by Calculated Risk on 1/16/2015 09:15:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production decreased 0.1 percent in December after rising 1.3 percent in November. The decrease in December reflected a sharp drop in the output of utilities, as warmer-than-usual temperatures reduced demand for heating; excluding utilities, industrial production rose 0.7 percent. Manufacturing posted a gain of 0.3 percent for its fourth consecutive monthly increase. The index for mining increased 2.2 percent after falling in the previous two months. At 106.5 percent of its 2007 average, total industrial production in December was 4.9 percent above its level of a year earlier. For the fourth quarter of 2014 as a whole, industrial production advanced at an annual rate of 5.6 percent, with widespread gains among the major market and industry groups. Capacity utilization for the industrial sector decreased 0.3 percentage point in December to 79.7 percent, a rate that is 0.4 percentage point below its long-run (1972–2013) average.
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Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 12.7 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 79.7% is 0.4% below the average from 1972 to 2012 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production decreased 0.1% in December to 106.5. This is 27.2% above the recession low, and 5.7% above the pre-recession peak.

This was slightly below expectations.

by Calculated Risk on 1/16/2015 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.4 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.8 percent before seasonal adjustment.

The gasoline index continued to fall sharply, declining 9.4 percent and leading to the decrease in the seasonally adjusted all items index. The fuel oil index also fell sharply, and the energy index posted its largest one-month decline since December 2008, although the indexes for natural gas and for electricity both increased. The food index, in contrast, rose 0.3 percent, its largest increase since September.

The index for all items less food and energy was unchanged in December, following a 0.2 percent increase in October and a 0.1 percent rise in November. This was only the second time since 2010 that it did not increase.
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I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI. This was at the consensus forecast of a 0.4% decrease for CPI, and below the forecast of a 0.1% increase in core CPI.

by Calculated Risk on 1/15/2015 08:33:00 PM

From Freddie Mac: Mortgage Rates Decline for Third Consecutive Week

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates falling for the third consecutive week as bond yields continued to drop despite a strong employment report. Averaging 3.66 percent, the 30-year fixed-rate mortgage is at its lowest level since the week ending May 23, 2013 when it averaged 3.59 percent. This also marks the first time the 15-year fixed rate mortgage has fallen below 3 percent since the week ending May 30, 2013.

30-year fixed-rate mortgage (FRM) averaged 3.66 percent with an average 0.6 point for the week ending January 15, 2014, down from last week when it averaged 3.73 percent. A year ago at this time, the 30-year FRM averaged 4.41 percent.
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Friday:
• At 8:30 AM ET, the Consumer Price Index for December. The consensus is for a 0.4% decrease in CPI, and for core CPI to increase 0.1%.

• At 9:15 AM, the The Fed will release Industrial Production and Capacity Utilization for December. The consensus is for no change in Industrial Production, and for Capacity Utilization to decrease to 80.0%.

• At 9:55 AM, the University of Michigan's Consumer sentiment index (preliminary for January). The consensus is for a reading of 94.1, up from 93.6 in December.

by Calculated Risk on 1/15/2015 06:31:00 PM

From the National Multi Housing Council (NMHC): Apartment Markets Moderate Slightly in January NMHC Quarterly Survey

Apartment markets expanded in three of four areas in the January National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions, indicating a slight moderation of the pace of improvement. Only the sales volume index (44) dropped below 50, with market tightness (51), equity financing (55) and debt financing (71) showing continued expansion.

“The apartment markets continue to show strength in most areas,” said Mark Obrinsky, NMHC’s SVP of Research and Chief Economist. “Last year’s ramp-up in new construction finally signaled complete recovery on the supply side. Even so, demand for apartment residences remains strong enough to absorb the increase in deliveries—and then some, as occupancy rates edged up a bit more.”

The Market Tightness Index fell from 52 to 51. More than half (58 percent) of respondents reported unchanged conditions, and slightly over one-fifth (22 percent) saw conditions as tighter than three months ago. Looser conditions were reported by 20 percent of respondents. This is the fourth consecutive quarter where the index has indicated overall improving conditions.
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Click on graph for larger image.

This graph shows the quarterly Apartment Tightness Index. Any reading above 50 indicates tighter conditions from the previous quarter. This indicates market conditions were mostly unchanged over the last quarter.

As I've mentioned before, this index helped me call the bottom for effective rents (and the top for the vacancy rate) early in 2010.

by Calculated Risk on 1/15/2015 03:28:00 PM

From housing economist Tom Lawler:

Based on local realtor/MLS reports from across the country, I estimate that existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.15 million in December, up 4.5% from November’s pace and up 5.7% from last December’s pace.

On the inventory front, most realtor/MLS reports showed a bigger monthly decline this December compared to last December, and my “guesstimate” is that the NAR will report that the number of existing homes for sale at the end of December was 1,870, down 10.5% from November and up just 0.5% from last December.

Finally, local realtor/MLS data suggest that the national median existing SF home sales price last month was up by about 4.8% from a year earlier.

CR Note: Existing home sales for December will be released next week on Friday, January 23rd.

by Calculated Risk on 1/15/2015 02:36:00 PM

From DataQuick: Bay Area Home Sales and Prices Rise in December 2014

Home buying picked up steam late in 2014, with December posting strong month-over-month and year-over-year sales gains. ... A total of 7,456 new and resale houses and condos sold in the nine-county Bay Area in December 2014. That was up month over month 24.2 percent from 6,003 in November 2014 and up year over year 14.1 percent from 6,532 in December 2013, according to CoreLogic DataQuick data.
...
“The Bay Area’s residential real estate market ended 2014 on a cautiously optimistic note, with moderate year-over-year increases in both median price and sales counts,” said John Karevoll, CoreLogic DataQuick analyst. “Supply continues to be constrained, and the mortgage market remains difficult. As long-term trends, cash sales and investor purchases are declining slowly, but they are still significant market factors. We know that there is a significant amount of pent-up demand lying in wait, and there is a good chance the market could see a surge this spring and summer as more homes are put up for sale.”
...
Foreclosure resales accounted for 3.7 percent of all resales in December 2014, up from 2.8 percent in November 2014, and down from 4.6 percent in December 2013. Foreclosure resales in the Bay Area peaked at 52.0 percent in February 2009, while the monthly average over the past 17 years is 9.6 percent. Foreclosure resales are purchased homes that have been previously foreclosed upon in the prior 12 months.

Short sales made up an estimated 4.0 percent of Bay Area resales in December 2014, up from a revised 3.9 percent in November 2014 and down from 7.9 percent in December 2013. Short sales are transactions in which the sale price fell short of what was owed on the property.
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Last month I noted that it seemed like houses were moving again.  I wrote 'in my area it seems like a large number of homes went "pending" during the last few weeks' - and sure enough the data suggests a pickup in sales in December.

by Calculated Risk on 1/15/2015 01:22:00 PM

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

From CoStar: CRE Price Recovery Continues With Strong Showing in November

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 1% and 0.7%, respectively, in the month of November 2014, contributing to annual gains of 9.9% and 14.8%, respectively, for the 12 months ending in November 2014.
...
VALUE-WEIGHTED U.S. COMPOSITE INDEX SET A NEW HIGH-WATER MARK. Investors’ healthy appetite for core properties propelled growth in the value-weighted U.S. Composite Index, which surpassed its pre-recession peak previously set in 2007 by 5.1% in November 2014.

PRICE GROWTH ACCELERATED IN EQUAL-WEIGHTED INDEX. Price growth in the equal-weighted U.S. Composite Index, influenced more by smaller, non-core deals, accelerated to an annual pace of 14.8% in November 2014, from an average annual pace of 7.5% in 2013.
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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 at a record high, but the equal weighted is still 14% below the pre-recession peak.

There are indexes by sector and region too.

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

The distressed share is down from over 35% at the peak, but still somewhat elevated.

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

by Calculated Risk on 1/15/2015 10:10:00 AM

From the Philly Fed: January Manufacturing Survey

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased 18 points, from a revised reading of 24.3 in December to 6.3 this month.
...
The current employment index fell 10 points, from 8.4 to -2.0. ...

The diffusion index for future activity edged up by less than 1 point, to 50.9, in January and has remained near its current level over the past five months ...
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This was below the consensus forecast of a reading of 18.8 for January.

Earlier today from the NY Fed: Empire State Manufacturing Survey

The headline general business conditions index climbed eleven points to 10.0.
...
Labor market conditions were mixed, with the index for number of employees rising several points to 13.7, while the average workweek index remained negative at -8.4.
...
Indexes assessing the six-month outlook conveyed considerable optimism about future business activity. The index for future general business conditions rose nine points to 48.4, with nearly 60 percent of respondents expecting conditions to improve.

The NY Fed survey was above the consensus forecast of 5.0

Click on graph for larger image.

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

The average of the Empire State and Philly Fed surveys declined in January, but this still suggests a decent ISM report for January.

by Calculated Risk on 1/15/2015 08:35:00 AM

The DOL reported:

In the week ending January 10, the advance figure for seasonally adjusted initial claims was 316,000, an increase of 19,000 from the previous week's revised level. The previous week's level was revised up by 3,000 from 294,000 to 297,000. The 4-week moving average was 298,000, an increase of 6,750 from the previous week's revised average. The previous week's average was revised up by 750 from 290,500 to 291,250.

There were no special factors impacting this week's initial claims

The previous week was revised yp to 297,000.

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 298,000.

This was higher than the consensus forecast of 295,000, and the level suggests few layoffs.  Note: We might start seeing an increase in unemployment claims due to layoffs in oil producing states.

by Calculated Risk on 1/14/2015 07:41:00 PM

On mortgage rates from Matthew Graham at Mortgage News Daily: Mortgage Rates Back to 3.5% for Some

If you have a truly ideal credit profile and loan scenario, a few of the more aggressive lenders are quoting conforming, 30yr fixed mortgage rates at 3.5% today. Almost all other lenders are only an eighth of a point higher at 3.625% for top tier scenarios. This is a rate landscape that hasn't been seen since early May 2013. There's still quite a bit of ground to cover between here and the 3.125%-3.25% rates seen at the end of September 2012, but for all intents and purposes, 3.5%-3.625% was the upper end of the refi boom golden age from mid 2012 to mid 2013.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 295 thousand from 294 thousand.

• Also at 8:30 AM, the Producer Price Index for December from the BLS. The consensus is for a 0.4% decrease in prices, and a 0.1% increase in core PPI.

• Also at 8:30 AM, the NY Fed Empire State Manufacturing Survey for January. The consensus is for a reading of 5.0, up from -3.6 last month (above zero is expansion).

• At 10:00 AM, the Philly Fed manufacturing survey for January. The consensus is for a reading of 18.8, down from 24.3 last month (above zero indicates expansion).