by Calculated Risk on 5/26/2010 10:00:00 AM

The Census Bureau reports New Home Sales in April were at a seasonally adjusted annual rate (SAAR) of 504 thousand. This is an increase from the revised rate of 439 thousand in March (revised from 411 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 2010. In April 2010, 48 thousand new homes were sold (NSA).

The record low for the month of April was 32 thousand in 1982 and 2009; the record high was 116 thousand in 2005.

The second graph shows New Home Sales vs. recessions for the last 45 years.

Sales of new one-family houses in April 2010 were at a seasonally adjusted annual rate of 504,000 ... This is 14.8 percent (±19.5%)* above the revised March rate of 439,000 and is 47.8 percent (±26.0%) above the April 2009 estimate of 341,000.

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

Months of supply declined to 5.0 in April from 6.2 in March. This is significantly below the all time record of 12.4 months of supply set in January 2009. This would be about normal, except the months of supply will increase next month when sales decline.

The seasonally adjusted estimate of new houses for sale at the end of April was 211,000. This represents a supply of 5.0 months at the current sales rate.

The final graph shows new home inventory.

New home sales are counted when the contract is signed, so this pickup in activity is related to the tax credit.

For new home sales, the tax credit selling ended in April and sales will probably decline sharply in May.

by Calculated Risk on 5/26/2010 08:07:00 AM

The MBA reports: Mortgage Refinance Applications Continue to Increase, Purchase Applications Decline Further

The Market Composite Index, a measure of mortgage loan application volume, increased 11.3 percent on a seasonally adjusted basis from one week earlier ...

The Refinance Index increased 17.0 percent from the previous week. This third consecutive increase marks the highest Refinance Index recorded in the survey since October 2009. The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier and is the lowest Purchase Index observed in the survey since April 1997.
...
“Refinance application volume jumped last week as continuing financial market turmoil related to the budget crises in Europe extended the opportunity for homeowners to lock in at historically low mortgage rates,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “In contrast, purchase applications fell further this week, following last week’s sharp decline, keeping the purchase index at 13-year lows.”
...
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.80 percent from 4.83 percent, with points remaining constant at 1.08 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed-rate recorded in the survey since the week ending November 27, 2009.

Click on graph for larger image in new window.

This graph shows the MBA Purchase Index and four week moving average since 1990.

There was a spike in purchase applications in April, followed by a decline to a 13 year low last week. As Fratantoni noted last week: "The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season."

by Calculated Risk on 5/25/2010 11:59:00 PM

From the San Francisco Chronicle: Parkmerced in default (ht David)

The commercial real estate meltdown has caught up with one of the largest apartment complexes in the country -- San Francisco's Parkmerced.

The complex's owner is due to announce that the loan on the property is in default.

"Parkmerced and its lenders engaged a special servicer (a company that specializes in handling loans in default) to support the payments of the loan on the property," said Seth Mallen, an executive vice president of Stellar Management, a co-owner of Parkmerced, in a statement to be released Wednesday.
...
The 116-acre complex, purchased by Stellar Management and another real estate investment firm, Rockpoint Group, has 1,683 rental units contained in 11 residential towers. Blocks of two-story garden townhouses account for an additional 1,538 apartments.

The beat goes on ... just yesterday Bloomberg reported: Defaults on Apartment-Building Loans Set Record for U.S. Banks

Defaults on apartment-building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter, almost twice the year-earlier level, as more borrowers failed to repay debt approved near the market peak, said Real Capital Analytics Inc. in a report.

Defaults on so-called multifamily mortgages rose from 4.4 percent in the fourth quarter and from 2.4 percent during the same period in 2009 ...

by Calculated Risk on 5/25/2010 10:12:00 PM

Just a summary of the housing news ...

Tomorrow the New Home sales report will be released, and since new homes are reported when the contract is signed, April was most likely the peak month for tax credit related buying.

For existing home sales, the sales are reported when the transaction is closed, and buyers have until June 30th to close - so reported sales will probably increase further. On existing home sales, please see Inventory increases Year-over-Year and Existing Home Sales increase in April

On house prices, see: Case-Shiller House Prices "Weakening" and First American CoreLogic: House Prices Decline 0.3% in March

And the MBA released the Q1 National Delinquency Survey last week showing record delinquencies:
1) Press Release from the MBA: Delinquencies, Foreclosure Starts Fall in Latest MBA National Delinquency Survey
2) Comments from MBA conference call.
3) Two key graphs: Mortgage Delinquencies by Period and by State

Best to all

by Calculated Risk on 5/25/2010 06:30:00 PM

From the Congressional Budget Office: Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from January 2010 Through March 2010

CBO estimates that in the first quarter of calendar year
2010, ARRA’s policies:

Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.2 percent,

Lowered the unemployment rate by between 0.7 percentage points and 1.5 percentage points,

Increased the number of people employed by between 1.2 million and 2.8 million, and

Increased the number of full-time-equivalent jobs by 1.8 million to 4.1 million compared with what those amounts would have been otherwise.

The effects of ARRA on output and employment are expected to increase further during calendar year 2010 but then diminish in 2011 and fade away by the end of 2012.

Here is the CBO's estimate of the impact on GDP by quarter:

Change Attributable to ARRA, GDP change (percent)
		Low Estimate	High Estimate
2009	Q1	0.1	0.1
2009	Q2	0.9	1.5
2009	Q3	1.3	2.7
2009	Q4	1.5	3.5
2010	Q1	1.7	4.2
2010	Q2	1.7	4.6
2010	Q3	1.4	4.2
2010	Q4	1.1	3.6

Note: the impact on GDP growth (the headline number reported each quarter by the BEA), is the change in spending from one quarter to the next. The ARRA impact on GDP peaks in Q2 2010 and is lower in Q3 2010 by both estimates. This change will show up as a drag on GDP growth in Q3.

This is part of the reason I expect a slowdown in growth in the 2nd half of 2010. Other factors include: the inventory correction appears over, I expect households to save more (a drag on consumption growth), and I expect further weakness in housing.