by Calculated Risk on 4/23/2009 11:12:00 AM

To add to the previous post, here is another way to look at existing homes sales - monthly, Not Seasonally Adjusted (NSA):

This graph shows NSA monthly existing home sales for 2005 through 2009. Sales (NSA) were lower in March 2009 than in March 2008.

Again - a significant percentage of recent sales were foreclosure resales, and although these are real sales, I think existing home sales could fall even further when foreclosure resales start to decline sometime in the future.

The second graph shows inventory by month starting in 2004.

Inventory levels were flat during the bubble, but started increasing at the end of 2005.

Inventory levels increased sharply in 2006 and 2007, but have been below the year ago level for the last eight months. Inventory in March 2009 was below the levels in March 2007 and 2008 (this is the 2nd consecutive month with inventory levels below 2 years ago).

It is important to watch inventory levels very carefully. If you look at the 2005 inventory data, instead of staying flat for most of the year (like the previous bubble years), inventory continued to increase all year. That was one of the key signs that led me to call the top in the housing market!

Note: there is probably a substantial shadow inventory – homeowners wanting to sell, but waiting for a better market - so existing home inventory levels will probably stay elevated for some time. There is also the possibility of some REOs being held off the market.

The third graph shows the year-over-year change in existing home inventory.

This shows the YoY change has turned negative.

If the trend of declining year-over-year inventory levels continues in 2009 that will be a positive for the housing market. Prices will probably continue to fall until the months of supply reaches more normal levels (in the 6 to 8 month range), and that will take some time.

I'll have more on Existing Home sales tomorrow after New Home sales are released.

by Calculated Risk on 4/23/2009 10:00:00 AM

The NAR reports: March Existing-Home Sales Slip but First-Time Buyers Rise

Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 3.0 percent to a seasonally adjusted annual rate of 4.57 million units in March from a downwardly revised level of 4.71 million in February, and were 7.1 percent lower than the 4.92 million-unit pace in March 2008.
...
Total housing inventory at the end of March fell 1.6 percent to 3.74 million existing homes available for sale, which represents a 9.8-month supply at the current sales pace, compared with a 9.7-month supply in February.

Click on graph for larger image in new window.

The first graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in March 2009 (4.57 million SAAR) were 3.0% lower than last month, and were 7.1% lower than March 2008 (4.92 million SAAR).

It's important to note that about 45% of these sales were foreclosure resales or short sales. Although these are real transactions, this means activity (ex-distressed sales) is under 3 million units SAAR.

The second graph shows nationwide inventory for existing homes. According to the NAR, inventory decreased to 3.74 million in March. The all time record was 4.57 million homes for sale in July 2008. This is not seasonally adjusted.

Typically inventory increases slightly in March, and then really increases over the next few months of the year until peaking in the summer. This decrease in inventory was small, and the next few months will be key for inventory.

Also, most REOs (bank owned properties) are included in the inventory because they are listed - but not all. Recently there have been stories about a substantial number of unlisted REOs - this is possible, but not confirmed.

The third graph shows the 'months of supply' metric for the last six years.

Months of supply was up slightly at 9.8 months.

Even though the inventory level decreased, sales also decreased, so "months of supply" increased slightly.

I'll have more on existing home sales soon ...

by Calculated Risk on 4/23/2009 08:49:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending April 18, the advance figure for seasonally adjusted initial claims was 640,000, an increase of 27,000 from the previous week's revised figure of 613,000. The 4-week moving average was 646,750, a decrease of 4,250 from the previous week's unrevised average of 651,000.
...
The advance number for seasonally adjusted insured unemployment during the week ending April 11 was 6,137,000, an increase of 93,000 from the preceding week's revised level of 6,044,000.

Click on graph for larger image in new window.

The first graph shows weekly claims and continued claims since 1971.

The four week moving average is at 646,750.

Continued claims are now at 6.14 million - the all time record.

The second graph shows the 4-week average of initial weekly unemployment claims (blue, right scale), and total insured unemployed (red, left scale), both as a percent of covered employment.

This normalizes the data for changes in insured employment, and shows the initial unemployment and continued claims are both at the highest level since the early '80s.

This is another very weak report and shows continued weakness for employment.

by Calculated Risk on 4/22/2009 11:16:00 PM

I'm surprised this is playing out in public ...

First the government offered $1.0 billion, and no equity interest in the new Chrysler, to a consortium of debtholders (mostly banks with pier loans: JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup).

The banks countered with $4.5 billion, and a 40% equity interest.

From CNBC: Treasury Raises Offer to Chrysler Lenders

Treasury has offered the lenders $1.5 billion of first-lien debt and a 5 percent equity stake in a restructured Chrysler ...

It will be interesting to see if the banks budge (and by how much). They claim they can get more than 65 cents on the dollar in liquidation - or $4.5 billion. Just 7 more days ...

by Calculated Risk on 4/22/2009 06:53:00 PM

From Bloomberg: U.S. May Reveal Each Bank’s Capital Needs After Tests

The Obama administration may direct banks that are judged to be short of capital after stress tests to disclose how they are going to get additional funds when the government reveals the results on May 4, according to a person familiar with the matter.

The government would release a bank-by-bank assessment, while the lenders would say how they plan to shore up their finances ...

Regulators conducting the stress tests are increasingly focusing on the quality of loans banks made after finding wide variations in underwriting standards...

It only makes sense for banks short of capital to explain how they will raise the additional funds. The answer will probably be more money from the TARP!

On the variations in quality of loans, just look at the DataQuick delinquency report earlier today - even when you account for subprime vs. prime lenders, there was a clearly a wide disparity in underwriting standards. Hopefully this wasn't a surprise to the regulators.