by Calculated Risk on 5/10/2017 07:00:00 AM

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

Mortgage applications increased 2.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 5, 2017.

... The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier to its highest level since October 2015. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 6 percent higher than the same week one year ago. ...

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.23 percent, with points decreasing to 0.31 from 0.32 (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 remains low - and will not increase significantly unless rates fall sharply.


The second graph shows the MBA mortgage purchase index.

Even with the increase in mortgage rates late last year, purchase activity is still up year-over-year.

by Calculated Risk on 5/09/2017 02:44:00 PM

First a note from housing economist Tom Lawler: Next “Official” Census Long-Term Population Projection Not Due Out Until End of This Year

In several earlier reports I highlighted how the last “official” long-term population projections from the Census Bureau (released in December 2014) were way out of date, and that analysts should not use them for any analysis. Someone asked me when the next Census population forecast report would be released, and someone from the Population Projection Staff of the Census Bureau told me that the next official population projections would probably come out at the end of this year.

And from Tom Lawler.

Below is a table showing selected operating statistics for nine large, publicly-traded home builders for the quarter ended March 31, 2017.

Preliminary statistics from the Commerce Department estimated that US new single-family home sales (unadjusted) last quarter were up 12.0% from the comparable quarter of 2016.

	Net Orders			Settlements			Average Closing Price (000s)
Qtr. Ended:	3/17	3/16	% Chg	3/17	3/16	% Chg	3/17	3/16	% Chg
D.R. Horton	13,991	12,292	13.8%	10,685	9,262	15.4%	296	295	0.2%
Pulte Group	6,126	5,652	8.4%	4,225	3,945	7.1%	375	353	6.2%
NVR	4,424	4,137	6.9%	3,256	3,006	8.3%	383	369	3.7%
Cal Atlantic	4,304	4,134	4.1%	3,012	2,727	10.5%	444	432	2.8%
Beazer Homes	1,549	1,538	0.7%	1,239	1,150	7.7%	341	328	3.8%
Meritage Homes	2,135	1,987	7.4%	1,581	1,488	6.3%	418	405	3.2%
MDC Holdings	1,696	1,646	3.0%	1,256	907	38.5%	448	435	3.2%
M/I Homes	1,454	1,314	10.7%	1,038	876	18.5%	373	353	5.7%
Total	35,679	32,700	9.1%	26,292	23,361	12.5%	356	346	2.7%

by Calculated Risk on 5/09/2017 12:40:00 PM

Here is another update on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs - and prices are once again near the bubble highs.

The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).

Prices didn't increase as much early in 2014 (more supply, smaller "surge" in demand).

In 2015, even with the pickup in U.S. housing starts, prices were down year-over-year.  Note: Multifamily starts do not use as much lumber as single family starts, and there was a surge in multi-family starts.  This decline in 2015 was also probably related to weakness in China.

Prices in 2017 are  up year-over-year.

Click on graph for larger image in graph gallery.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through early May 2017 (via NAHB), and 2) CME framing futures.

Right now Random Lengths prices are up 19% from a year ago, and CME futures are up about 27% year-over-year.

by Calculated Risk on 5/09/2017 10:06:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 5.7 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.1 million, respectively. ...

The number of quits was little changed at 3.1 million in March. The quits rate was 2.1 percent. The number of quits was little changed for total private and for government.
emphasis added

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for March, the most recent employment report was for April.

Click on graph for larger image.


Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings increased in March to 5.743 million from 5.682 million in February.  Job openings are mostly moving sideways at a high level.

The number of job openings (yellow) are down 2% year-over-year.

Quits are up 6% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

This is another solid report.

by Calculated Risk on 5/09/2017 09:20:00 AM

From the National Federation of Independent Business (NFIB): April 2017 Report: Small Business Optimism Index

The NFIB Index of Small Business Optimism posted another historically high reading in April, but expectations for future business conditions plunged by eight points ...
...
The Index dipped 0.2 points April, settling at 104.5. ... Small business owners reported a seasonally adjusted average employment change per firm of 0.19 workers per firm ...
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index decreased to 104.5 in April.

by Calculated Risk on 5/08/2017 06:56:00 PM

Tuesday:
• At 9:00 AM ET, NFIB Small Business Optimism Index for April.

• At 10:00 AM: Job Openings and Labor Turnover Survey for March from the BLS. Jobs openings increased in February to 5.743 million from 5.625 million in January. The number of job openings were up 3% year-over-year, and Quits were up 3% year-over-year.

by Calculated Risk on 5/08/2017 03:40:00 PM

Note: This index is a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.

From Dodge Data Analytics: Dodge Momentum Index Loses Steam in April

The Dodge Momentum Index fell 5.1% in April to 133.8 (2000=100) from its revised March reading of 140.9. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. April’s decline was due to a 12.0% drop for the institutional component of the Momentum Index, while the commercial component rose a meager 0.1%. Since early 2016, the Momentum Index has gained substantial ground, albeit in a saw-tooth pattern, increasing by over 20% through March this year. Despite April’s decline, the broad upward trend for the Momentum Index remains present, suggesting that construction activity still has further room to grow in 2017. The planning data’s strengthening over the past year stands in stark contrast to the 2014-2015 period, when the Momentum Index saw little improvement, gaining just 4.0% in that 24-month span.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 133.8 in April, down from 140.9 in March.

The index is still up solidly year-over-year.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year". This suggests further increases in CRE spending over the next year.

by Calculated Risk on 5/08/2017 01:21:00 PM

This is a key housing market to follow since Phoenix saw a large bubble and bust, followed by strong investor buying.

note: Updated

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in April were up 4.5% year-over-year.

2) Cash Sales (frequently investors) were down to 22.5% of total sales.

3) Active inventory is now down 11.0% year-over-year.  

More inventory (a theme in most of 2014) - and less investor buying - suggested price increases would slow sharply in 2014.  And prices increases did slow in 2014, only increasing 2.4% according to Case-Shiller.

In 2015, with falling inventory, prices increased a little faster.  Prices were up 6.3% in 2015 according to Case-Shiller.

With flat inventory in 2016, prices were up 4.8%.

This is the sixth consecutive month with a YoY decrease in inventory following eight months with YoY increases.

April Residential Sales and Inventory, Greater Phoenix Area, ARMLS
	Sales	YoY Change Sales	Cash	Percent Cash	Inventory	YoY Change
Apr-08	4,8751	---	986	20.2%	55,7261	---
Apr-09	8,564	75.7%	3,464	40.4%	44,165	-20.7%
Apr-10	9,261	8.1%	3,641	39.3%	41,756	-5.5%
Apr-11	9,328	0.7%	4,489	48.1%	34,515	-17.3%
Apr-12	8,438	-9.5%	4,013	47.6%	21,125	-38.8%
Apr-13	8,744	3.6%	3,670	42.0%	20,083	-4.9%
Apr-14	7,656	-12.4%	2,469	32.2%	29,889	48.8%
Apr-15	8,368	9.3%	2,120	25.3%	25,950	-13.2%
Apr-16	8,437	0.8%	2,008	23.8%	27,232	4.9%
Apr-17	8,819	4.5%	1,980	22.5%	24,230	-11.0%
1 April 2008 does not include manufactured homes, ~100 more

by Calculated Risk on 5/08/2017 11:08:00 AM

This is a key distressed market to follow since Las Vegas saw the largest price decline, following the housing bubble, of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported Local home prices keep rising as Southern Nevada faces a housing shortage, GLVAR Housing Statistics for April 2017

Local home prices continued to climb in April amid what leaders of the Greater Las Vegas Association of REALTORS®(GLVAR) are now calling a housing shortage.
...
... The total number of existing local homes, condos and townhomes sold in April was 3,529, up from 3,518 in April 2016. Compared to one year ago, sales were up 1.7 percent for homes, but down 5.3 percent for condos and townhomes.

According to GLVAR, local home sales in 2017 continue to outpace 2016, when 41,720 total properties were sold in Southern Nevada. That was more than the 38,577 properties sold during 2015. It was also more total sales than in 2014, but fewer than each year from 2009 through 2013.
...
By the end of April, GLVAR reported 5,083 single-family homes listed for sale without any sort of offer. That’s down 30.9 percent from one year ago. For condos and townhomes, the 639 properties listed without offers in April represented a 71.4 percent drop from one year ago.

For several years, GLVAR has been reporting fewer distressed sales and more traditional home sales, where lenders are not controlling the transaction. That trend continued in April, when 4.4 percent of all local sales were short sales – which occur when lenders allow borrowers to sell a home for less than what they owe on the mortgage. That compares to 4.5 percent of all sales in April 2016. Another 4.0 percent of all April sales were bank-owned, down from 7.1 percent one year ago.
emphasis added

1) Overall sales were up slightly year-over-year.

2) Active inventory (single-family and condos) is down sharply from a year ago (A very sharp decline in condo inventory).

3) Fewer distressed sales.

by Calculated Risk on 5/07/2017 08:15:00 PM

Weekend:
• Schedule for Week of May 7, 2017

Monday:
• At 10:00 AM ET, the Fed will release the monthly Labor Market Conditions Index (LMCI).

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

Oil prices were down over the last week with WTI futures at $46.90 per barrel and Brent at $49.87 per barrel.  A year ago, WTI was at $44, and Brent was at $45 - so oil prices are up about 5% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.34 per gallon - a year ago prices were at $2.23 per gallon - so gasoline prices are up about 10 cents a gallon year-over-year.