by Calculated Risk on 11/23/2009 10:42:00 AM

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. For the fifth consecutive month, sales were higher in 2009 than in 2008.

And for the second straight month, sales in 2009 were higher than in 2007 (two years ago).

Of course many of these transactions in October were due to first-time homebuyers rushing to beat the expiration of the tax credit (that has now been extended). This has pushed sales far above the historical normal level; based on normal turnover, existing home sales would be in the 4.5 to 5.0 million SAAR range.

The second graph shows nationwide inventory for existing homes. According to the NAR, inventory decreased to 3.57 million in October from the upwardly revised 3.71 million in September. The all time record was 4.57 million homes for sale in July 2008. This is not seasonally adjusted.

Typically inventory peaks in July or August, so some of this decline is seasonal.

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

Months of supply declined to 7.0 months in October.

Sales increased sharply, and inventory decreased, so "months of supply" declined. A normal market has under 6 months of supply, so this is still high - and especially considering sales were artificially boosted by the tax credit.

by Calculated Risk on 11/23/2009 10:00:00 AM

The NAR reports: Existing-Home Sales Record Another Big Gain, Inventories Continue to Shrink

Existing-home sales – including single-family, townhomes, condominiums and co-ops – surged 10.1 percent to a seasonally adjusted annual rate1 of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.
...
Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, which represents a 7.0-month supply2 at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.

Click on graph for larger image in new window.

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

Sales in Oct 2009 (6.10 million SAAR) were 10.1% higher than last month, and were 23% higher than Oct 2008 (4.94 million SAAR).

I'll have more soon ...

by Calculated Risk on 11/23/2009 08:30:00 AM

From the Chicago Fed: Index shows economic activity leveled off in October

The Chicago Fed National Activity Index was –1.08 in October, down very slightly from –1.01 in September.
...
The index’s three-month moving average, CFNAI-MA3, decreased to –0.91 in October from –0.67 in September, declining for the first time in 2009. October’s CFNAI-MA3 suggests that growth in national economic activity remained below its historical trend.

Click on table for larger image in new window.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. According to the Chicago Fed (update: earlier I excerpted from the entering recession section):

"When the economy is coming out of a recession, the CFNAI-MA3 moves significantly into positive territory a few months after the official NBER date of the trough. Specifically, after the onset of a recession, when the index first crosses +0.20, the recession has ended according to the NBER business cycle measures. The positive horizontal line in Figure 3 is at +0.2. The critical question is: how early does the CFNAI-MA3 reveal this turning point? For four of the last five recessions, this happened within five months of the business cycle trough."

According to this index, it is still early to call the official recession over. The index is still fairly weak.

by Calculated Risk on 11/22/2009 10:36:00 PM

Earlier posts ...
Summary and a Look Ahead (A busy week for housing data!)

Fed's Bullard Backs Extension of MBS Purchases

Possible Changes to FHA Insured Mortgages


From the NY Times: Calming Sign of Troubled Past Appears in Modern Offices

To propel themselves through this economic downturn, media and advertising executives are turning to a phrase meant to soothe another troubled populace: the British during World War II.

“Keep calm and carry on,” a British government propaganda poster created in 1939, is now decorating offices.

Image from Wikipedia.

Hey ... Keep Calm and Carry On!

by Calculated Risk on 11/22/2009 07:26:00 PM

From the WSJ Real Time Economics: Fed’s Bullard: Asset Buying Efforts Should Remain Active (ht (Bob_in_MA)

“I have advocated to keep the asset purchase program open but at a very low level, and wait and see what happens, and as information comes in about the economy we can adjust that program while the federal funds rate remains at zero,” [Federal Reserve Bank of St. Louis President James] Bullard told Dow Jones Newswires in an interview Sunday ahead of a conference in New York. He added “no decision has been made” about the program’s fate.
...
Citing the current level of the Fed’s overnight interest rate target, Bullard said “as long as we are at zero (percent) we’d be able to send signals to the markets about what we are thinking about the economy, and how much accommodation the economy needs at various points, by adjusting the asset purchases.”

Bullard will be a voting member of the FOMC next year.

Here are the slides from Bullard's speech today. Here are a few excerpts:

KEY PROBLEM: TOO BIG TO FAIL

The crisis showed that large financial institutions worldwide were “too big to fail.” (TBTF)

Really, “too big to fail quickly.”

If we let large financial firms fail suddenly, global panic ensues.

Again, these firms are not necessarily banks.

Reform efforts must focus on getting this intolerable situation under control.

TBTF is very costly to the macroeconomy as well as unfair.

We need laser-like focus on this problem.

ACTUAL PROPOSALS

Proposals addressing TBTF:

Systemic risk regulation: A council with the Fed having implementation responsibility.

A resolution regime for large financial firms.

Split up large firms.

There are important global coordination issues.

Difficulties in design suggests a “go slow” approach.

The crisis will not soon be forgotten.