by Calculated Risk on 7/22/2014 11:48:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.0% annualized rate) in June. The 16% trimmed-mean Consumer Price Index also increased 0.1% (1.8% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.3% (3.1% annualized rate) in June. The CPI less food and energy increased 0.1% (1.6% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed has the median CPI details for June here. Motor fuel was up sharply in June.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.3%, the trimmed-mean CPI rose 1.9%, and the CPI less food and energy rose 1.9%. Core PCE is for May and increased just 1.5% year-over-year.

On a monthly basis, median CPI was at 2.0% annualized, trimmed-mean CPI was at 1.8% annualized, and core CPI increased 1.6% annualized.

There key measures of inflation have moved up over the last few months, but on a year-over-year basis these measures suggest inflation remains at or below the Fed's target of 2%. 

by Calculated Risk on 7/22/2014 10:14:00 AM

The NAR reports: Existing-Home Sales Up in June, Unsold Inventory Shows Continued Progress

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 2.6 percent to a seasonally adjusted annual rate of 5.04 million in June from an upwardly-revised 4.91 million in May. Sales are at the highest pace since October 2013 (5.13 million), but remain 2.3 percent below the 5.16 million-unit level a year ago. ...

Total housing inventory at the end of June rose 2.2 percent to 2.30 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace, unchanged from May. Unsold inventory is 6.5 percent higher than a year ago, when there were 2.16 million existing homes available for sale.

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in June (5.04 million SAAR) were 2.6% higher than last month, but were 2.3% below the June 2013 rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 2.30 million in June from 2.25 million in May.   Headline inventory is not seasonally adjusted, and inventory usually increases from the seasonal lows in December and January, and peaks in mid-to-late summer.

The third graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory increased 6.5% year-over-year in June compared to June 2013.  

Months of supply was at 5.5 months in June.

This was above expectations of sales of 4.99 million.  For existing home sales, the key number is inventory - and inventory is still low, but up solidly year-over-year.    I'll have more later ...

by Calculated Risk on 7/22/2014 08:35:00 AM

From the Bureau of Labor Statistics (BLS): Consumer Price Index - June 2014

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in June on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.1 percent before seasonal adjustment.

In contrast to the broad-based increase last month, the June seasonally adjusted increase in the all items index was primarily driven by the gasoline index. It rose 3.3 percent and accounted for two-thirds of the all items increase.
...
The index for all items less food and energy also decelerated in June, increasing 0.1 percent after a 0.3 percent increase in May.
emphasis added

On a year-over-year basis, CPI is up 2.1 percent, and core CPI is up also up 1.9 percent.  This was close to the consensus forecast of a 0.3% increase for CPI, and a 0.2% increase in core CPI.

Note: CPI-W (used for cost of living adjustment, COLA) is up 2.0% year-over-year in June.  The COLA is calculated using the average Q3 data (July, August, and September).

I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 7/21/2014 08:01:00 PM

Here is a followup on an earlier article concerning short sale fraud, from E. Scott Reckard at the LA Times: Former BofA short-sales employee gets prison term for taking bribes

A former Bank of America mortgage employee was sentenced to 30 months in prison for pocketing $1.2 million in payoffs to approve sales of distressed properties for far less than their actual value.
...
Plea agreements filed by three other defendants at the time of Lauricella's arrest indicated that the manipulation of Southland home sales for illicit profit was widespread.

"It's part of a large, ongoing investigation," Katzenstein said. "There are a large number of related cases."

Short sale fraud was widespread, especially in the 2009 through 2012 period. Fraud has always been a key problem with short sales (the agent represents the "seller" who has no equity in the home - and this creates an obvious agency problem with unscrupulous agents).

There are many types of short sales fraud (money under the table to either seller or agent, agents not actually marketing property, etc.), and unfortunately most of the fraud will never be prosecuted - but we can still hope some more of them will be caught.

Tuesday:
• At 8:30 AM ET, the Consumer Price Index for June. The consensus is for a 0.3% increase in CPI in June and for core CPI to increase 0.2%.

• At 9:00 AM, the FHFA House Price Index for May. This was original a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.3% increase.

• At 10:00 AM, Existing Home Sales for June from the National Association of Realtors (NAR). The consensus is for sales of 4.99 million on seasonally adjusted annual rate (SAAR) basis. Sales in May were at a 4.89 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 4.96 million SAAR.

• Also at 10:00 AM, the Richmond Fed Survey of Manufacturing Activity for July. The consensus is for a reading of 5.5, up from 3 in June.

by Calculated Risk on 7/21/2014 04:30:00 PM

From housing economist Tom Lawler:

NVR, Inc. the fourth largest US home builder with a heavy concentration in the Mid-Atlantic region, reported that net home orders in the quarter ended June 30, 2014 totaled 3,415, up 4.2% from the comparable quarter of 2013. Net orders per active community were down 4.7% YOY. NVR’s average net order price last quarter was $368,000, up 1.9% from a year ago, but virtually unchanged from the previous quarter.

For the first two quarters of 2014 NVR’s net home orders were down 0.7% from the first half of 2013, while net orders per active community were down 9.5%. Home settlements last quarter totaled 2,943, up 2.3% from the comparable quarter of 2013, at an average sales price of $368,200, up 6.8% from a year ago and up 1.9% from the previous quarter. Home settlements in the first half of 2014 were virtually unchanged from the first half of 2013.

 The company’s order backlog at the end of June was 6,513, down 1.3% from last June, at an average order price of $374,100, up 4.3% from last June but virtually unchanged from the previous quarter. NVR controlled (owned or optioned) 67,500 lots at the end of June, up 10.3% from a year earlier and up 22.7% from two years earlier.

by Calculated Risk on 7/21/2014 01:42:00 PM

CR Note: If you want to understand subprime lending, I strongly suggest the following post from my former co-blogger Doris "Tanta" Dungey. This was written in 2007, but the concepts are forever. Read it all.

What Is "Subprime"?

For other Tanta posts, see: The Compleat UberNerd and Compendium of Tanta's Posts

by Calculated Risk on 7/21/2014 11:05:00 AM

Here is another weekly update on housing inventory ...

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

The Realtor (NAR) data is monthly and released with a lag (the most recent data released was for May and indicated inventory was up 6.0% year-over-year).   Existing home sales for June will be released tomorrow.

Fortunately Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data, for 54 metro areas, for the last several years.

Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

In 2013 (Blue), inventory increased for most of the year before declining seasonally during the holidays.  

Inventory in 2014 (Red) is now 15.0% above the same week in 2013. (Note: There are differences in how the data is collected between Housing Tracker and the NAR).

Inventory is also about 2.7% above the same week in 2012.  According to several of the house price indexes, house prices bottomed in early 2012, and low inventories were a key reason for the subsequent price increases.  Now that inventory is back above 2012 levels, I expect house price increases to slow (and possibly decline in some areas).

Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess was inventory would be up 10% to 15% year-over-year at the end of 2014 based on the NAR report.  Right now it looks like inventory might increase more than I expected.

by Calculated Risk on 7/21/2014 08:39:00 AM

The Chicago Fed released the national activity index (a composite index of other indicators): Index shows economic growth decelerated slightly in June

Led by slower growth in production-related indicators, the Chicago Fed National Activity Index (CFNAI) edged down to +0.12 in June from +0.16 in May. Two of the four broad categories of indicators that make up the index made nonpositive contributions to the index in June, but two of the four categories increased from May.

The index’s three-month moving average, CFNAI-MA3, decreased to +0.13 in June from +0.28 in May, marking its fourth consecutive reading above zero. June’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.
emphasis added

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity was somewhat above the historical trend in June (using the three-month average).

According to the Chicago Fed:

What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

by Calculated Risk on 7/20/2014 09:39:00 PM

Monday:
• At 8:30 AM ET, the Chicago Fed National Activity Index for June. This is a composite index of other data.

Weekend:
• Schedule for Week of July 20th

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down slightly and DOW futures are down 7 (fair value).

Oil prices moved up over the last week with WTI futures at $102.93 per barrel and Brent at $107.16 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.57 per gallon (down about a dime from a year ago).  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 7/20/2014 11:49:00 AM

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

From CoStar: Value-Weighted U.S. Composite Price Index Approaches Prerecession Peak Levels

COMMERCIAL REAL ESTATE PRICES POST DOUBLE-DIGIT ANNUAL GAINS IN MAY: The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—increased by 0.9% and 1.2%, respectively, in the month of May 2014, and 11.4% and 11.7% respectively, year over year, reflecting a broad improvement in market fundamentals seen across all property types. The value-weighted U.S. Composite Index, which is heavily influenced by core property transactions, has now risen within 1% of its prerecession peak level reached in 2007, while its equal-weighted counterpart, which is more influenced by smaller non-core property sales, has recovered to within 20% of its 2007 high water mark.
...
DISTRESS LEVELS CONTINUE TO DISSIPATE: The percentage of commercial transactions involving distressed assets has declined to 10.5% in May 2014 from over 17% one year earlier. In the multifamily and industrial sectors, the distress share of total sales fell into the single digits, while it remains comparatively high at 11% in the retail sector and 17% in the office sector, suggesting there is more room for pricing appreciation. The share of distress trades in late-recovery markets such as Chicago, Atlanta, and Detroit remain near 20%, while in the early-recovery, coastal markets of Los Angeles, San Francisco and San Jose, distress levels are nearly non-existent.
emphasis added

Click on graph for larger image.

This graph from CoStar shows the the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index indexes.

 The value weighted index is almost back to the pre-recession peak, however the equal weighted index is about 20% below the pre-recession peak.

The second graph shows the percent of distressed "pairs".

The distressed share is down from over 30% at the peak, to 10.5% in May.

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