by Calculated Risk on 4/27/2011 10:00:00 AM

The Census Bureau reported the homeownership and vacancy rates for Q1 2011 this morning.

Click on graph for larger image in graph gallery.

The homeownership rate declined to 66.4%, down from 66.5% in Q4 2010. This is the same as in 1998.

Note: graph starts at 60% to better show the change.

The homeownership rate increased in the '90s and early '00s because of changes in demographics and "innovations" in mortgage lending. Some of the increase due to demographics (older population) will probably stick, so I've been expecting the rate to decline to around 66%, and probably not all the way back to 64%.

The homeowner vacancy rate decreased to 2.6% in Q1 2011, down from 2.7% in Q4 2010. This has been bouncing around in the 2.5% to 2.7% range for two years, and is slightly below the peak of 2.9% in 2008.

A normal rate for recent years appears to be about 1.7%.

This leaves the homeowner vacancy rate about 0.9 percentage points above normal. This data is not perfect, but based on the approximately 75 million homeowner occupied homes, we can estimate that there are close to 675 thousand excess vacant homes.

The rental vacancy rate increased to 9.7% in Q1 2011 from 9.4% in Q4 2010.

This increase doesn't fit with the Reis apartment vacancy data and the NMHC apartment survey. However this report is nationwide and includes homes for rent.

It's hard to define a "normal" rental vacancy rate based on the historical series, but we can probably expect the rate to trend back towards 8%. According to the Census Bureau there are close to 42 million rental units in the U.S. If the rental vacancy rate declined from 9.7% to 8%, then 1.7% X 42 million units or about 700 thousand excess units would have to be absorbed.

This suggests there are still close to 1.4 million excess housing units.

Note: Some analysts also add in the increase in "held off market, other" units to track the excess housing units - and that has increased from 2.6 million units at the end of 2005 to 3.861 million units in Q1 2011 - or another 1.26 million excess units. That would suggest over 2.6 million excess units. Either way, this survey suggests there is still a large number of excess units.

by Calculated Risk on 4/27/2011 07:19:00 AM

The MBA reports: Mortgage Applications Decrease in Latest MBA Weekly Survey

The Refinance Index decreased 0.6 percent from the previous week. The seasonally adjusted Purchase Index decreased 13.6 percent to its lowest level since February 25, 2011, driven by a 26.6 percent decrease in government purchase applications.
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"Purchase applications fell last week, driven primarily by a sharp decrease in government purchase applications as new, higher FHA premiums went into effect," said Michael Fratantoni, MBA’s Vice President of Research and Economics. “This decrease reverses a 20 percent increase in government purchase applications over a four week period, which was likely driven by borrowers attempting to beat this deadline.”
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The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.80 percent from 4.83 percent, with points decreasing to 1.01 from 1.06 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Click on graph for larger image in graph gallery.

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

With the higher FHA premiums, the purchase index fell last week to the lowest level since February.

The four week average is at about 1997 levels, although - as far as sales - this doesn't include the very high percentage of cash buyers. From the NAR: "All-cash sales were at a record market share of 35 percent in March, up from 33 percent in February; they were 27 percent in March 2010."

by Calculated Risk on 4/26/2011 11:05:00 PM

From Michael Derby at the WSJ: Bernanke's Code: a Guide to Fed Chairman's First Q&A Derby discusses "inflation expectations", TIPS, the "extended period" language, commodity prices, the Fed's balance sheet, the dollar and "jobs, jobs, jobs". A good preview.

Here was my earlier preview of the FOMC meeting. Note that the FOMC statement will be released earlier than usual at 12:30 PM ET, and the Bernanke press briefing will be at 2:15 PM (and Bernanke will release the Fed's updated forecast).

Also tomorrow:
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.

8:30 AM: Durable Goods Orders for March from the Census Bureau. The consensus is for a 2.0% increase in durable goods orders after decreasing 0.9% in February.

10:00 AM: Q1 Housing Vacancies and Homeownership report from the Census Bureau.

On House Prices earlier:
• Case Shiller: Home Prices near post-bubble lows in February
• Real House Prices and Price-to-Rent
• House Price Graphs

by Calculated Risk on 4/26/2011 05:22:00 PM

• From the Associated Estates Realty Corp (AEC) conference call, an apartment REIT in IN, OH, MI and PA (ht Brian):

Looking at certain performance metrics throughout our portfolio, we continue to see residents staying longer - on average, 18 months. Also, it has been well publicized, households have a greater propensity to rent versus own as renting allow for increased financial flexibility and physical mobility. To this point our annual resident turnover is down 10 basis points year-over-year and buying home as a reason for moveout is just over 14%, down from better than 25% just a few years ago. These trends are contributing to increased occupancy, increased rents, and improved same community NOI as a result of the lower turnover costs.

Other apartment owners have also told me that the number of renters "moving out to buy a home" is way down.

• Although LPS has not released their mortgage metrics for March yet, I've heard that the "foreclosure in process" category is at a record high (no surprise) while the overall delinquencies declined sharply (a seasonal decline is normal for March). Also Freddie Mac released the monthly volume report for March, and they showed 90+ day delinquencies down to 3.63% - a high level, but the lowest since September 2009. I'll have graphs for both reports in the next few days.

• Earlier I posted the ATA press release showing the trucking index was up 1.7% in March.

Click on graph for larger image in graph gallery.

Here is a long term graph that shows ATA's Fore-Hire Truck Tonnage index.

On House Prices earlier:
• Case Shiller: Home Prices near post-bubble lows in February
• Real House Prices and Price-to-Rent
• House Price Graphs

by Calculated Risk on 4/26/2011 02:15:00 PM

• From the Richmond Fed: Manufacturing Growth Moderates in April

In April, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — fell ten points to 10 from March's reading of 20.
...
Hiring conditions at Fifth District plants changed little in April from their March pace. The manufacturing employment index slipped two points to end at 14 and the average workweek measure eased three points to 7. In contrast, wage growth added three points to 22.

Also the Richmond Fed service survey showed improvement: Service Sector Activity Strengthens: Retail Revenues Rise; Services Firms Make Gains (This is new and not closely followed, but this showing a strong pickup in the service sector with little increase in prices).

• From ATA Trucking: ATA Truck Tonnage Index Rose 1.7 Percent in March

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 1.7 percent in March after falling a revised 2.7 percent in February 2011.
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Compared with March 2010, SA tonnage climbed 6.3 percent, which was higher than February’s 4.4 percent year-over-year gain, but below the 7.6 percent jump in January. For the first quarter of 2011, tonnage increased 3.8 percent from the previous quarter and 6.1 percent from the first quarter 2010.

“Despite my concern that higher energy costs are going to begin cutting into consumer spending, tonnage levels were pretty good in March and the first quarter of the year,” said ATA Chief Economist and Vice President Bob Costello. Looking ahead, Costello said, “While I still think the industry will continue to grow and recover from the weak freight environment we've seen in recent years, the rapid spike in fuel prices will slow that growth.”
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Trucking serves as a barometer of the U.S. economy, representing 68 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.

• From CNBC: Consumer Confidence Index rises in April

The Conference Board said Tuesday the index rose to 65.4 from a revised 63.8 in March.

Expectations were for an increase to 64.4.

On House Prices:
• Case Shiller: Home Prices near post-bubble lows in February
• Real House Prices and Price-to-Rent
• House Price Graphs