by Calculated Risk on 12/22/2009 10:54:00 AM

Earlier the NAR released the existing home sales data for November; here are a couple more graphs ... and a few comments.

Click on graph for larger image in new window.

This graph shows NSA monthly existing home sales for 2005 through 2009 (see Red columns for 2009).

Sales (NSA) in November were much higher than in November 2007 and 2008, and were at the same level as November 2006.

Of course - as I noted earlier - many of these transactions in November were due to first-time homebuyers rushing to beat the expiration of the tax credit (that has now been extended).

Note: Existing home sales play an important role in the economy because they allow people to move for new job opportunies, or to move to larger or smaller homes for various reasons. It is the reason that people move that contributes to the economy; churning homes does nothing except generate some fees and commissions. Nothing has been added to the housing stock or the wealth of the nation.

The way to think of existing home sales is as grease for the economy. Once you have enough - probably around 4.5 to 5.0 million units per year - any extra is just a waste.

What matters for the economy are new home sales, housing starts and residential investment. And there has been little improvement in these key indicators - and there will not be any until the huge overhang of excess inventory is reduced.

This really shows up on the following graph:

This graph shows existing home sales (left axis) through November, and new home sales (right axis) through October.

The initial gap was caused by the flood of distressed sales. This kept existing home sales elevated, and depressed new home sales since builders couldn't compete with the low prices of all the foreclosed properties.

The recent spike in existing home sales was due primarily to the first time homebuyer tax credit.

A few more comments:

Months-of-supply will now increase sharply as sales plunge. Do not be fooled because months-of-supply is close to "normal" levels. This is primarily because sales were distorted by the tax credit.

Excess inventory includes existing home inventory, rental units (vacancy at record high), and various shadow inventory. This is still near record levels.

House prices are now falling again - and this will show up in the Case-Shiller index soon.

This is probably the end of the "good" housing news for a while.

by Calculated Risk on 12/22/2009 10:00:00 AM

The NAR reports: Another Big Gain in Existing-Home Sales as Buyers Respond to Tax Credit

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.4 percent to a seasonally adjusted annual rate of 6.54 million units in November from 6.09 million in October, and are 44.1 percent higher than the 4.54 million-unit pace in November 2008. Current sales remain at the highest level since February 2007 when they hit 6.55 million.
...
Total housing inventory at the end of November declined 1.3 percent to 3.52 million existing homes available for sale, which represents a 6.5-month supply at the current sales pace, down from an 7.0-month supply in October.

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 Nov 2009 (6.54 million SAAR) were 7.4% higher than last month, and were 44% higher than Nov 2008 (4.54 million SAAR).

Of course many of the transactions in November were due to first-time homebuyers rushing to beat the initial 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 3.52 million in November from 3.57 million in October. 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 this decline is mostly seasonal.

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

Months of supply declined to 6.5 months in November.

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. I'll have more soon ...

by Calculated Risk on 12/22/2009 08:28:00 AM

From the BEA:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.2 percent in the third quarter of 2009 ...

GDP was revised down from the advance estimated of 3.5% to the preliminary estimate of 2.8%, and now to 2.2%.

Personal consumption expenditures (PCE) were revised down to 2.8% from 2.9%.

And investment in nonresidential structures was revised down to -18.4% from -15.1% (aka falling off a cliff).

by Calculated Risk on 12/21/2009 10:51:00 PM

Earlier today I mentioned that the Fed started using First American CoreLogic's LoanPerformance House Price Index last year for the Flow of Funds report.

And also that LoanPerformance announced today that house prices fell 0.7% in October.

Since most people have been following Case-Shiller, here is a graph of the LoanPerformance index (with and without foreclosures) and the Case-Shiller Composite 20 index.

Click on graph for larger image in new window.

This graph shows the three indices with January 2000 = 100.

The indices mostly move together over time. Notice how the total LoanPerformance index fell further than the index excluding foreclosures - and also rebounded more.

The Case-Shiller index will probably show a decline in October - although Case-Shiller is an average of three months, so it might be a small decrease. The question is how much further will prices fall?

by Calculated Risk on 12/21/2009 07:31:00 PM

From the WaPo: Number of delinquent bailed-out banks rises

A growing number of the recipients face financial problems and have been unable to pay the government. Fifteen banks failed to make the required payments in May, federal data show. The number climbed to 33 banks in August, and 55 banks that failed to make the dividend payments due Nov. 17.

Here is the report from the Treasury.

And in excel format under Dividend and Interest Reports.

There are three permanent deadbeats on the list: CIT Group (filed bankruptcy and wiped out its $2.3 billion in TARP debt), UCBH Holdings Inc. was seized by the FDIC (TARP lost $298.7 million), and Pacific Coast National Bank was also seized by the FDIC (TARP lost $4.1 million).

Remember when the TARP capital was supposed to only go to "healthy" financial institutions?