by Calculated Risk on 6/02/2010 03:54:00 PM

Based on an estimate from Autodata Corp, light vehicle sales were at a 11.63 million SAAR in May. This is up 18.1% from May 2009 (when sales were very low), and up 3.9% from the April sales rate.

Click on graph for larger image in new window.

This graph shows the historical light vehicle sales (seasonally adjusted annual rate) from the BEA (blue) and an estimate for May (red, light vehicle sales of 11.63 million SAAR from Autodata Corp).

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current month sales rate.

Auto sales have recovered from the low levels of early 2009, but are still at the lowest point of the '90/'91 recession (even with a larger number of registered drivers).

This was slightly above most forecasts of around 11.2 million SAAR.

by Calculated Risk on 6/02/2010 01:56:00 PM

From Diana Olick at CNBC: BofA: Mortgage Walkaways Have Huge Incentive

On the conference call ... this morning, BofA's credit loss mitigation executive, Jack Schakett, said the amount of strategic defaulters ... are "more than we have ever experienced before." He went on to say, "there is a huge incentive for customers to walk away because getting free rent and waiting out foreclosure can be very appealing to customers."

Schakett says the foreclosure process is still taking 13 to 14 months ... and so there's over a year of free rent.
emphasis added

This is just acknowledging the obvious - borrowers have "a huge incentive to walk away" and "foreclosure can be very appealing to customers".

On the conference call, BofA announced a new "Principal Reduction Enhancement" program for certain underwater borrowers. Here is the press release via MarketWatch: Qualified Homeowners Who Are Severely Underwater May Earn Forgiveness of Some Principal Over Three or Five Years

NHRP-eligible loans include subprime, Pay-Option ARM and prime-quality two-year hybrid ARM loans originated by Countrywide on or prior to January 1, 2009, if the amount of principal owed exceeds the current property value by at least 20 percent and the loan is 60 days or more past due.

This is really targeted at Option ARMs ... and I guess they are asking borrowers to stop paying so they can get a principal reduction.

by Calculated Risk on 6/02/2010 11:08:00 AM

From MarketWatch: GM posts 16.6% rise in May U.S. sales:

General Motors Co. on Wednesday reported a 16.6% rise in May U.S. sales from a year ago to 223,822 vehicles.

This is based on an easy comparison: in May 2009 U.S. light vehicle sales fell 31% to 9.8 million (SAAR) from 14.2 million (SAAR) in May 2008. The sharp decline last year was due to the financial crisis, the recession, the Chrysler bankruptcy (Chrysler filed for bankruptcy at the end of April, 2009) and reports of the then impending bankruptcy of GM (GM filed for bankruptcy on June 1, 2009).

UPDATE: From Ford: Ford's U.S. May Sales Up 23 Percent

UPDATE2: From MarketWatch: Chrysler U.S. May sales rise 33% to 104,819 units (Chrysler was in BK last May).

UPDATE3: From MarketWatch: Toyota U.S. May sales up 6.7%

I'll add reports from the other major auto companies as updates to this post.

NOTE: Once all the reports are released, I'll post a graph of the estimated total May sales (SAAR: seasonally adjusted annual rate) - usually around 4 PM ET. Most estimates are for about the same level as April (11.2 million SAAR).

by Calculated Risk on 6/02/2010 10:00:00 AM

From the NAR: Pending Home Sales Surge Continuing

The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Once again this is no surprise - the tax credit has pulled demand forward, and existing home sales will decline after June (existing home sales are counted when the contract closes).

I suspect a number of these homes will never close. I've heard stories of buyers entering into two deals at the end of April, intending to cancel one. Also some short sales will probably not close on time because of the lengthy process.

Post title next month: Pending home sales collapse in May!

by Calculated Risk on 6/02/2010 07:06:00 AM

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

The Refinance Index increased 2.4 percent from the previous week. This was a smaller increase than in previous weeks, but was still the fourth consecutive weekly increase for the Refinance Index and it remains at its highest level since October 2009. The seasonally adjusted Purchase Index decreased 4.1 percent from one week earlier. The Purchase Index decreased for the fourth consecutive week and is currently at the lowest level since April 1997.
...
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.83 percent from 4.80 percent, with points decreasing to 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Click on graph for larger image in new window.

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

The purchase index has declined sharply following the tax credit related buying, suggesting home sales will fall sharply too. Pending home sales for April will be announced today and a large increase is expected, however May pending home sales will be much lower.

As the Michael Fratantoni, MBA’s Vice President of Research and Economics noted two weeks ago: "The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season."