week ending September 12, 2013, unchanged from last week. A year ago at this time, the 30-year FRM averaged 3.55 percent.

15-year FRM this week averaged 3.59 percent with an average 0.7 point, unchanged from last week. A year ago at this time, the 15-year FRM averaged 2.85 percent.

The high this year for 30 year rates in the Freddie Mac survey was 4.58%, and the high for 15 year rates was 3.60%.

Click on graph for larger image.

This graph shows the 30 year fixed rate mortgage interest rate from the Freddie Mac Primary Mortgage Market Survey® compared to the MBA refinance index.

The refinance index has dropped sharply recently (down 71% since early May) and will probably decline further if rates stay at this level.

by Calculated Risk on 9/12/2013 01:34:00 PM

From DataQuick: Southland Median Sale Price Steady Month-to-Month, Up Sharply Year-Over-Year

A total of 23,057 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 0.8 percent from a revised 23,253 sales in July, and up 2.8 percent from 22,438 sales in August 2012, according to San Diego-based DataQuick.

Last month’s sales were 12.8 percent below the average number of sales – 26,452 – in the month of August since 1988, when DataQuick’s statistics begin. Southland sales haven’t been above average for any particular month in more than seven years. August sales have ranged from 16,379 in August 1992 to 39,562 in August 2003.

In a sign of continued market confidence, Southern California home buyers continue to put near-record amounts of their own money into residential real estate. In August they paid a total of $4.68 billion out of their own pockets in the form of down payments or cash purchases. That was down from a revised $5.18 billion in July and up from $4.24 billion a year ago. The out-of-pocket total peaked this May at $5.41 billion.

“There’s something for everyone in today’s housing data. Sellers have seen an amazing price jump from just a year ago, allowing many to finally sell at a profit. Home shoppers have more properties to choose as we begin to see a ‘supply response’ to higher values. Price pressures appear to be easing, though, amid higher mortgage rates, more supply and fewer cash and investor purchases. As we head into fall and winter, a slower time of year, we’ll probably see year-over-year price gains continue to taper,” said John Walsh, DataQuick president.

In August, foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 7.1 percent of the Southland resale market. That was down from a revised 7.7 percent the month before and down from 19.2 percent a year earlier. Last month’s foreclosure resale rate was the lowest since it was 5.5 percent in June 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 13.6 percent of Southland resales last month. That was the lowest level since it was also 13.6 percent in April 2009. Last month’s short sale figure was down from an estimated 14.6 percent the month before and down from 26.6 percent a year earlier.

Absentee buyers – mostly investors and some second-home purchasers – bought 26.3 percent of the Southland homes sold last month, which is the lowest share for any month since it was 25.1 percent in November 2011. Last month’s level was down from 27.4 percent the month before and down from 27.2 percent a year earlier.
emphasis added

This is moving in the right direction (fewer distressed sales, fewer absentee buyers).

by Calculated Risk on 9/12/2013 10:27:00 AM

From Nick Timiraos at the WSJ: Sellers Test Housing Market Amid Rising Prices

Housing inventories increased in August and stood just 2.5% below their levels of a year ago, offering the latest sign that more sellers are testing the market after swift home-price gains over the past year.

Nationally, there were 1.98 million homes listed for sale in August, according to a report released Thursday by Realtor.com. That was up by more than 24% from the low point in February and up 1% from July. Inventories have increased for six straight months.

While the overall level of homes for sale remains relatively depressed, the report suggests that inventory may have hit a bottom earlier this year after an extended two-year decline.
emphasis added

Note: Here is the realtor.com site (not updated with August data yet at posting time). The year-over-year decline is getting smaller each month. As an example, Realtor.com reported that the year-over-year decline was 16% in February, 7.3% in June, 5.2% in July - and is now down to just 2.5% (August 2013 inventory is 2.5% below August 2012 inventory).

This was the smallest year-over-year (YoY) decrease since 2011, and it appears the YoY change will turn positive soon.  My guess is the YoY change for inventory will probably turn positive in September and that inventory bottomed in early 2013.

by Calculated Risk on 9/12/2013 08:30:00 AM

The DOL reports:

In the week ending September 7, the advance figure for seasonally adjusted initial claims was 292,000, a decrease of 31,000 from the previous week's unrevised figure of 323,000. The 4-week moving average was 321,250, a decrease of 7,500 from the previous week's revised average of 328,750.

From MarketWatch:

a Labor Department official on Thursday said two states made changes to their computer systems that resulted in some claims not being processed in time. The Labor Day holiday may have also skewed the report. As a result, initial claims are likely to rise in the following week

The previous week was unchanged at 323,000.

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 decreased to 332,250.

The 4-week average is at the lowest level since October 2007 (before the recession started).  Claims were below the 330,000 consensus forecast.

Here is a long term graph of the 4-week average of weekly unemployment claims back to 1971.

Note: There were reporting delays and an adjustment for the holiday.

by Calculated Risk on 9/11/2013 07:19:00 PM

Early this morning, the MBA mortgage application survey was released showing a 71% decline in refinance applications since early May (purchase applications are down 13% over the same period, but still up year-over-year). It appears the refinance boom is over. From CNBC: Rates rising, banks hit the brakes on mortgage business

JPMorgan laid off more than 2,000 employees in early August—about half of them in originations, according to a person familiar with the situation. ... The August round of layoffs represented the first time the bank had moved to downsize its origination business, which surged as mortgage rates went to historic lows.

Other Wall Street banks are making similar moves, as a sharp rise in rates has kept consumers from taking out or refinancing mortgages.

Late last month, Bank of America notified 2,100 employees that their jobs were being cut; Wells Fargo has laid off more than 3,000 since July. Citigroup confirmed Wednesday the July closure of an office in Danville, Ill., that affected 120 jobs.

Most mortgage applications this year have been for refis (the refinance share was 76% of total applications in early May), and most of that business is going away.  And so are the jobs.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 330 thousand from 323 thousand last week.

• At 2:00 PM, the Monthly Treasury Statement for August. The CBO has already released their Monthly Budget Review for August 2013 showing a monthly deficit of $146 billion in August, and a year-to-date deficit of $750 through August (the fiscal year ends in September, and there will be a large surplus in September since quarterly estimated payments are due in mid-September. The annual deficit for fiscal 2013 should be around $650 billion or 4% of GDP, down sharply from 7.0% of GDP in fiscal 2012.

by Calculated Risk on 9/11/2013 04:13:00 PM

For laughs, a collection of a few of Jim's gems from 2008 ...

by Calculated Risk on 9/11/2013 11:45:00 AM

From Kris Hudson at the WSJ: New-Home Sales Not So August

A survey of 273 builders by John Burns Real Estate Consulting in Irvine, Calif., found that the respondents’ sales of new homes declined by 4% in August from a month earlier. In past years, August typically has yielded a 2% gain from the July figure. Burns estimates that its survey, conducted Aug. 29 to Sept. 3, spans roughly 16% of new-home sales in the U.S.

Perhaps more telling: far fewer of Burns’s survey respondents reported raising their prices in August than had in previous months. Of the respondents in August, 47% reported raising prices, 48% held prices steady and 5% lowered prices—the largest percentage of reductions since March 2012.

Those figures show substantial change from the results of Burns’s July survey in which 64% of builders reported raising prices, 36% held them study and one builder—statistically 0%—said it cut prices.

This is similar to the report from home builder Hovnanian earlier this week.

Builders have been raising prices significantly, and combined with rising mortgage rates, this has slowed down new home buying.

Click on graph for larger image in graph gallery.

However, as this graph shows (through July), new home sales are still historically low, and I expect sales to continue to increase over the next few years. 

But I do think the new home price increases will slow sharply.