by Calculated Risk on 4/22/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending April 17, the advance figure for seasonally adjusted initial claims was 456,000, a decrease of 24,000 from the previous week's revised figure of 480,000. The 4-week moving average was 460,250, an increase of 2,750 from the previous week's revised average of 457,500.
...
The advance number for seasonally adjusted insured unemployment during the week ending April 10 was 4,646,000, a decrease of 40,000 from the preceding week's revised level of 4,686,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims increased this week by 2,750 to 460,250.

The dashed line on the graph is the current 4-week average. The current level of 456,000 (and 4-week average of 460,250) is still high, and suggests continuing weakness in the jobs market.

The 4-week average fell to this level in December 2009 following the worst of the recession, and has essentially moved sideways for four months.

by Calculated Risk on 4/21/2010 08:35:00 PM

Existing home sales for March will be released tomorrow and the consensus is for the NAR to report 5.25 million sales on a seasonally adjusted annual rate (SAAR) basis. That is probably close (I'll take the under). The NAR reported a 5.02 million sales rate in February.

1) The Federal tax credit expires at the end of April for buyers to sign a contract. Since existing home sales are reported when the transaction is closed (by the end of June to qualify for the tax credit), the tax credit probably had little impact on March sales. The boost to reported existing home sales from the tax credit will probably come mostly in May and June.

2) New home sales are counted when the contract is signed, so the boost should come earlier (March and April). The Census Bureau will report March new home sales on Friday.

3) The MBA mortgage purchase index is showing only a small pickup in purchase applications - so it appears the boost to sales from the tax credit will be much smaller than last year.

4) The level of existing home inventory is probably the most interesting detail in the NAR report tomorrow. Unfortunately there appears to be some discrepancy between local inventory levels and the number the NAR reports. However, on a year-over-year basis, inventories have been declining for the last 19 months. It is possible that the inventory level in March will be above March 2009 (3.65 million in March 2009). So that is something to watch for ...

by Calculated Risk on 4/21/2010 03:58:00 PM

Just an update ...

From Bloomberg: Portugal Spread to Bunds Widest in 13 Months on Greek Contagion

The yield on Portugal’s 10-year bond jumped 11 basis points to 4.80 percent ... That left the difference in yield, or spread, with bunds 11 basis points wider at 166 basis points, after earlier reaching 172 basis points, the most since March 10, 2009.

Greek 10-year bonds dropped ... sending the yield up 20 basis points to 8.17 percent. The yield premium over bunds jumped 25 basis points to 503 basis points after climbing to more than 522 basis points, the most since at least March 1998, when Bloomberg began compiling the generic prices.

by Calculated Risk on 4/21/2010 12:13:00 PM

The Sacramento Association of REALTORS® is breaking out monthly resales by equity sales (conventional resales), and distressed sales (Short sales and REO sales), and I'm following this series as an example to see mix changes in a distressed area.

Starting last month First American Corelogic has started releasing a distressed sales report - and that shows the trend in short sales and REOs nationally.

Click on graph for larger image in new window.

Here is the March data.

The Sacramento Association started breaking out REO sales in 2008, but they have only broken out short sales since June 2009. Almost 65% of all resales (single family homes and condos) were distressed sales in March.

Note: This data is not seasonally adjusted, although the increase in sales in March is slightly above normal because of the tax credit.

The second graph shows the percent of REO, short sales and conventional sales. The percent of short sales is near the high set in December. This will probably continue to increase this year (2010 is the year of the short sale!).

Also total sales in March were off 3.4% compared to March 2009; the tenth month in a row with declining YoY sales - even with a surge from tax credit buying this year!

On financing, nearly 60 percent were either all cash (27.1%) or FHA loans (31.5%), suggesting most of the activity in distressed former bubble areas like Sacramento is first time home buyers using government-insured FHA loans, and investors paying cash.

by Calculated Risk on 4/21/2010 08:57:00 AM

Note: This index is a leading indicator for Commercial Real Estate (CRE) investment.

The WSJ reports that the American Institute of Architects’ Architecture Billings Index increased to 46.1 in March from 44.8 in February. Any reading below 50 indicates contraction.

"This is certainly an encouraging sign that we could be moving closer to a recovery phase, even though we continue to hear about mixed conditions across the country," said Kermit Baker, chief economist at the American Institute of Architects

The ABI press release is not online yet.

Click on graph for larger image in new window.

This graph shows the Architecture Billings Index since 1996. The index has remained below 50, indicating falling demand, since January 2008.

The second graph compares the Architecture Billings Index with the year-over-year change in non-residential structure investment.

Historically, according to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. This suggests further significant declines in CRE investment through all of 2010, and probably longer.

Note: Nonresidential construction includes commercial and industrial facilities like hotels and office buildings, as well as schools, hospitals and other institutions.

And more on CRE: Fitch: U.S. CMBS Loan Defaults to Exceed 11% by End of 2010

Loan defaults will continue to escalate for U.S. CMBS, with an additional 4.4% likely in 2010 and the overall rate to exceed 11% among Fitch-rated deals by the end of the year, according to Fitch Ratings.

... For the first time in five years, multifamily was not the property type with the most new defaults, with that distinction going to retail (32.3%) last year. Following retail was multifamily (22.1%), office (20.2%) and hotel (17.8%). Fitch projects sizeable default increases for each property type, with rates likely to increase at accelerated rates for office and hotel loans.

'Office defaults spiked in the fourth quarter last year, with further rental and net operating income declines likely through next year before a rebound takes place,' said Senior Director Richard Carlson.