by Calculated Risk on 7/16/2009 01:00:00 PM

Click on graph for larger image in new window.

This graph shows the builder confidence index from the National Association of Home Builders (NAHB).

The housing market index (HMI) increased to 17 in July from 15 in June. The record low was 8 set in January.

This is still very low - and this is what I've expected - a long period of builder depression.

Note: any number under 50 indicates that more builders view sales conditions as poor than good.

Press release from the NAHB (added):

Builder confidence in the market for newly built, single-family homes notched up two points in July to its highest level since September 2008, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose two points to 17 in July as builders saw an improvement in current sales conditions but continued to express concerns about the future.
...
“Although today’s HMI is positive news that helps confirm the market is bouncing around a bottom, the gain was entirely contained in the component gauging current sales conditions, while the component gauging sales expectations for the next six months remained virtually flat for a fourth consecutive month,” noted NAHB Chief Economist David Crowe. “Builders recognize the recovery is going to be a slow one and that we are facing a number of substantial negative forces.”

by Calculated Risk on 7/16/2009 11:46:00 AM

A few more conference call comments on mods and foreclosures: (ht Brian)

“we definitely saw as all did a build up in loans that were delinquent in all of the delinquency statistics given that we suspended foreclosures during the moratoriums in the Fall and Spring of this year which are described on that side of the page. What I would say is that those will sit there longer in a delinquency bucket so our in prime and subprime you see elevated delinquency stats but we don't expect it to have meaningful accounting or Income Statement impact because as we came out of those moratoriums we originally written down those loans and made adjustments to the writedowns to take account of the longer timeliness to move them through into Real Estate owned and foreclosure, if appropriate, or modify them. So then on modifications, again, I said at the beginning we've approved 138,000 modifications for the Second Quarter here, but those don't have any meaningful impact on our Second Quarter stats, and that's because we have to see three-monthly payments under the terms of the new modification before we'll reunderwrite that loan and it comes out of delinquency and in the meantime, it just continues to roll through delinquency buckets as it otherwise would have per the contract of the term. When we do see, if we do see and we hope to see good success with these modifications perhaps next quarter and in future quarters we'll talk about just the success rate but given that these are largely speaking payment reduction modifications that are done reunderwritten with real income stats and so fourth, we are hopeful that we see some good rates of success in the trial period, but when we do modify, you just see the description at the bottom of how we take into account when we adjust our reserves at the time we modify the expected remaining losses including an assumption for redefault”

Next quarter we should see the results of the modicifications.

“when you look at home equity prime and subprime, you'll see the charge-offs continue to trend higher versus prior periods and in a couple of the cases prime and subprime we up our future [loss] guidance but the second point is that across each of these portfolios, the flow into the early delinquency buckets and the dollar value of loans sitting in the early delinquency buckets has started to stabilize over the last 60-90 days across-the-board. That's a new trend versus what we've seen previously and obviously, we don't know if it's going to sustain itself but obviously if it did that would have good implications for future loss trends and could mean that we could be getting near the end of needing to add to reserves in these portfolios.”

All the other data (like from the MBA) is showing rising delinquencies, especially for prime loans - so this will be something to watch too.

by Calculated Risk on 7/16/2009 10:00:00 AM

Here is the Philadelphia Fed Index released today: Business Outlook Survey.

The region's manufacturing sector is still experiencing weakness ....

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from -2.2 in June to -7.5 this month. The index has been negative for 19 of the past 20 months, a span that corresponds to the current recession ...

Labor market conditions remain weak, and firms continue to report employment losses and declines in work hours. The current employment index declined to -25.3, from an already weak reading of -21.8. ...

Click on graph for larger image in new window.

This graph shows the Philly index for the last 40 years.

"The index has been negative for 19 of the past 20 months, a span that corresponds to the current recession."

by Calculated Risk on 7/16/2009 09:16:00 AM

JPM Conference call comments on Commercial Real Estate (CRE): (ht Brian)

Analyst: Everyone is still concerned about commercial Real Estate and kind of how it's performing. You haven't really mentioned it as being a problem in the quarter highlighted it. Can you give any color as to how you're seeing general trends in the commercial Real Estate market?

Jamie Dimon: Commercial Real Estate in the United States of America is going to get worse consistently over the next several quarters. That should not be a surprise to anybody. We've got two major Real Estate exposures, we have what we call CTO which is multi-family smaller loans, it's performing fine and-- what we got from WaMu, that's the commercial bank, 30 Billion portfolio from WaMu -- it will get worse but we don't expect it to be significant, materially significant to our numbers, and we also have a more traditional Real Estate portfolio but I would say both the Bank One, JP Morgan and Chase, we've been so conservative of the last eight or nine years it's been doing nothing but in general shrinking other than the acquisition of WaMu [ it’s 12 billion] and losses are, charge-offs were for the Real Estate banking, 186 basis points and the commercial term lending was 36 and both will get worse but they aren't that big a number for us. It [commercial real estate] is a big deal for regional banks.
emphasis added

by Calculated Risk on 7/16/2009 08:59:00 AM

From RealtyTrac:

RealtyTrac ... today released its Midyear 2009 U.S. Foreclosure Market Report, which shows a total of 1,905,723 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 1,528,364 U.S. properties in the first six months of 2009, a 9 percent increase in total properties from the previous six months and a nearly 15 percent increase in total properties from the first six months of 2008. The report also shows that 1.19 percent of all U.S. housing units (one in 84) received at least one foreclosure filing in the first half of the year.

Foreclosure filings were reported on 336,173 U.S. properties in June, the fourth straight monthly total exceeding 300,000 and helping to boost the second quarter total to the highest quarterly total since RealtyTrac began issuing its report in the first quarter of 2005. Foreclosure filings were reported on 889,829 U.S. properties in the second quarter, an increase of nearly 11 percent from the previous quarter and a 20 percent increase from the second quarter of 2008.

Something to remember: questions have been raised before about the RealtyTrac numbers (see Foreclosure numbers don’t add up), and RealtyTrac has only been tracking these numbers since 2005. For California, I use the DataQuick numbers for NOD activity (released quarterly), and available since the early '90s - but that is just one state.