by Calculated Risk on 2/24/2011 03:04:00 PM

UPDATE: CNBC: US Cannot Confirm Rumors Gaddafi Shot; Oil Tumbles

• From the Kansas City Fed: Manufacturing activity matched an all-time survey high in February

The month-over-month composite index was 19 in February, up from 7 in January and 14 in December. This reading matched all-time survey highs reached several times from late 2003 to early 2005.
...
The production index rose to 23, its highest level since early 2006, and the shipments, new orders, and order backlog indexes also increased. The employment index jumped from 8 to 23, a ten-year high, and the new orders for exports index also edged higher.
...
Price indexes generally increased, or remained elevated from last month’s record high.

This follows solid reports from the NY Fed (Empire State), Philly Fed, and the Richmond Fed. The Texas survey will be released on Monday, Feb 28th, and these surveys suggest a strong reading in the ISM manufacturing survey to be released on March 1st.

• From Freddie Mac: 30-Year Fixed-Rate Mortgage Eases Just Below 5 Percent

30-year fixed-rate mortgage (FRM) averaged 4.95 percent with an average 0.6 point for the week ending February 24, 2011, down from last week when it averaged 5.0 percent. Last year at this time, the 30-year FRM averaged 5.05 percent.

Libya updates:
• From the NY Times: Qaddafi Strikes Back as Rebels Close In on Libyan Capital

• From the WSJ: Libya Rebels Vow Offensive as Gadhafi Blames al Qaeda

• The Telegraph blog that is updated frequently: Libya protests: live

• From al Jazeera: Live Blog - Libya Feb 24

• From Jim Hamilton at Econbrowser: Libya, oil prices, and the economic outlook

[O]ne wouldn't begin to anticipate significant effects on U.S. GDP until the price of oil got above about $130 a barrel, or until the second half of this year. ... My bottom line is that events as they have unfolded so far are not in the same ballpark as the major historical oil supply disruptions, and are unlikely to produce big enough economic multipliers that they could precipitate a new economic downturn. ... But the worry of course is that the big geopolitical changes we've been seeing didn't stop with Tunisia, and didn't stop with Egypt. So maybe it's not a good idea to assume it's all going to stop with Libya, either.

Earlier: New Home Sales
• New Home Sales decrease in January

Existing Home Sales:
• January Existing Home Sales: 5.36 million SAAR, 7.6 months of supply
• Existing Home Inventory increases 3.1% Year over Year

House Prices:
• Case-Shiller: National Home Prices Are Close to the 2009Q1 Trough
• Real House Prices fall to 2000 Levels, Update on NAR Overstating Sales
• House Prices: Price-to-rent, Price-to-median Household Income

Graph Galleries: New Home sales, existing home sales, House prices

by Calculated Risk on 2/24/2011 12:41:00 PM

Note: The National Association of Realtors (NAR) is working on a benchmark revision for existing home sales numbers. As I noted in January, this benchmarking is expected to result in significant downward revisions to sales estimates for the last few years - perhaps as much as 10% to 15% for 2009 and 2010. Even with these revisions, most of the following "distressing gap" will remain.

This graph shows existing home sales (left axis) and new home sales (right axis) through January. This graph starts in 1994, but the relationship has been fairly steady back to the '60s. Then along came the housing bubble and bust, and the "distressing gap" appeared (due mostly to distressed sales).

Click on graph for larger image in graph gallery.

Initially the 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 two spikes in existing home sales were due primarily to the homebuyer tax credits (the initial credit in 2009, followed by the 2nd credit in 2010). There were also two smaller bumps for new home sales related to the tax credits. The recent increase in existing home sales (before downward revisions) appears to be due to a combination of lower prices and investors buying low end properties.

Note: it is important to note that existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

In a few years - when the excess housing inventory is absorbed and the number of distressed sales has declined significantly - I expect existing home-to-new home sales to return to something close to this historical relationship.

by Calculated Risk on 2/24/2011 10:00:00 AM

The Census Bureau reports New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 284 thousand. This is down from a revised 325 thousand in December.

Click on graph for larger image in new window.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Sales of new single-family houses in January 2011 were at a seasonally adjusted annual rate of 284,000 ... This is 12 6 12.6 percent (±11.2%) below the revised December rate of 325,000 and is 18.6 percent (±15.4%) below the January 2010 estimate of 349,000.

And a long term graph for New Home Months of Supply:

Months of supply increased to 7.9 in January from 7.0 months in December. The all time record was 12.1 months of supply in January 2009. This is still high (less than 6 months supply is normal).

The seasonally adjusted estimate of new houses for sale at the end of January was 188,000. This represents a supply of 7.9 months at the current sales rate.

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

This graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale fell to 78,000 units in January. And the combined total of completed and under construction is at the lowest level since this series started.

This is the "good" news - in most areas the 'completed' and 'under construction' inventory of new homes is fairly lean.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In January 2010 (red column), 19 thousand new homes were sold (NSA). This is a new record low for the month of January.

The previous record low for January was 24 thousand in 2009 and 2010.

This was below the consensus forecast of 310 thousand homes sold (SAAR).

New home sales have averaged 293 thousand per month (annual rate) over the last nine months - all below the previous record low. Another very weak report ...

by Calculated Risk on 2/24/2011 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Feb. 19, the advance figure for seasonally adjusted initial claims was 391,000, a decrease of 22,000 from the previous week's revised figure of 413,000. The 4-week moving average was 402,000, a decrease of 16,500 from the previous week's revised average of 418,500.

Click on graph for larger image in graph gallery.

This graph shows the 4-week moving average of weekly claims for the last 40 years. The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week by 16,500 to 402,000.

The sharp drop in the 4-week average since late last year suggests some improvement in the labor market. There is nothing magical about the 400,000 level, but breaking below that level would be a good sign.

by Calculated Risk on 2/23/2011 09:39:00 PM

From Nick Timiraos, Dan Fitzpatrick and Ruth Simon at the WSJ: Mortgage Deal Takes Shape

The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns ... some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers ...

This is just preliminary - and is just a broad outline of a possible settlement. This is the first I've heard of a possible number for fines and/or loan modifications.