by Calculated Risk on 11/29/2016 09:16:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for September ("September" is a 3 month average of July, August and September prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

Note: Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs.

From S&P: The S&P CoreLogic Case-Shiller National Index Reaches New High as Home Price Gains Continue

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, surpassed the peak set in July 2006 as the housing boom topped out. The National index reported a 5.5% annual gain in September, up from 5.1% last month. The 10-City Composite posted a 4.3% annual increase, up from 4.2% the previous month. The 20-City Composite reported a yearover-year gain of 5.1%, unchanged from August.

Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over each of the last eight months. In September, Seattle led the way with an 11.0% year-over-year price increase, followed by Portland with 10.9%, and Denver with an 8.7% increase. 12 cities reported greater price increases in the year ending September 2016 versus the year ending August 2016.
...
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.4% in September. Both the 10-City Composite and the 20-City Composite posted a 0.1% increase in September. After seasonal adjustment, the National Index recorded a 0.8% month-over-month increase, the 10-City Composite posted a 0.2% month-over-month increase, and the 20-City Composite reported a 0.4% month-over-month increase. 15 of 20 cities reported increases in September before seasonal adjustment; after seasonal adjustment, all 20 cities saw prices rise.
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 10.7% from the peak, and up 0.2% in September (SA).

The Composite 20 index is off 8.5% from the peak, and up 0.4% (SA) in September.

The National index is off 0.8% from the peak (SA), and up 0.8% (SA) in September.  The National index is up 34.0% from the post-bubble low set in December 2011 (SA).

The second graph shows the Year over year change in all three indices.

The Composite 10 SA is up 4.3% compared to September 2015.

The Composite 20 SA is up 5.1% year-over-year.

The National index SA is up 5.5% year-over-year.

Note: According to the data, prices increased in all 20 cities month-over-month seasonally adjusted.

I'll have more later.

by Calculated Risk on 11/29/2016 08:46:00 AM

From the BEA: Gross Domestic Product: Third Quarter 2016 (Second Estimate)

Real gross domestic product increased at an annual rate of 3.2 percent in the third quarter of 2016, according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.4 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.9 percent. With the second estimate for the third quarter, the general picture of economic growth remains the same; the increase in personal consumption expenditures was larger than previously estimated ...
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was revised up from 2.1% to 2.8%. (decent PCE).  Non-Residential investment in structures was revised up from 5.4% to +10.1%. This was above the consensus forecast.

by Calculated Risk on 11/29/2016 07:01:00 AM

Note: There was a report of a "foreclosure spike" in October. This data shows the opposite happened.

From Black Knight: Black Knight’s First Look at October 2016 Mortgage Data: Foreclosure Starts Hit Lowest Level Since January 2005; Foreclosure Rate Falls Below One Percent for First Time Since July 2007

• October’s 56,500 foreclosure starts is the lowest one-month total in nearly 12 years

  • Delinquencies see modest seasonal increase in October; still down nine percent from last year

  • Active foreclosure inventory continues to improve, just over 500,000 active foreclosure cases remain

  • Prepayment activity down slightly from September but remains 37 percent above last year’s level

According to Black Knight's First Look report for October, the percent of loans delinquent increased 2% in October compared to September, and declined 8.9% year-over-year.

The percent of loans in the foreclosure process declined 1% in October and were down 30% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.35% in October, up from 4.27% in September.

The percent of loans in the foreclosure process declined in October to 0.99%.  This is the lowest level since July 2007.

The number of delinquent properties, but not in foreclosure, is down 214,000 properties year-over-year, and the number of properties in the foreclosure process is down 217,000 properties year-over-year.

Black Knight will release the complete mortgage monitor for October on December 5th.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	Oct 2016	Sept 2016	Oct 2015	Oct 2014
Delinquent	4.35%	4.27%	4.77%	5.42%
In Foreclosure	0.99%	1.00%	1.43%	1.81%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	2,202,000	2,165,000	2,415,000	2,731,000
Number of properties in foreclosure pre-sale inventory:	504,000	509,000	721,000	912,000
Total Properties	2,706,000	2,674,000	3,136,000	3,643,000

by Calculated Risk on 11/28/2016 07:32:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Fall at Fastest Pace Since Brexit

WARNING: this article's headline makes the overall mortgage rate situation sound much better than it actually is. While it is indeed a fact that today's rates are lower than the previous business day's rates by the widest margin since Brexit, caveats abound. First off, the Brexit move was more than twice as big. Today's move is only slightly better than a handful of other decent days over the past 5 months.

The post-Brexit move also occurred when rates were already fairly low. In fact, rates were near all-time lows already, and had been moving almost exclusively lower all year. In stark contrast, today's improvement comes on the heels of one of the sharpest moves higher in history. It's fairly normal to see a decent-sized correction after a huge spike higher.
...
Bottom line: it was a great individual day for rates, but we're still very much in the "new normal" range of conventional 30yr fixed rates between 4% and 4.25%.
emphasis added

Tuesday:
• At 8:30 AM ET, Gross Domestic Product, 3rd quarter 2016 (Second estimate). The consensus is that real GDP increased 3.1% annualized in Q3, revised from 2.9% in the advance report.

• At 9:00 AM, S&P/Case-Shiller House Price Index for September. Although this is the September report, it is really a 3 month average of July, August and September prices. The consensus is for a 5.2% year-over-year increase in the Comp 20 index for September. The Zillow forecast is for the National Index to increase 5.4% year-over-year in September.

by Calculated Risk on 11/28/2016 03:44:00 PM

On Friday I posted a few 2017 housing forecasts. I'll add more forecasts soon. Some of these forecasts may be revised due to the Presidential results and also due to the possibility of higher mortgage rates.

Here are some preliminary thoughts on several potential issues for housing over the next couple of years:

1) Higher interest rates due to policy changes (tax cuts and more spending).  Higher mortgage rates could slow housing activity.  However, if the tax cuts and more spending lead to more jobs, then that might offset any increase in mortgage rates.

2) Immigration.  If the next administration focuses on deportation, this could lead to less demand in certain areas.  This could lead to lower rents, fewer sales, more inventory, fewer housing starts, and possibly lower prices in those areas.

3) Financing.  Although most policy discussions have focused on deregulation, it is also possible that Fannie and Freddie will be privatized, and that some mortgage lending will dry up.   FHA loans might also become more expensive.

by Calculated Risk on 11/28/2016 01:34:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 19 November

The U.S. hotel industry reported positive results in the three key performance metrics during the week of 13-19 November 2016, according to data from STR.

In year-over-year comparisons, the industry’s occupancy rose 4.5% to 65.8%. Average daily rate (ADR) increased 4.6% to US$122.02. Revenue per available room (RevPAR) grew 9.2% to US$80.25.
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The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2016, dashed orange is 2015, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.

2015 was the best year on record for hotels.

So far 2016 is tracking just behind 2015, and well ahead of the median rate.    With a solid finish, 2016 could be the best year on record.

Year-to-date, the three best years are:
1) 2015: 67.4% average occupancy.
2) 2016: 67.4% average.
3) 2000: 66.5% average.

For hotels, the Fall business travel season is slowing down, and the occupancy rate will decline into the holiday season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 11/28/2016 10:36:00 AM

Note: All regional Fed surveys indicated expansion in November. This is the first time all regional surveys were positive in two years (the decline in oil prices hit some regions hard - like Dallas).

From the Dallas Fed: Texas Manufacturing Activity Continues to Expand

Texas factory activity increased again in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, posted a fifth consecutive positive reading and edged up to 8.8. ...
...
The general business activity index shot up to 10.2 after nearly two years of negative readings.
...
Labor market measures indicated increased employment levels and longer workweeks. The employment index came in at 4.5 after a near-zero reading last month. Seventeen percent of firms noted net hiring, compared with 13 percent noting net layoffs. The hours worked index returned to positive territory in November, coming in at 2.5. ...
emphasis added

This was the last of the regional Fed surveys for November.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through November), and five Fed surveys are averaged (blue, through November) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through October (right axis).

It seems likely the ISM manufacturing index will show expansion again in November, and the consensus is for a reading of 52.3.

by Calculated Risk on 11/28/2016 08:53:00 AM

Note: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight, Zillow, FHFA, FNC and more). Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.

From Black Knight: Black Knight Home Price Index Report: September 2016 Transactions, U.S. Home Prices Up 0.1 Percent for the Month; Up 5.4 Percent Year-Over-Year 

• September’s home price movement was relatively flat at the national level, with home prices ticking up just 0.1 percent from August

• U.S. home prices are up 5.4 percent from last year and are now within just 0.6 percent of hitting a new national peak

• Home prices in seven of the nation’s 20 largest states and seven of the 40 largest metros hit new peaks

The year-over-year increase in this index has been about the same for the last year.

Note that house prices are close to the bubble peak in nominal terms, but not in real terms (adjusted for inflation).  Case-Shiller for September will be released tomorrow.

by Calculated Risk on 11/27/2016 08:18:00 PM

The words of a President matter. Same with the words of a President-elect. Just like during the campaign, Donald Trump just keeps making stuff up ...

"In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally" Donald Trump, Nov 27, 2016

There is no evidence of significant voter fraud. Sad. And dangerous. Trump is known to make up economic data too ... and that could have negative consequences for the economy and stock market.

Weekend:
• Schedule for Week of Nov 27, 2016

• November NFP Forecasts

Monday:
• At 10:30 AM ET, Dallas Fed Survey of Manufacturing Activity for November. This is the last of the regional Fed surveys for October.

From CNBC: Pre-Market Data and Bloomberg futures: S&P futures are down 5, and DOW futures are down 30 (fair value).

Oil prices were up over the last week with WTI futures at $45.39 per barrel and Brent at $46.52 per barrel.  A year ago, WTI was at $41, and Brent was at $43 - so oil prices are up year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.12 per gallon - a year ago prices were at $2.04 per gallon - so gasoline prices are up slightly year-over-year.

by Calculated Risk on 11/27/2016 11:01:00 AM

I hope everyone is having a great Thanksgiving weekend!

A couple of NFP forecasts ...

From Nomura:

[W]e forecast private payrolls grew by 155k in November with an additional 5k increase in government payrolls, implying that nonfarm payrolls grew by 160k. ... given another month of solid job gains, we think that the unemployment rate will tick down for a consecutive month and settle on a rounded basis at 4.8% in November. Lastly, on wage growth, we think some negative payback is in order as wage gains in October were amplified by inclement weather cutting short the workweek during the BLS survey reference period. Therefore, we forecast only a 0.1% m-o-m increase in average hourly earnings.
emphasis added

From Merrill Lynch:

Recent labor market data has continued to show solid improvement. We expect the trend to continue in November with 170,000 in nonfarm payroll growth, a slight deceleration from the 176,000 average over the prior three months. We expect 165,000 in private payroll growth, with a modest 5,000 expansion in government payrolls.

We expect the labor force participation rate to remain at 62.8% and the unemployment rate to also remain unchanged at 4.9%. We expect a softer 0.2% mom gain in average hourly earnings after the strong 0.4% mom pop last month, leaving the year-over-year rate at 2.8%.