by Calculated Risk on 9/25/2009 02:23:00 PM

From the American Trucking Association: ATA Truck Tonnage Index Rose 2.1 Percent in August

Click on graph for slightly larger image in new window.

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.1 percent in August, matching July’s increase of the same magnitude. The latest gain raised the SA index to 104.1 (2000=100), which was the best reading since February 2009. ... Compared with August 2008, SA tonnage fell 7.5 percent, which was the best year-over-year showing since November 2008. ...

“The gains in tonnage during July and August reflect a growing economy and less of an overhang in inventories,” [ATA Chief Economist Bob Costello] noted. “While I am optimistic that the worst is behind us, most economic indicators, including industrial output and household spending, suggest freight tonnage will exhibit moderate, and probably inconsistent, growth in the months ahead."

The Rail Freight Traffic shows some recent pickup too, but the level is still way below 2008 and 2007. (ht Bob_in_MA) Note: Trucking accounts for about 70% of tonnage carried by all modes of domestic freight transportation, and about 83% of total revenue.

It appears the economy has reset to a new lower level, and growth will probably be sluggish. Trucking is probably benefiting from inventory restocking, and exports - the key positive areas for the economy.

by Calculated Risk on 9/25/2009 12:16:00 PM

For graphs based on the new home sales report this morning, please see: New Home Sales Flat in August

The following graph is a turnover ratio for existing home sales. This is annual sales and year end inventory divided by the total number of owner occupied units. For 2009, sales were estimated at 4.8 million units, and inventory at the August level.

Click on graph for larger image in new window.

Although the turnover ratio has fallen from the bubble years, the level is still above the median for the last 40 years. This suggests 2009 is about a normal year for existing home turnover.

That might seem shocking based on all the reports of weak existing home sales. But the problem isn't the number of sales (except as compared to the bubble years), but the type and price of sales.

The reason turnover hasn't fallen further is because of all the distressed sales (foreclosures and short sales) primarily in the low priced areas. Distressed sales declined in August, and this is a major reason existing home sales declined.

There is another wave of foreclosures coming, so existing home sales might stay elevated for some time. Plus, the "first-time" homebuyers tax credit might be extended (a poorly targeted an inefficient credit).

Note: there is a substantial shadow inventory too.

All this distressed sales activity has created a gap between new and existing sales as shown in the following graph that I've jokingly labeled the "Distressing" gap.

This graph shows existing home sales (left axis) and new home sales (right axis) through August.

As I've noted before, I believe this gap was caused primarily by distressed sales. Even with the recent rebound in new and existing home sales, the gap is still very wide.

The third graph shows the same information, but as a ratio for existing home sales divided by new home sales.

Although distressed sales will stay elevated for some time, eventually I expect this ratio to decline back to the previous ratio.

The ratio could decline because of a further increase in new home sales, or a decrease in existing home sales - or a combination of both. I expect the ratio will decline mostly from a decline in existing home sales as the first-time home buyer frenzy subsides, and as the foreclosure crisis moves into mid-to-high priced areas (with fewer cash flow investors).

by Calculated Risk on 9/25/2009 10:00:00 AM

The Census Bureau reports New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 429 thousand. This is a slight increase from the revised rate of 426 thousand in July (revised from 433 thousand).

Click on graph for larger image in new window.

The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted).

Note the Red columns for 2009. Sales in August 2009 were the same as August 2008. This is the 4th lowest sales for August since the Census Bureau started tracking sales in 1963.

In August 2009, 38 thousand new homes were sold (NSA); the record low was 34 thousand in August 1981; the record high for August was 110 thousand in 2005.

The second graph shows New Home Sales vs. recessions for the last 45 years. New Home sales fell off a cliff, but are now 30% above the low in January.

Sales of new one-family houses in August 2009 were at a seasonally adjusted annual rate of 429,000 ...

This is 0.7 percent (±16.2%)* above the revised July rate of 426,000, but is 3.4 percent (±13.3%) below the August 2008 estimate of 444,000.

And another long term graph - this one for New Home Months of Supply.

There were 7.3 months of supply in August - significantly below the all time record of 12.4 months of supply set in January.

The seasonally adjusted estimate of new houses for sale at the end of August was 262,000. This represents a supply of 7.3 months at the current sales rate.

The final graph shows new home inventory.

Note that new home inventory does not include many condos (especially high rise condos), and areas with significant condo construction will have much higher inventory levels.

Months-of-supply and inventory have both peaked for this cycle, and new homes sales has probably also bottomed for this cycle. However any further recovery in sales will likely be modest because of the huge overhang of existing homes for sale.

I'll have more later ...

by Calculated Risk on 9/25/2009 08:33:00 AM

From the Census Bureau:

New orders for manufactured durable goods in August decreased $4.0 billion or 2.4 percent to $164.4 billion, the U.S. Census Bureau announced today. This was the second decrease in the last three months. This followed a 4.8 percent July increase. Excluding transportation, new orders were down slightly.

Transportation equipment, also down two of the last three months, had the largest decrease, $4.0 billion or 9.3 percent to $39.5 billion. This was led by nondefense aircraft and parts, which decreased $3.7 billion.

So excluding civilian aircraft, durable goods orders were only down slightly.

The manufacturers continue to work down their unfilled orders and inventory:

Unfilled Orders
Unfilled orders for manufactured durable goods in August, down eleven consecutive months, decreased $2.8 billion or 0.4 percent to $737.1 billion. This was the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992 ...

Inventories
Inventories of manufactured durable goods in August, down eight consecutive months, decreased $4.2 billion or 1.3 percent to $308.9 billion. This followed a 1.1 percent July decrease.
emphasis added

by Calculated Risk on 9/24/2009 09:59:00 PM

Housing economist Thomas Lawler on CNBC this morning.

"It is virtual certainty that [foreclosure] sales will pick up. Various moratoria has actually diminished the pace of sales, but as people try to see who can qualify for the modification program. But the backlog of loans in foreclosure are rising, and foreclosure sales will 100% pickup, we just don't know when."

On tax credit: "It has been very very expensive, if you look at the number of people who have claimed the credit versus estimates of the incremental number of sales that wouldn't have occurred otherwise, looks it is costing the government about $40 thousand for every home sale generated."