by Calculated Risk on 2/26/2019 09:12:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for December ("December" is a 3 month average of October, November and December 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: Annual Gains Fall to 4.7% to End 2018 According to the S&P CoreLogic Case-Shiller Index

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 4.7% annual gain in December, down from 5.1% in the previous month. The 10City Composite annual increase came in at 3.8%, down from 4.2% in the previous month. The 20-City Composite posted a 4.2% year-over-year gain, down from 4.6% in the previous month.

Las Vegas, Phoenix and Atlanta reported the highest year-over-year gains among the 20 cities. In December, Las Vegas led the way with an 11.4% year-over-year price increase, followed by Phoenix with an 8.0% increase and Atlanta with a 5.9% increase. Three of the 20 cities reported greater price increases in the year ending December 2018 versus the year ending November 2018.
...
Before seasonal adjustment, the National Index posted a month-over-month decrease of 0.1% in December. The 10-City and 20-City Composites both reported 0.2% decreases for the month. After seasonal adjustment, the National Index recorded a 0.3% month-over-month increase in December. The 10-City Composite and the 20-City Composite both posted 0.2% month-over-month increases. In December, five of 20 cities reported increases before seasonal adjustment, while 14 of 20 cities reported increases after seasonal adjustment.

“The annual rate of price increases continues to fall,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Even at the reduced pace of 4.7% per year, home prices continue to outpace wage gains of 3.5% to 4% and inflation of about 2%. A decline in interest rates in the fourth quarter was not enough to offset the impact of rising prices on home sales. The monthly number of existing single family homes sold dropped throughout 2018, reaching an annual rate of 4.45 million in December. The 2018 full year sales pace was 4.74 million.

“Regional patterns continue to shift. Seattle and Portland, OR experienced the fastest price increases of any city from late 2016 to the spring of 2018; in December, they ranked 11th and 16th. Currently, the cities with the fastest price increases are Las Vegas and Phoenix. These are a reminder of how prices rose and collapsed in the financial crisis 12 years ago. Despite their recent gains, Las Vegas and Phoenix are the furthest below their 2006 peaks of any city followed in the S&P CoreLogic Case-Shiller Indices.
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 up slightly from the bubble peak, and up 0.2% in December (SA).

The Composite 20 index is 3.8% above the bubble peak, and up 0.2% (SA) in December.

The National index is 11.9% above the bubble peak (SA), and up 0.3% (SA) in December.  The National index is up 51.3% 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 3.7% compared to December 2017.  The Composite 20 SA is up 4.2% year-over-year.

The National index SA is up 4.7% year-over-year.

Note: According to the data, prices increased in 17 of 20 cities month-over-month seasonally adjusted.

I'll have more later.

by Calculated Risk on 2/26/2019 08:40:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately‐owned housing starts in December were at a seasonally adjusted annual rate of 1,078,000. This is 11.2 percent below the revised November estimate of 1,214,000 and is 10.9 percent below the December 2017 rate of 1,210,000. Single‐family housing starts in December were at a rate of 758,000; this is 6.7 percent below the revised November figure of 812,000. The December rate for units in buildings with five units or more was 302,000.

An estimated 1,246,600 housing units were started in 2018. This is 3.6 percent (±2.1%) above the 2017 figure of 1,203,000.

Building Permits:
Privately‐owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,326,000. This is 0.3 percent above the revised November rate of 1,322,000 and is 0.5 percent above the December 2017 rate of 1,320,000. Single‐family authorizations in December were at a rate of 829,000; this is 2.2 percent below the revised November figure of 848,000. Authorizations of units in buildings with five units or more were at a rate of 460,000 in December.

An estimated 1,310,700 housing units were authorized by building permits in 2018. This is 2.2 percent above the 2017 figure of 1,282,000.
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 December compared to November.   Multi-family starts were down 12% year-over-year in December.

Multi-family is volatile month-to-month, and  has been mostly moving sideways the last few years.

Single-family starts (blue) decreased in December, and were down 11% 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 eventual recovery (but still historically low).

Total housing starts in December were below expectations, and starts for October and November were revised down.

I'll have more later ...

by Calculated Risk on 2/25/2019 08:23:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Only Modestly Higher After Tariff News

Mortgage rates were very nearly unchanged today, although the average lender was just slightly higher.
...
Potentially more important will be congressional testimony tomorrow with Federal Reserve Chair Jerome Powell. [30YR FIXED 4.375 - 4.5%]
emphasis added

Tuesday:
• At 8:30 AM ET, Housing Starts for December. The consensus is for 1.256 million SAAR, unchanged from 1.256 million SAAR.

• At 9:00 AM, FHFA House Price Index for December 2018. This was originally a GSE only repeat sales, however there is also an expanded index.

• Also at 9:00 AM, S&P/Case-Shiller House Price Index for December. The consensus is for a 4.5% year-over-year increase in the Comp 20 index for December.

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for February.

• Also at 10:00 AM: Testimony by Fed Chair Jerome Powell, Semiannual Monetary Policy Report to the Congress, Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate

by Calculated Risk on 2/25/2019 06:12:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate in January was 0.70%, up slightly from 0.69% in December. Freddie's rate is down from 1.07% in January 2018.

Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

This is the lowest serious delinquency rate for Freddie Mac since December 2007.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

Click on graph for larger image

The increase in the delinquency rate in late 2017 and early 2018 was due to the hurricanes (These are serious delinquencies, so it took three months late to be counted).

I expect the delinquency rate to decline to a cycle bottom in the 0.5% to 0.7% range - but this is close to a bottom.

Note: Fannie Mae will report for January soon.

by Calculated Risk on 2/25/2019 02:21:00 PM

From JD Power: J.D. Power and LMC Automotive Forecast February 2019

"The year is off to its slowest start since 2014 with the industry set to post sales declines again in February. While retail sales through the first two months will be down more than 4%, it's important to note that January and February are among the lowest volume sales months of the year." (Last year the two months combined to account for only 13.5% of the annual total.)

Looking ahead to the coming months, the industry should expect to receive a slight boost with the recovery of any lost sales due to inclement weather. [Forecast: total sales 16.6 million SAAR]

This forecast is for sales to be about the same level as in January, and down from 16.9 million SAAR in February 2018.  

by Calculated Risk on 2/25/2019 10:37:00 AM

From the Dallas Fed: Texas Manufacturing Expansion Continues

Texas factory activity continued to expand in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, slipped four points to 10.1, indicating a slight deceleration in output growth.

Most other measures of manufacturing activity also suggested continued but slower expansion in February. The new orders index fell five points to 6.9, its lowest reading in more than two years. Similarly, the capacity utilization index fell eight points to 7.1 and reached a two-year low. Meanwhile, the shipments index was largely unchanged at 10.7.

Perceptions of broader business conditions improved notably in February. The general business activity index rose 12 points to 13.1 after posting weak readings the prior two months. The company outlook index rose seven points to 14.2, a four-month high. The index measuring uncertainty regarding companies’ outlooks retreated 12 points to 4.1, its lowest reading in nine months.

Labor market measures suggested stronger employment growth and little change in workweek length in February. The employment index rebounded from 6.6 to 12.6.
emphasis added

So far the regional surveys have been mixed for February.

by Calculated Risk on 2/25/2019 09:19:00 AM

From Black Knight: Black Knight’s First Look: January’s Prepayment Rate Lowest in More Than 18 Years as Seasonal Home Sale Reductions Outweigh Rise in Refinance Incentive

• The national delinquency rate fell by 3.5 percent and is now nearly 13 percent below last year’s level

• Foreclosure starts rose seasonally month-over-month but were down more than 19 percent year-over-year

• The number of loans in active foreclosure continued its downward trend; there are now 265,000 active foreclosures, down 72,000 from one year ago
...
• Despite recent declines in interest rates, January’s prepayment rate was the lowest since November 2000

• Seasonal reductions in home sales outweighed any early, rate-driven rise in refinance incentive

According to Black Knight's First Look report for January, the percent of loans delinquent decreased 3.45% in January compared to December, and decreased 12.9% year-over-year.

The percent of loans in the foreclosure process decreased 2.2% in January and were down 22.4% 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 3.75% in January, down from 3.88% in December.

The percent of loans in the foreclosure process decreased slightly in January to 0.51% from 0.52% in December.

The number of delinquent properties, but not in foreclosure, is down 257,000 properties year-over-year, and the number of properties in the foreclosure process is down 72,000 properties year-over-year.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	Jan 2019	Dec 2018	Jan 2018	Jan 2017
Delinquent	3.75%	3.88%	4.31%	4.25%
In Foreclosure	0.51%	0.52%	0.66%	0.94%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	1,945,000	2,013,000	2,202,000	2,162,000
Number of properties in foreclosure pre-sale inventory:	265,000	271,000	337,000	481,000
Total Properties	2,210,000	2,283,000	2,539,000	2,643,000

by Calculated Risk on 2/25/2019 08:53:00 AM

From the Chicago Fed: Index Points to Slower Economic Growth in January

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.43 in January from +0.05 in December. One of the four broad categories of indicators that make up the index decreased from December, and two of the four categories made negative contributions to the index in January. The index’s three-month moving average, CFNAI-MA3, decreased to a neutral reading in January from +0.16 in December.
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 at the historical trend in January (using the three-month average).

According to the Chicago Fed:

The index is a weighted average of 85 indicators of growth in 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 monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

by Calculated Risk on 2/24/2019 07:35:00 PM

Weekend:
• Schedule for Week of February 24, 2019

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

• At 10:30 AM: Dallas Fed Survey of Manufacturing Activity for February.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 7 and DOW futures are up 63 (fair value).

Oil prices were up over the last week with WTI futures at $57.36 per barrel and Brent at $67.25 per barrel.  A year ago, WTI was at $62, and Brent was at $65 - so WTI oil prices are down year-over-year, although Brent is up slightly.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.40 per gallon. A year ago prices were at $2.50 per gallon, so gasoline prices are down 10 cents per gallon year-over-year.

by Calculated Risk on 2/24/2019 12:51:00 PM

Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for February 2019.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List for February 2019. During the month, the list decreased by a net of two institutions to 76 banks after three removals and one addition. Aggregate assets dropped to $52.8 billion from $55.2 billion at month earlier, with $1.9 billion of the $2.4 billion decline due to the release of updated financials. A year ago, the list held 101 institutions with assets of $20.5 billion.

Removals included Beach Community Bank, Fort Walton Beach, FL ($468 million) because of action termination; Gunnison Valley Bank, Gunnison, UT ($71 million) because of an unassisted merger; and Maryland Financial Bank, Towson, MD ($42 million) because of voluntary liquidation.

Added this month was Fort Gibson State Bank, Fort Gibson, OK ($61 million) because the FDIC issued it a Prompt Corrective Action order on January 9, 2019. Strange, the FDIC has yet to provide public notice of a safety & soundness consent order against this bank.

On February 21, 2019 the FDIC released industry results for the fourth quarter of 2018. In that release, the FDIC disclosed that the Official Problem Bank List includes 60 institutions with assets of $48.5 billion, down from 71 institutions with assets of $53.3 billion in the third quarter of 2018.