by Calculated Risk on 5/08/2019 10:22:00 AM

This is a key former 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 hovering around $300,000, with more homes on the market; GLVAR housing statistics for April 2019

Local home prices are hovering around $300,000, while the number of homes on the market continues to increase. So says a report released Wednesday by the Greater Las Vegas Association of REALTORS® (GLVAR).
...
The total number of existing local homes, condos and townhomes sold during April was 3,625. Compared to one year ago, April sales were down 0.2% for homes, but up 8.7% for condos and townhomes.
...
At the current sales pace, Carpenter said Southern Nevada now has less than a three-month supply of homes available for sale. That’s up from one year ago, but still below what would normally be considered a balanced market. By the end of April, GLVAR reported 7,435 single-family homes listed for sale without any sort of offer. That’s up 94.8% from one year ago. For condos and townhomes, the 1,826 properties listed without offers in April represented a 131.1% jump from one year ago.
...
The number of so-called distressed sales remains near historically low levels. GLVAR reported that short sales and foreclosures combined accounted for just 3.0% of all existing local property sales in April. That compares to 2.5% of all sales one year ago and 8.4% two years ago.
emphasis added

1) Overall sales were up 1.5% year-over-year from 3,571 in April 2018 to 3,625 in April 2019.

2) Active inventory (single-family and condos) is up sharply from a year ago, from a total of 4,606 in April 2018 to 9,261 in April 2019. Note: Total inventory was up 101% year-over-year.   This is a significant increase in inventory, although months-of-supply is still somewhat low.

3) Low level of distressed sales, but up slightly YoY.

by Calculated Risk on 5/08/2019 07:00:00 AM

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

Mortgage applications increased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 3, 2019.

... The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 5 percent compared with the previous week and was 5 percent higher than the same week one year ago.
...
“We saw a good week for the spring homebuying season, as a 5 percent increase in purchase applications – both weekly and year-over-year – drove the results,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Average loan amounts also stayed elevated, with government purchase applications rising to the highest in the survey. Even with slower price appreciation in higher-priced markets, home prices are still rising enough to push average loan sizes higher.”

Added Kan, “With purchase activity increasing and mortgage rate movements mostly unchanged, the refinance share of applications were at their lowest level since last November.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.41 percent from 4.42 percent, with points increasing to 0.47 from 0.46 (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.

Once mortgage rates fell more than 50 bps from the highs of last year, a number of recent buyers were able to refinance.  But it would take another significant decrease in rates to see a further increase in refinance activity.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 5% year-over-year.

by Calculated Risk on 5/07/2019 04:46:00 PM

During the recession, I wrote about the troubles in Las Vegas and included a chart of visitor and convention attendance: Lost Vegas.

Since then Las Vegas visitor traffic recovered to new record highs.

However, in 2018, visitor traffic declined 0.2% compared to 2017, but was still 7.5% above the pre-recession peak.

Convention attendance declined 2.2% in 2018 from the record high in 2017.  Here is the data from the Las Vegas Convention and Visitors Authority.  

Click on graph for larger image.

The blue bars are annual visitor traffic (left scale), and the red line is convention attendance (right scale).  2019 is estimate based on Q1 data.

Convention attendance was up 1.5% in Q1 2019 compared to Q1 2018.

Visitor traffic was up 0.8% in Q1 2019 compared to Q1 2018.

Historically, declines in Las Vegas visitor traffic have been associated with economic weakness, so the slight declines over the last two years was concerning.

by Calculated Risk on 5/07/2019 01:48:00 PM

The Northwest Multiple Listing Service reported Northwest MLS Housing Report for April Signals Good News for Home Buyers

Housing activity during April signaled good news for buyers in Western Washington as inventory continued to grow, the rate of price increases was slowing in many areas (and even decreasing in a few counties), and mortgage rates remained low.

Northwest Multiple Listing Service statistics for last month show a 28.5 percent overall increase in active listings compared to the same month a year ago, a 5.8 percent gain in pending sales, and a 2.4 percent rise in median prices for sales of single family homes and condos that closed during April. The volume of closings dipped slightly (down 1.9 percent).
emphasis added

The press release is for the Northwest. In King County, sales were down 1% year-over-year, and active inventory was up 78% year-over-year.

In Seattle, sales were unchanged year-over-year, and inventory was up 124% year-over-year from very low levels.  This is another market with inventory increasing sharply year-over-year, but months-of-supply in Seattle is still on the low side at 1.9 months.

by Calculated Risk on 5/07/2019 10:08:00 AM

Notes: In March there were 7.488 million job openings, and, according to the March Employment report, there were 6.211 million unemployed. So, for the thirteen consecutive month, there were more job openings than people unemployed. Also note that the number of job openings has exceeded the number of hires since January 2015 (over 4 years).

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings rose to 7.5 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.7 million and 5.4 million, respectively. Within separations, the quits rate was unchanged at 2.3 percent and the layoffs and discharges rate was little changed at 1.1 percent. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions. ...

The number of quits was little changed in March at 3.4 million. The quits rate was 2.3 percent. The quits level 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 7.488 million from 7.142 million in February.

The number of job openings (yellow) are up 9% year-over-year.

Quits are up 3% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Job openings remain at a high level, and quits are still increasing year-over-year. This was still a solid report.

by Calculated Risk on 5/07/2019 09:16:00 AM

Notes: This CoreLogic House Price Index report is for March. The recent Case-Shiller index release was for February. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic Reports March Home Prices Increased by 3.7% Year Over Year

CoreLogic® ... today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for March 2019, which shows home prices rose both year over year and month over month. Home prices increased nationally by 3.7% year over year from March 2018. On a month-over-month basis, prices increased by 1% in March 2019. (February 2019 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results each month.)

Looking ahead, after some initial moderation in early 2019, the CoreLogic HPI Forecast indicates home prices will begin to pick up and increase by 4.8% on a year-over-year basis from March 2019 to March 2020. On a month-over-month basis, home prices are expected to decrease by 0.3% from March 2019 to April 2019. The CoreLogic HPI Forecast is a projection of home prices calculated using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

“The U.S. housing market continues to cool, primarily due to some of our priciest markets moving into frigid waters,” said Dr. Ralph McLaughlin, deputy chief economist at CoreLogic. “But the broader market looks more temperate as supply and demand come into balance. With mortgage rates flat and inventory picking up, we expect more buyers to take advantage of easing housing market headwinds.”
emphasis added

CR Note: The CoreLogic YoY increase had been in the 5% to 7% range for the last few years. This is the slowest twelve-month home-price growth rate since 2012.

The year-over-year comparison has been positive for seven consecutive years since turning positive year-over-year in February 2012.

by Calculated Risk on 5/06/2019 07:27:00 PM

From Matthew Graham at Mortgage News Daily: Lowest Mortgage Rates in a Month

Mortgage rates dropped noticeably this morning as financial markets opened sharply changed from Friday's latest levels thanks to Trump trade tweets over the weekend. The stock market dropped to its lowest levels in several weeks before bouncing back as the day progressed. As money flew out of stocks, it found a safe haven in the bond market. Mortgage rates are most directly affected by the bond market, and when demand for bonds increases, rates fall.

The average lender was offering its best rates in roughly a month this morning. You'd have to go back to April 10th to see anything lower. [30YR FIXED - 4.25%]
emphasis added

Tuesday:
• At 10:00 AM ET, Job Openings and Labor Turnover Survey for March from the BLS.

• At 10:00 AM, Corelogic House Price index for February.

• At 3:00 PM, Consumer Credit from the Federal Reserve.

by Calculated Risk on 5/06/2019 03:23:00 PM

Here is another monthly update on framing lumber prices.   Lumber prices declined from the record highs in early 2018, and are now down about 35% year-over-year.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through April 26, 2019 (via NAHB), and 2) CME framing futures.

Click on graph for larger image in graph gallery.

Right now Random Lengths prices are down 31% from a year ago, and CME futures are  down 40% year-over-year.

There is a seasonal pattern for lumber prices, and usually prices will increase in the Spring, and peak around May, and then bottom around October or November - although there is quite a bit of seasonal variability.

by Calculated Risk on 5/06/2019 12:11:00 PM

A short note: Over the years, I've made several significant economic calls. For example, I predicted a recession in 2007, a recovery in 2009 (link is first in a series of posts), the top for housing prices in early 2006 and the bottom for housing prices in early 2012. I do not have a crystal ball, and I've missed some calls - but by watching the data closely, I've been pretty lucky overall.

Sometimes people ask me when I'll make another call.  I don't know; I'm very data dependent!

But I was wondering if these count?  Back in December 2015, I wrote The Endless Parade of Recession Calls. I concluded:

Looking at the economic data, the odds of a recession in 2016 are very low (extremely unlikely in my view). Someday I'll make another recession call, but I'm not even on recession watch now.

That was correct.  And earlier this year I wrote an update to that post.

My view now: a recession in 2019 is very unlikely. I'm still not on recession watch!

So far that looks correct too.

Someday I'll make another "Big" call, but I don't know when.

by Calculated Risk on 5/06/2019 10:29:00 AM

The Census Bureau will soon start hiring temporary workers for the 2020 Census. Temporary hiring will really increase in March, April and May of 2020, and then the jobs will finish in a few months. These are real jobs - frequently second jobs, or taken by seniors and students - but they will only last a few months.

Since these are temporary, and only happen every ten years with the decennial Census, it makes sense to adjust the headline monthly Current Employment Statistics (CES) by Census hiring to determine the underlying employment trend.

The correct adjustment method is to take the headline number and subtract the change in the number of Census 2020 temporary and intermittent workers. The BLS reports the number of Census temporary workers here: Census 2020 temporary and intermittent workers and Federal government employment

As an example, in May 2010, the Census hired 411 thousand temporary workers.   The BLS reported (since revised)

"Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today."

So the underlying trend was +20,000 jobs in May 2010 (as originally reported).

For June 2010, the number of temporary Census hires declined by 225,000. The BLS reported

"Total nonfarm payroll employment declined by 125,000 in June, and the unemployment rate edged down to 9.5 percent, the U.S. Bureau of Labor Statistics reported today. The decline in payroll employment reflected a decrease (-225,000) in the number of temporary employees working on Census 2010."

So the underlying trend was +100,000.

Some readers will notice that this is mixing SA and NSA data! Usually that is not appropriate, but in this special case, based on the methods used by the BLS, this is correct.

I checked with the BLS, and they agree in this situation it is correct. Here is my question (back in March 2010) and the BLS response:

9:34 Michele Walker (BLS-CES) -
Submitted via email from Bill: Hi. The headline payroll number is seasonally adjusted, and the hiring for the 2010 Census is NSA. How would you suggest adjusting for the 2010 Census hiring to determine the underlying trend?

Thanks for your question Bill.

There is an adjustment made for the 2010 Census. Before seasonally adjusting the estimates, BLS makes a special modification so that the Census workers do not influence the calculation of the seasonal factors. Specifically, BLS subtracts the Census workers from the not-seasonally adjusted estimates before running seasonal adjustment using X-12. After the estimates have been seasonally adjusted, BLS adds the Census workers to the seasonally adjusted totals. Therefore, to determine the underlying trend of the total nonfarm (TNF) employment estimates (minus the Census workers), simply subtract the Census employment from the seasonally adjusted TNF estimate.

So starting soon (as hiring ramps up), the correct way to report the headline number is ex-Census.

BTW, it is widely reported that there have been 103 consecutive months with positive job growth (a record). However, if you use the ex-Census numbers, it is 110 consecutive months!  The job streak started during the decennial Census, but was masked by the temporary Census layoffs.  As an example, the BLS reported a negative 64,000 jobs in September 2010, however the number of temporary Census workers declined by 76,000 that month, so ex-Census the number of jobs added in September 2010 was 12,000.