by Calculated Risk on 6/14/2014 01:01:00 PM

The key report this week is housing starts for May on Tuesday.

For manufacturing, the May Industrial Production and Capacity Utilization report, and the June NY Fed (Empire State) and Philly Fed surveys, will be released this week. 

For prices, CPI will be released on Tuesday.

The FOMC meets on Tuesday and Wednesday, and the FOMC is expected to taper QE3 asset purchases another $10 billion per month at this meeting.

----- Monday, June 16th -----
8:30 AM: NY Fed Empire Manufacturing Survey for June. The consensus is for a reading of 15.0, down from 19.0 in May (above zero is expansion).

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for May.

This graph shows industrial production since 1967.

The consensus is for a 0.5% increase in Industrial Production, and for Capacity Utilization to increase to 78.9%.

10:00 AM: The June NAHB homebuilder survey. The consensus is for a reading of 47, up from 45 in May.  Any number below 50 indicates that more builders view sales conditions as poor than good.

----- Tuesday, June 17th -----
8:30 AM: Housing Starts for May.

Total housing starts were at 1.072 million (SAAR) in April. Single family starts were at 649 thousand SAAR in April.

The consensus is for total housing starts to decrease to 1.036 million (SAAR) in May.

8:30 AM: Consumer Price Index for May. The consensus is for a 0.2% increase in CPI in May and for core CPI to increase 0.2%.

----- Wednesday, June 18th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

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

2:00 PM: FOMC Meeting Announcement.  The FOMC is expected to reduce monthly QE3 asset purchases from $45 billion per month to $35 billion per month at this meeting.

2:00 PM: FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

2:30 PM: Fed Chair Janet Yellen holds a press briefing following the FOMC announcement.

----- Thursday, June 19th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 313 thousand from 317 thousand.

10:00 AM: the Philly Fed manufacturing survey for June. The consensus is for a reading of 13.0, down from 15.0 last month (above zero indicates expansion).

----- Friday, June 20th -----
10:00 AM: Regional and State Employment and Unemployment (Monthly) for May 2014

by Calculated Risk on 6/14/2014 08:15:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for June 13, 2014.

Changes and comments from surferdude808:

Back-to-back quiet weeks for changes to the Unofficial Problem Bank List. This week only Minnwest Bank Metro, Eagan, MN ($209 million) was removed as it found a merger partner to work its way off the list. After removal, the list holds 494 institutions with assets of $153.7 billion. A year ago, the list had 757 institutions with assets of $274.5 billion. Next week, we anticipate for the OCC to provide an update on its enforcement action activity through mid-May 2014.

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 494.

by Calculated Risk on 6/13/2014 08:22:00 PM

Just an update ... during the recession, I wrote about the troubles in Las Vegas and included a chart of visitor and convention attendance: Lost Vegas.

Since then Las Vegas visitor traffic recovered to a new record high in 2012, although visitor traffic was down slightly in 2013.

Convention attendance in 2013 was still about 18% below the peak level in 2006.  Here is the data from the Las Vegas Convention and Visitors Authority.  

Click on graph for larger image.

The blue bars are annual visitor traffic (left scale), and the red line is convention attendance (right scale). 

Through April, visitor traffic in 2014 is running 4.8% above 2013 - and on a record pace.

Convention traffic is barely up from last year, and is still way below the pre-recession peak.

In general, the gamblers are back ... but the conventions are still lagging behind.

by Calculated Risk on 6/13/2014 02:29:00 PM

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

On distressed: Total "distressed" share is down in all of these markets, mostly because of a sharp decline in short sales.

Short sales are down in all of these areas.

Foreclosures are down in most of these areas too, although foreclosures are up a little in a couple of areas.

The All Cash Share (last two columns) is mostly declining year-over-year. 

As investors pull back, the share of all cash buyers will probably continue to decline.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	May-14	May-13	May-14	May-13	May-14	May-13	May-14	May-13
Las Vegas	7.9%	31.8%	9.1%	10.3%	17.0%	42.1%	40.2%	57.9%
Reno**	11.0%	27.0%	6.0%	7.0%	17.0%	34.0%
Phoenix	3.9%	12.3%	6.7%	9.7%	10.7%	22.0%	29.5%	38.9%
Sacramento	7.0%	22.5%	8.3%	7.5%	15.3%	30.0%	20.5%	33.6%
Minneapolis	3.9%	6.8%	12.1%	19.9%	16.0%	26.7%
Mid-Atlantic	5.2%	8.2%	8.1%	7.2%	13.3%	15.5%	17.2%	16.7%
California *	6.0%	11.3%	6.9%	15.0%	12.9%	26.3%
Bay Area CA*	4.7%	10.4%	3.1%	6.5%	7.8%	16.9%	22.9%	27.6%
So. California*	6.6%	15.7%	5.8%	10.9%	12.4%	26.6%	25.8%	32.6%
Hampton Roads					21.3%	26.3%
Northeast Florida					36.5%	37.8%
Toledo							36.6%	33.8%
Des Moines							17.5%	17.3%
Tucson							31.3%	32.8%
Omaha							19.4%	14.1%
Georgia***							26.0%	NA
Houston			4.5%	9.4%
Memphis*			15.9%	21.5%
*share of existing home sales, based on property records **Single Family Only ***GAMLS

by Calculated Risk on 6/13/2014 10:31:00 AM

Here are some analyst comments on the upcoming FOMC meeting. From Nomura:

At the conclusion of the 17-18 June Federal Open Market Committee (FOMC) meeting, we expect the FOMC to announce another $10bn reduction in its asset purchase program. We will look to see if there is any mention of discussions around the exit strategy in the statement or in Chair Yellen’s press conference. We will also look out for any mention of the pace of adjustment when the Committee begins to raise rates. The Summary of Economic Projections (SEP) will also be released. Notably, based on the weak Q1 GDP numbers, we expect to see a downward revision to the FOMC’s GDP forecast for 2014.

And from Merrill Lynch:

The Fed is unlikely to make any meaningful policy changes in June: tapering should continue (bringing the asset purchase pace down to $35 bn per month) and the forward guidance should remain unchanged. The interesting discussions should revolve around various aspects of the exit strategy. There is some chance that Fed Chair Janet Yellen addresses aspects at her press conference, but more likely, we will have to wait until the minutes to get any details. ...

At this point, it would take a significant shift in the outlook to change the pace of tapering. In all likelihood, the Fed will taper $10 bn each in June, July, and September, leaving a $15 bn purchase pace at the October meeting. If the economy is deemed strong enough, they could taper the full amount then. Alternatively, should they want to hammer home a message of gradual exit, they could again taper $10 bn in October and then do the final $5 bn in December.

CR note: I've seen a suggestion that the FOMC might increase the pace of tapering at this meeting - they won't - and other suggestions that QE3 will never end - it will. I'll post some thoughts on the upcoming meeting this weekend.

by Calculated Risk on 6/13/2014 09:55:00 AM

Click on graph for larger image.

The preliminary Reuters / University of Michigan consumer sentiment index for June was at 81.2, down from 81.9 in May.

This was below the consensus forecast of 83.0. Sentiment has generally been improving following the recession - with plenty of ups and downs - and a big spike down when Congress threatened to "not pay the bills" in 2011, and another smaller spike down last October and November due to the government shutdown.

by Calculated Risk on 6/12/2014 07:16:00 PM

Several years ago I started following the Sacramento market to look for changes in the mix of houses sold (equity, 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 and 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 May 2014, 14.7% of all resales (single family homes) were distressed sales. This was down from last month, and down from 29.1% in May 2013. This is the post-bubble low.

The percentage of REOs was at 7.7%, and the percentage of short sales was 7.0%.

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 over the last 2 years (blue). 

Active Listing Inventory for single family homes increased 83.7% year-over-year in May. 

Cash buyers accounted for 20.5% of all sales, down from 33.6% in May 2013, and down from 21.9% 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 10.6% from May 2013, but conventional equity sales were up 7.5% 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.

by Calculated Risk on 6/12/2014 04:03:00 PM

From DataQuick: Bay Area Home Sales Constrained by Supply; Prices Continue to Rise

A total of 7,898 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 4.5 percent from 7,555 in April and down 7.5 percent from 8,541 in May last year, according to San Diego-based DataQuick.

Bay Area sales almost always increase from April to May. On average they have risen about 7.2 percent between those two months since 1988, when DataQuick’s statistics begin. ...

Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 3.1 percent of all resales, down from a revised 3.6 percent the month before, and down from 6.5 percent a year ago. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 17 years is 9.8 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 4.7 percent of Bay Area resales last month. That was up from an estimated 4.2 percent in April and down from 10.4 percent a year earlier.

Last month absentee buyers – mostly investors – purchased 20.5 percent of all Bay Area homes. That was up a hair from April’s revised 20.4 percent and down from 22.4 percent for May a year ago.
emphasis added

A few key year-over-year trends: 1) declining distressed sales, 2) generally declining investor buying, 3) declining total sales, but 4) some increase in non-distressed sales. Though total sales were down 7.5% year-over-year, the percent of non-distressed sales was up 3%.  There were 7,898 total sales this year in May, and 7.8% were distressed.  In May 2013, there were 8,541 total sales, and 16.9% were distressed.

by Calculated Risk on 6/12/2014 01:04:00 PM

From HotelNewsNow.com: SSTR: US hotel results for week ending 7 June

In year-over-year measurements, the industry’s occupancy increased 3.1 percent to 69.1 percent. Average daily rate increased 4.2 percent to finish the week at US$114.00. Revenue per available room for the week was up 7.4 percent to finish at US$78.81.
emphasis added

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and is at the highest level since 2000. 

The following graph shows the seasonal pattern for the hotel occupancy rate for the last 15 years using the four week average.

Click on graph for larger image.

The red line is for 2014 and black is for 2009 - the worst year since the Great Depression for hotels.  Note: 2001 was briefly worse than 2009 in September.

Year 2000 was the best year for hotel occupancy until late in the year when 2005 had the highest occupancy rate (due to hurricane Katrina).

Right now it looks like 2014 will be the best year since 2000 for hotels.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 6/12/2014 08:45:00 AM

On a monthly basis, retail sales increased 0.3% from April to May (seasonally adjusted), and sales were up 4.3% from May 2013. Sales in April were revised up sharply from a 0.1% increase to a 0.5% increase. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $437.6 billion, an increase of 0.3 percent from the previous month, and 4.3 percent above May 2013. ... The March 2014 to April 2014 percent change was revised from +0.1 percent to +0.5 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 ex-autos were up 0.1%. 

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 4.6% on a YoY basis (4.3% for all retail sales).

The increase in May was well below consensus expectations of a 0.6% increase - however sales in April were revised up sharply (sales in May were up 0.7% from the initial April release level).