by Calculated Risk on 10/18/2013 04:33:00 PM

A few items:

• From CBO: CBO's Next Monthly Budget Review Will Be Published Early in November

Because CBO largely shut down its operations during the recent lapse in appropriated funds, the agency will not issue its Monthly Budget Review in October. The next issue of that report will come out early in November and will discuss the budgetary results for fiscal year 2013.

No schedule on Fiscal 2013 results from Treasury yet.

• From the BEA: 2013 Release Schedule Revision

BEA is currently assessing the impact of the government shutdown on our release schedule and will post revisions to the release schedule as soon as possible.

• From the BLS yesterday: Updated Schedule of BLS News Releases. Here is a partial table of rescheduled BLS releases:

Release	Reference Period	Previously Scheduled Release Date	Revised Release Date
Metropolitan Area Employment and Unemployment	Aug-13	Wednesday, October 02, 2013	Monday, October 21, 2013
Employment Situation	Sep-13	Friday, October 04, 2013	Tuesday, October 22, 2013
U.S. Import and Export Price Indexes	Sep-13	Thursday, October 10, 2013	Wednesday, October 23, 2013
Job Openings and Labor Turnover Survey	Aug-13	Tuesday, October 08, 2013	Thursday, October 24, 2013
Producer Price Index	Sep-13	Friday, October 11, 2013	Tuesday, October 29, 2013
Consumer Price Index	Sep-13	Wednesday, October 16, 2013	Wednesday, October 30, 2013
Real Earnings	Sep-13	Wednesday, October 16, 2013	Wednesday, October 30, 2013
Employment Situation	Oct-13	Friday, November 01, 2013	Friday, November 08, 2013

• No update yet from the Census Bureau (Housing Starts, New Home sales, etc)

by Calculated Risk on 10/18/2013 01:22:00 PM

Here is a price index for commercial real estate that I follow. 

From CoStar: Commercial Real Estate Pricing Growth Levels Off in August Amid Uncertainty over Fed Tapering and Rising Interest Rates

PRICING GROWTH FOR COMMERCIAL PROPERTY SLOWED IN AUGUST AMID ANXIETY OVER FED’S TAPERING OF BOND PURCHASES AND RISE IN INTEREST RATES: The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted and the equal-weighted versions of the U.S. Composite Index—saw mixed movements for the month. The equal-weighted index, which reflects the pricing impact of more numerous smaller transactions, edged downward by 1.1% in August, while the value-weighted index, which is influenced by larger transactions, expanded by 1.6% during the same time period. On an annual basis, both indices advanced by nearly 10%. Despite investor reassurance following the Fed’s decision in September to delay the tapering of its quantitative easing policies, further economic uncertainty, largely stemming from the U.S. government shutdown and debt ceiling debate, may lead to further volatility in pricing in the near term.

POSITIVE ABSORPTION IN BOTH INVESTMENT GRADE AND GENERAL COMMERCIAL SEGMENTS SUPPORTS BROAD PRICING RECOVERY: Net absorption of available space across the three major commercial property types – office, retail and warehouse – continues to improve. For the first three quarters of 2013 net absorption among these three property types totaled more than 240 million square feet, the highest level for the first three quarters of a year since 2008. ...

TRANSACTION VOLUME REMAINS STEADY: The number of repeat sale transactions through August 2013 increased 15% from the same period one year ago, while the value of those transactions increased 17%. The percentage of commercial property selling at distressed prices remains near a four-and-a-half year low.
emphasis added

Click on graph for larger image.

This graph from CoStar shows the Value-Weighted and Equal-Weighted indexes.  CoStar reported that the Value-Weighted index is up 47.5% from the bottom (showing the earlier and stronger demand for higher end properties) and up 9.0% year-over-year. However the Equal-Weighted index is only up 15.7% from the bottom, and up 10.0% year-over-year.

Note: These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.

by Calculated Risk on 10/18/2013 10:03:00 AM

Economist Tom Lawler sent me the updated table below of short sales, foreclosures and cash buyers for several selected cities in September. 

Comments from CR: Tom Lawler has been sending me this table every month for a couple of years (or longer). I think it is very useful for looking at the trend for distressed sales and cash buyers in these areas. I sincerely appreciate Tom sharing this data with us.

Look at the first two columns in the table for Short Sales Share.  Short sales are down sharply from a year ago, and will probably really decline in early 2014.  It appears that the Mortgage Debt Relief Act of 2007 will not be extended again next year. Usually cancelled debt is considered income, but a provision of the 2007 Debt Relief Act allowed borrowers "to exclude certain cancelled debt on [a] principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief." (excerpt from IRS).  This relief expires on Dec 31, 2013.  As I've written before, plan to complete all short sales by the end of this year! 

Total "Distressed" Share. In most areas the share of distressed sales is down year-over-year (Hampton Roads is an exception).  Also there has been a decline in foreclosure sales in all of these cities except Springfield, Ill.  

The All Cash Share is declining in some cities (Phoenix, Las Vegas, Sacramento, Orlando), but steady in other areas.  When investors pull back in markets like Phoenix (already declining), the share of all cash buyers will probably decline.

In general it appears the housing market is slowly moving back to normal.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	Sep-13	Sep-12	Sep-13	Sep-12	Sep-13	Sep-12	Sep-13	Sep-12
Las Vegas	23.0%	44.8%	7.4%	13.6%	30.4%	58.4%	47.2%	54.8%
Reno	20.0%	41.0%	5.0%	12.0%	25.0%	53.0%
Phoenix	8.8%	27.0%	8.0%	12.9%	16.8%	39.9%	33.4%	44.0%
Sacramento	12.1%	35.4%	3.9%	15.4%	16.0%	50.8%	23.6%	35.9%
Minneapolis	6.0%	9.9%	15.9%	25.0%	21.9%	34.9%
Mid-Atlantic	7.7%	12.4%	8.2%	9.4%	15.9%	21.8%	18.4%	18.8%
Orlando	17.6%	28.4%	18.2%	23.7%	35.8%	52.1%	43.4%	53.0%
Bay Area CA*	8.6%	27.5%	3.6%	14.1%	12.2%	41.6%	24.0%	28.4%
So. California*	13.1%	28.0%	6.3%	16.6%	19.4%	44.6%	27.6%	32.2%
Hampton Roads					26.1%	25.4%
Northeast Florida					34.9%	44.1%
Chicago					31.0%	41.0%
Hampton Roads					26.1%	25.4%
Toledo							38.1%	35.9%
Tucson							29.8%	29.7%
Omaha							19.1%	15.8%
Pensacola							27.3%	34.4%
Des Moines							19.2%	19.9%
Houston			7.4%	16.1%
Memphis*			18.4%	26.6%
Birmingham AL			20.9%	26.6%
Springfield IL			14.2%	13.5%
*share of existing home sales, based on property records

by Calculated Risk on 10/18/2013 08:44:00 AM

From Zillow: Housing Market Shows Welcome Signs of Cooling in Q3

The pace of home value appreciation nationwide is slowing, and has even turned negative in some areas. But rather than being a bad sign for housing, this slowdown was expected and is, in fact, welcome in a handful of markets, according to the third quarter Zillow Real Estate Market Reports.

The U.S. Zillow Home Value Index stood at $163,000 as of the end of the third quarter, up 6.4 percent year-over-year and 1.2 percent from the end of the second quarter. But national home values in September remained the same as in August, and the pace of monthly home value growth has fallen in each of the past three months. Among the top 30 largest metro areas covered by Zillow, half showed negative monthly appreciation at the end of the third quarter. As recently as July, all of the top 30 metro areas showed positive monthly appreciation, with none exhibiting a monthly pace slower than 1 percent month-over-month.
...
"Far from being a negative sign, we’re relieved to see more noticeable signs of cooling in the market. If home values continued to rise as they have, relatively unchecked, we would almost certainly be headed into another bubble cycle, and nobody wants that,” said Zillow Chief Economist Dr. Stan Humphries. “This is more proof that the market recovery is entering a new phase, transitioning away from the bounce off the bottom we’ve been experiencing and finding a more sustainable level. This moderation should help consumers feel more at ease in their decisions to buy and sell, and will help keep the market balanced.”

The Zillow Home Value Forecast calls for annual appreciation rates to slow markedly over the next 12 months as moderation spreads, to an annual pace of 3.8 percent nationwide by September 2014.
emphasis added

With a little more inventory, and somewhat higher mortgage rates, a slowdown in house price appreciation makes sense.

by Calculated Risk on 10/17/2013 08:36:00 PM

From Jon Hilsenrath at the WSJ: Fed Unlikely to Trim Bond Buying in October

The Fed is unlikely to start curtailing its bond buying at its next policy meeting Oct. 29-30. Fed officials have said the decision depends on how the economic data evolve, but the data won't be very illuminating into November because the partial government shutdown closed the agencies that collect them.

"For those who really look at the data, it is going to basically delay thought of changing course," Richard Fisher, president of the Federal Reserve Bank of Dallas, said Thursday in an interview.
...
Fed officials could act at one of the following two meetings—Dec. 17-18 or Jan. 28-29. Their decision will turn on the strength of an economy that would still be a bit harder to read ...

We've been flying blind, and it will take some until all "instruments" are working again. Plus the shutdown probably slowed growth in Q4 - and the Fed will want to understand the economic impact of the shutdown before changing course. 

by Calculated Risk on 10/17/2013 05:27:00 PM

From housing economist Tom Lawler:

Based on local realtor association/board/MLS reports I’ve seen so far, I estimate that existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of about 5.26 million in September, down 4% from August’s seasonally-adjusted pace. While unadjusted sales this September showed faster YOY growth than was the case in August, business-day related seasonal factor differences, combined with a lower year-ago “comp” for September relative to August, are the reasons why the faster YOY growth translates into a lower monthly SA sales pace.

[CR Note: on adjustments, see table below]

On the inventory front, data from various local listings trackers, combined with local realtor association/board/MLS reports, would suggest that the number of existing homes for sale at the end of September was down only slightly from August. However, NAR inventory estimates typically show larger monthly declines in September than listings data and publicly-available realtor reports would suggest, for reasons that aren’t clear. For example, NAR estimates suggest that the number of existing homes for sale fell by 9.6% from the end of last August to the end of last September, a drop that vastly exceeded both what available listings data and local realtor reports would have suggested. If the NAR’s inventory estimate for this September were down 3.56% from August’s estimate, then this September’s inventory estimate would be unchanged from last September’s. Such a result is quite possible.

Finally, local realtor/MLS/board reports suggest that the NAR’s median home sales estimate will show significantly slower YOY growth for September than for August My best estimate is that the NAR’s estimate for the median existing SF home sales price in September will be around $198,800, up 11.1% from last September.

CR Note: The NAR is scheduled to report September existing home sales on Monday, October 21st.

As Lawler noted, there is a chance that the NAR will report inventory flat year-over-year for September (although it will probably be down slightly).

YOY Growth, Existing Home Sales, 2013 vs. 2012
	Unadjusted	Seasonally Adjusted	Difference	% Difference, Business Days
Jan-13	11.9%	9.5%	2.4%	5.0%
Feb-13	5.9%	9.5%	-3.6%	-5.0%
Mar-13	7.5%	10.8%	-3.3%	-4.5%
Apr-13	13.5%	9.7%	3.8%	4.8%
May-13	14.7%	12.0%	2.7%	0.0%
Jun-13	8.0%	14.7%	-6.7%	-4.8%
Jul-13	20.7%	17.2%	3.5%	4.8%
Aug-13	10.5%	13.2%	-2.7%	-4.3%
Sep-13proj	14.0%	10.0%	3.9%	5.3%

by Calculated Risk on 10/17/2013 04:38:00 PM

From the BLS: Updated Schedule of BLS News Releases

See the table below for some of the updated dates.

There will be concerns about the data for some time (this is the October employment report reference week). As an example, from the Cleveland Fed: Implications of the Government Shutdown on Inflation Estimates

Each month, the Bureau of Labor Statistics (BLS) releases estimates of the Consumer Price Index (CPI) and the Producer Price Index (PPI). The government shutdown, which ended late on October 16, caused a delay in the release of these statistics and many of the statistics and data products that rely on them. But the shutdown will also affect the accuracy of these statistics for months to come. This article outlines the impact of the shutdown, particularly on the accuracy of the CPI.

The repercussions on CPI estimates will continue for at least seven months. Some of these repercussions will occur later this month, but the majority of the influence will occur the next month, in November, when the monthly overall inflation estimates derived from the CPI will be subject to significant error.
emphasis added

Here are a few of the schedule changes:

Release	Reference Period	Previously Scheduled Release Date	Revised Release Date
Metropolitan Area Employment and Unemployment	Aug-13	Wednesday, October 02, 2013	Monday, October 21, 2013
Employment Situation	Sep-13	Friday, October 04, 2013	Tuesday, October 22, 2013
U.S. Import and Export Price Indexes	Sep-13	Thursday, October 10, 2013	Wednesday, October 23, 2013
Job Openings and Labor Turnover Survey	Aug-13	Tuesday, October 08, 2013	Thursday, October 24, 2013
Producer Price Index	Sep-13	Friday, October 11, 2013	Tuesday, October 29, 2013
Consumer Price Index	Sep-13	Wednesday, October 16, 2013	Wednesday, October 30, 2013
Real Earnings	Sep-13	Wednesday, October 16, 2013	Wednesday, October 30, 2013
Employment Situation	Oct-13	Friday, November 01, 2013	Friday, November 08, 2013

by Calculated Risk on 10/17/2013 01:24:00 PM

Several years ago I started following the Sacramento market to look for changes in the mix of houses sold (conventional, REOs, and short sales).  For a long time, not much changed. But over the last 2 years we've seen some significant changes with a dramatic shift from foreclosures (REO: lender Real Estate Owned) to short sales, and the percentage of total distressed sales declining sharply.

This data suggests healing in the Sacramento market, although some of this is due to investor buying.  Other distressed markets are showing similar improvement.  Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In September 2013, 16.0% of all resales (single family homes) were distressed sales. This was down from 19.0% last month, and down from 50.8% in September 2012. This is the lowest percentage of distressed sales - and therefore the highest percentage of conventional sales - since the association started tracking the data.

The percentage of REOs was at 3.9% (the lowest since the data was tracked), and the percentage of short sales decreased to 12.1%. (the lowest percentage for short sales since Sacramento started tracking short sales in June 2009).

Here are the statistics.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional sales recently (blue). 

Active Listing Inventory for single family homes increased 77.3% year-over-year in September.  This is the fifth consecutive month with a year-over-year increase in inventory - clearly inventory has bottomed in Sacramento. 

Cash buyers accounted for 23.6% of all sales, down from 25.4% last month (frequently investors).  This has been trending down, and it appears investors are becoming less of a factor in Sacramento.

Total sales were down 11% from September 2012, but conventional sales were up 51% compared to the same month last year. This is exactly what we expect to see in an improving distressed market - flat or even declining overall sales as distressed sales decline, and conventional sales increasing.

As I've noted before, we are seeing a similar pattern in other distressed areas.  This suggests what will happen in other areas: 1) Flat or declining overall existing home sales, 2) but increasing conventional sales,  3) Less investor buying, 4) more inventory, and 5) slower price increases.

by Calculated Risk on 10/17/2013 10:00:00 AM

From the Philly Fed: October Manufacturing Survey

Manufacturing growth in the region continued in October, according to firms responding to this month’s Business Outlook Survey. The survey’s broadest indicators for general activity, new orders, shipments, and employment were positive, signifying growth. The survey's indicators of future activity suggest continued optimism about growth over the next six months.

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, edged down from 22.3 in September to 19.8 this month. The index has now been positive for five consecutive months. ... The demand for manufactured goods, as measured by the current new orders index, increased 6 points, to 27.5, its highest reading since March 2011.

Labor market indicators showed improvement this month. The current employment index increased 5 points, to 15.4, its highest reading since May 2011.
emphasis added

This was above the consensus forecast of a reading of 15.0 for October.

Click on graph for larger image.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through October. The ISM and total Fed surveys are through September.

The average of the Empire State and Philly Fed surveys has been positive for five consecutive months.  This was a solid report and suggests further solid expansion in the ISM report for October.

by Calculated Risk on 10/17/2013 08:30:00 AM

The DOL reports:

In the week ending October 12, the advance figure for seasonally adjusted initial claims was 358,000, a decrease of 15,000 from the previous week's revised figure of 373,000. The 4-week moving average was 336,500, an increase of 11,750 from the previous week's revised average of 324,750.

The previous week was revised down from 374,000.

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 336,500.

Some of this recent increase in the four-week average was related to the government shutdown (and some related to processing issues in California).

Note: This information is collected by the states and was not delayed by the shutdown.