by Calculated Risk on 4/20/2016 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 15, 2016.
...
The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 17 percent higher than the same week one year ago.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.83 percent from 3.82 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

Refinance activity was higher in 2015 than in 2014, but it was still the third lowest year since 2000.

Refinance activity is picking again with lower rates.


The second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is 17% higher than a year ago.

by Calculated Risk on 4/19/2016 06:20:00 PM

One more comment on housing starts, here is my prediction from the beginning of this year:

Most analysts are looking for starts to increase to around 1.25 million in 2016, and for new home sales around 560 thousand. This would be an increase of around 12% for both starts and new home sales.

I think there will be further growth in 2016, but I'm a little more pessimistic than some analysts. Some key areas - like Houston - will be hit hard by the decline oil prices. And I think growth will slow for multi-family starts. Also, to achieve double digit growth for new home sales in 2016, the builders would have to offer more lower priced homes (the builders have focused on higher priced homes in recent years).  There has been a shift to offering more affordable new homes, but it takes time.

My guess is growth of around 4% to 8% in 2016 for new home sales, and about the same percentage growth for housing starts.  Also I think the mix between multi-family and single family starts will shift a little more towards single family in 2016.

So far housing starts are up 14.5% year-over-year for the comparable period (January through March). I expect the year-over-year change to slow sharply. To reach the bottom of my predicted range (4% year-over-year), starts could be flat for the rest of the year compared to the same period in 2015.  That will still be decent growth all things considered (slow down in oil producing areas and in multi-family).

Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM, Existing Home Sales for March from the National Association of Realtors (NAR). The consensus is for 5.27 million SAAR, up from 5.08 million in February.

• During the day, the AIA's Architecture Billings Index for March (a leading indicator for commercial real estate).

by Calculated Risk on 4/19/2016 01:15:00 PM

Economist Tom Lawler sent me a preliminary table below of short sales, foreclosures and all cash sales for a few selected cities in March.

On distressed: Total "distressed" share is down in all of these markets.

Short sales and foreclosures are down in all of these 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
	Mar- 2016	Mar- 2015	Mar- 2016	Mar- 2015	Mar- 2016	Mar- 2015	Mar- 2016	Mar- 2015
Las Vegas	5.9%	8.3%	7.1%	9.3%	13.0%	17.6%	27.7%	32.4%
Reno**	3.0%	5.0%	3.0%	8.0%	6.0%	13.0%
Phoenix							24.6%	27.5%
Sacramento	4.5%	5.4%	5.5%	6.9%	10.0%	12.4%	17.3%	19.3%
Minneapolis	2.5%	3.0%	10.9%	12.4%	13.4%	15.4%
Mid-Atlantic	4.4%	4.7%	13.6%	14.0%	18.0%	18.8%	18.3%	18.2%
Riverside	2.4%	3.5%	3.2%	5.0%	5.6%	8.5%	18.2%	19.2%
San Bernardino	2.4%	4.1%	3.2%	5.2%	5.6%	9.3%	20.7%	21.8%
Riverside	2.4%	3.5%	3.2%	5.0%	5.6%	8.5%	18.2%	19.2%
Richmond VA			9.8%	11.9%			17.3%	18.0%
Chicago (city)					19.6%	21.9%
Northeast Florida					19.9%	30.9%
Toledo							30.6%	32.7%
Tucson							25.8%	32.0%
Georgia***							21.0%	23.2%
Omaha							16.3%	16.1%
Pensacola							28.3%	33.4%
Memphis			15.0%	15.3%
Springfield IL**					11.2%	12.1%	18.1%	N.A.
*share of existing home sales, based on property records **Single Family Only ***GAMLS

by Calculated Risk on 4/19/2016 10:12:00 AM

Earlier: Housing Starts decreased to 1.089 Million Annual Rate in March

The housing starts report this morning was below consensus, however there were upward revisions to the prior two months (combined).  Still a decent report.  Starts were up 14.2% from March 2015, but March was weak last year (see the first graph).

The key take away from the report is that multi-family is slowing, and single family growth is ongoing year-over-year.

Total housing starts were up 14.2% year-over-year, and single family was up 22.6%.

This graph shows the month to month comparison between 2015 (blue) and 2016 (red).

The comparison for March was easy, however the year-over-year comparisons will be more difficult going forward.

Year-to-date starts are up 14.5% compared to the same period in 2015, but that will clearly slow with the more difficult comparisons for the remainder of the year.

Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

The blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) increased steadily over the last few years, and completions (red line) have lagged behind - but completions have been catching up (more deliveries), and will continue to follow starts up (completions lag starts by about 12 months).

Multi-family completions are increasing sharply year-over-year.

I think most of the growth in multi-family starts is probably behind us - in fact multi-family starts probably peaked in June 2015 (at 510 thousand SAAR) - although I expect solid multi-family starts for a few more years (based on demographics).

The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

Note the exceptionally low level of single family starts and completions.  The "wide bottom" was what I was forecasting several years ago, and now I expect several years of increasing single family starts and completions.

The housing recovery continues, but I expect most of the growth will be from single family going forward.

by Calculated Risk on 4/19/2016 08:39:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,089,000. This is 8.8 percent below the revised February estimate of 1,194,000, but is 14.2 percent above the March 2015 rate of 954,000.

Single-family housing starts in March were at a rate of 764,000; this is 9.2 percent below the revised February figure of 841,000. The March rate for units in buildings with five units or more was 312,000.

Building Permits:
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,086,000. This is 7.7 percent below the revised February rate of 1,177,000, but is 4.6 percent above the March 2015 estimate of 1,038,000.

Single-family authorizations in March were at a rate of 727,000; this is 1.2 percent below the revised February figure of 736,000. Authorizations of units in buildings with five units or more were at a rate of 324,000 in March.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) decreased in March compared to February.  Multi-family starts are down 2% year-over-year.

Single-family starts (blue) decreased in March, but are up 23% year-over-year.



The second graph shows total and single unit starts since 1968.

 The second graph shows the huge collapse following the housing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically low),

Total housing starts in March were below expectations, however combined starts for January and February were revised up.  I'll have more later ...

by Calculated Risk on 4/18/2016 08:06:00 PM

Tuesday:
• At 8:30 AM, Housing Starts for March. Total housing starts decreased to 1.178 million (SAAR) in February. Single family starts increased to 822 thousand SAAR in February. The consensus for 1.167 million, down from the February rate.

From Matthew Graham at Mortgage News Daily: Mortgage Rates Hold Steady Despite Market Volatility

Most lenders have been quoting top tier conventional 30yr fixed rates of either 3.5 or 3.625%, though there are a few laggards at 3.75% and even fewer standouts at 3.375%.

by Calculated Risk on 4/18/2016 04:34:00 PM

From housing economist Tom Lawler: Early Look at Existing Home Sales in March

Based on publicly-available state and local realtor/MLS reports released through today, I project that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.27 million in March, up 3.7% from February’s preliminary pace (which should be revised up slightly), and up 0.4% from last March’s seasonally adjusted pace. Unadjusted sales should register a slightly higher YOY gain, as there was one more business day this March compared to last March.

Local realtor/MLS data suggest that the NAR’s estimate of the inventory of existing homes for sale at the end of March should be about 5.0% higher than February’s preliminary estimate, and down 1.8% from last February.

Finally, local/realtor/MLS data suggest that the NAR’s estimate of the median existing single-family home sales price in March should be up by about 4.7% from a year earlier.

CR Note: March existing home sales will be released on Wednesday, and the The consensus is for 5.27 million SAAR (the same as Lawler).

by Calculated Risk on 4/18/2016 02:11:00 PM

Here is an update to a list I posted several years ago with my ranking of economic data releases.

These lists are not exhaustive (I'm sure I left a few off), and the rankings are not static. As an example, a few years ago I ranked initial weekly unemployment claims as ‘B List’ data, but now that claims are close to normal levels, I've moved weekly claims down to the 'C List'.  Currently I'm watching measures of household debt a little closer and I've moved up the NY Fed's quarterly "Household Debt and Credit Report" to the C-list.

Note: There has been some research by Wall Street analysts about how "surprises" for many of these indicators impact the stock market. In general the ranking is similar with the employment situation report being #1.

The NAR existing home sales report is difficult to rank.  'For sale' inventory is important - almost "B-List"  - but the headline sales number is more "C-List". 

For each indicator I've included a link to the source and a recent post with graphs (in parenthesis).

Some of the lower ranked data is useful as leading indicators. As an example, the Architecture Billings Index is a leading indicator for investment in commercial real estate. And the NMHC apartment survey leads changes in apartment rents and vacancy rates. Also some of the lower ranked data helps forecast some of the more important data.

A-List
• BLS: Employment Situation Report, (March Employment Report: 215,000 Jobs, 5.0% Unemployment Rate and Comments: Another Solid Employment Report)
• BEA: GDP Report (quarterly) (Q4 GDP Revised Up to 1.4% Annual Rate)

B-List
• Census: New Home Sales (New Home Sales increased to 512,000 Annual Rate in February)
• Census: Housing Starts (Housing Starts increased to 1.178 Million Annual Rate in February and Comments on February Housing Starts)
• ISM Manufacturing Index (ISM Manufacturing index increased to 51.8 in March)
• Census: Retail Sales (Retail Sales decreased 0.3% in March)
• BEA: Personal Income and Outlays (Personal Income increased 0.2% in February, Spending increased 0.1%)
• Fed: Industrial Production (Fed: Industrial Production decreased 0.6% in March)
• BLS: Core CPI (Key Measures Show Inflation close to 2% in March)

C-List
• NAR: Existing Home Sales (Existing Home Sales decreased in February to 5.08 million SAAR)
• DOL: Weekly Initial Unemployment Claims (Weekly Initial Unemployment Claims decrease to 253,000)
• Manufacturers: Light Vehicle Sales (U.S. Light Vehicle Sales decline to 16.45 million annual rate in March)
• Philly Fed: Philly Fed Index (Philly Fed Manufacturing Survey showed Expansion in March)
• NY Fed Empire State Manufacturing Index (NY Fed: April "General business conditions climbed nine points, highest in more than a year")
• Chicago ISM: Chicago PMI (Chicago PMI increases to 53.6)
• Census: Durable Goods
• ISM Non-Manufacturing Index (ISM Non-Manufacturing Index increased to 54.5% in March)
• House Prices: Case-Shiller and CoreLogic (Case-Shiller: National House Price Index increased 5.4% year-over-year in January and CoreLogic: House Prices up 6.8% Year-over-year in February)
• BLS: Job Openings and Labor Turnover Survey (BLS: Jobs Openings "little changed" in February)
• Census: Construction Spending (Construction Spending decreased 0.5% in February)
• Census: Trade Balance (Trade Deficit Increased in February to $47.1 Billion)
• MBA: Mortgage Delinquency Data (Quarterly) (MBA: Mortgage Delinquency and Foreclosure Rates Decrease in Q4)
• Black Knight: Mortgage Delinquency Data (Black Knight's First Look at February Mortgage Data: Delinquency rate lowest since April 2007)
• CoreLogic and Zillow: Negative Equity Report and Zillow (quarterly) (CoreLogic: "1 Million US Borrowers Regained Equity in 2015")
• AIA: Architecture Billings Index (AIA: "Modest Expansion for Architecture Billings Index")
• NY Fed: Household Debt and Credit Report (Quarterly) (NY Fed: Household Debt Increased "Modestly" in Q4 2015, Delinquency Rates Declined)

D-List
• Fed: Household Debt Service and Financial Obligations Ratios (Quarterly)
• Fed: Flow of Funds (Quarterly)
• Richmond Fed: Richmond Fed Manufacturing Index
• Kansas City Fed: Kansas City Fed Manufacturing Index
• Dallas Fed: Dallas Fed Manufacturing Index
• Reis: Office, Mall, Apartment Vacancy Rates (Quarterly)
• NMHC Apartment Survey (Quarterly)
• Univ. of Michigan Consumer Sentiment Index
• MBA: Mortgage Purchase Applications Index
• NAHB: Housing Market Index ( NAHB: Builder Confidence unchanged at 58 in April)
• Census: Housing Vacancy Survey (Quarterly)
• Fed: Senior Loan Officer Survey (Quarterly)
• ATA: Trucking
• NFIB: Small Business Survey
• STR: Hotel Occupancy
• NRA: Restaurant Performance Index
• Fed: Consumer Credit
• DOT: Vehicle Miles Driven
• LA and Long Beach Port Traffic
• BLS: Producer Price Index
• ADP Employment Report
• Conference Board Confidence Index
• NAR: Pending Home Sales

Sources (Government):
BEA: Bureau of Economic Analysis
BLS: Bureau of Labor Statistics
Census: Census Bureau
DOL: Dept of Labor
DOT: Dept. of Transportation
Fed: Federal Reserve

Sources (Industry):

AIA: American Institute of Architects
ISM: Institute for Supply Management
LPS: Black Knight
MBA: Mortgage Bankers Association
NAHB: National Association of Homebuilders
NAR: National Association of Realtors
NFIB: National Federation of Independent Business
NRA: National Restaurant Association
STR: Smith Travel Research

by Calculated Risk on 4/18/2016 10:04:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 58 in April, unchanged from 58 in March. Any number above 50 indicates that more builders view sales conditions as good than poor.

From the NAHB: Builder Confidence Holds Firm in April

Builder confidence in the market for newly-built single-family homes remained unchanged in April at a level of 58 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“Builder confidence has held firm at 58 for three consecutive months, showing that the single-family housing sector continues to recover at a slow but consistent pace,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “As we enter the spring home buying season, we should see the market move forward.”

“Builders remain cautiously optimistic about construction growth in 2016,” said NAHB Chief Economist Robert Dietz. “Solid job creation and low mortgage interest rates will sustain continued gains in the single-family housing market in the months ahead.”
...
The HMI components measuring sales expectations in the next six months rose one point to 62, and the index gauging buyer traffic also increased a single point to 44. Meanwhile, the component charting current sales conditions fell two points to 63.

Looking at the three-month moving averages for regional HMI scores, all four regions registered slight declines. The Northeast and West each fell two points to 44 and 67, respectively. Meanwhile, the Midwest and South each posted respective one-point losses to 57 and 58.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was below the consensus forecast of 59, but still a strong reading.

by Calculated Risk on 4/17/2016 07:28:00 PM

For amusement, the Barron's cover this week says "Detroit is Back!" Hmmm ... the correct time to be looking for the bottom in auto sales was in 2009.   It has been a nice ride.

Note: Some yellow journalism sites will trumpet the Barron's cover this week, but remember that they missed the bottom for auto sales in 2009.   Someday I'll be bearish again (I was a Grizzly bear when I started this blog), but always bearish is mostly wrong!

From the WSJ: Oil Prices Fall After Producers Fail to Reach Deal at Doha

Oil prices opened sharply lower in early Asian trading hours on Monday after major oil producers ended their meeting in Doha, Qatar, over the weekend without reaching an agreement to cap production.
...
U.S. crude plunged 6.7% at $37.70 a barrel and Brent was down 6.9% at $40.14 a barrel in early Asian trading.

Weekend:
• Schedule for Week of April 17, 2016

Monday:
• 10:00 AM, the April NAHB homebuilder survey. The consensus is for a reading of  59, up from 58 in March.  Any number above 50 indicates that more builders view sales conditions as good than poor.

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 9 and DOW futures are down 75 (fair value).

Oil prices were down over the last week with WTI futures at $38.26 per barrel and Brent at $40.14 per barrel.  A year ago, WTI was at $56, and Brent was at $61 - so prices are down about 33% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.12 per gallon (down about $0.30 per gallon from a year ago).