by Calculated Risk on 8/18/2011 10:00:00 AM

The NAR reports: Existing-Home Sales Down in July but Up Strongly From a Year Ago

Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 3.5 percent to a seasonally adjusted annual rate of 4.67 million in July from 4.84 million in June, but are 21.0 percent above the 3.86 million unit pace in July 2010, which was a cyclical low immediately following the expiration of the home buyer tax credit.
...
Total housing inventory at the end of July fell 1.7 percent to 3.65 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, up from a 9.2-month supply in June.

Click on graph for larger image in graph gallery.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in July 2011 (4.67 million SAAR) were 3.5% lower than last month, and were 21% above the July 2010 rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 3.65 million in July from 3.72 million in June.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, so it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory decreased 8.9% year-over-year in July from July 2010. This is the sixth consecutive month with a YoY decrease in inventory.

Months of supply increased to 9.4 months in July, up from 9.2 months in June. This is much higher than normal. These sales numbers were below the consensus, but right at Lawler's forecast of 4.69 million using the NAR method.

by Calculated Risk on 8/18/2011 08:30:00 AM

The DOL reports:

In the week ending August 13, the advance figure for seasonally adjusted initial claims was 408,000, an increase of 9,000 from the previous week's revised figure of 399,000. The 4-week moving average was 402,500, a decrease of 3,500 from the previous week's revised average of 406,00.

The following graph shows the 4-week moving average of weekly claims since January 2000 (longer term graph in graph gallery).

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 402,500.

This is the lowest level for the 4-week average since early April. The 4-week average is still elevated, but has been moving down since mid-May.

Note: CPI increased 0.5% in July (0.2% core). I'll have some graphs later.

by Calculated Risk on 8/18/2011 12:13:00 AM

From Louise Story at the NY Times: U.S. Inquiry Eyes S.&P. Ratings of Mortgages

The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities ... the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers ... If the government finds enough evidence to support such a case ... it could undercut S.& P.’s longstanding claim that its analysts act independently from business concerns

There is no question that S&P incorrectly rated mortgage securities, but that was just their "opinion". This investigation is apparently focused on if the analysts wanted to downgrade the ratings, but they were overruled by managers. If so, S&P might lose their first amendment protection and then be open to lawsuits from investors.

by Calculated Risk on 8/17/2011 07:01:00 PM

From the Chicago Fed: Second Quarter Midwest Farmland Values Soar

Farmland values for the second quarter of 2011 climbed 17 percent from the level of a year ago in the Seventh Federal Reserve District. The value of “good” agricultural land increased 4 percent in the second quarter compared with the first quarter of 2011, according to a survey of 226 agricultural bankers in the District.
...
At 17 percent, the year-over-year increase in the value of District farmland for the second quarter of 2011 was the largest recorded since
the 1970s.

Apparently there is quite a bit of investor buying (Gold, guns and farmland?). The Chicago Fed will hold a conference on farmland values in November: Rising Farmland Values: Causes and Cautions

Back in the 1980s, when farmland values collapsed, many farmers lost their land - and many banks went under. I just hope the lenders and farmers remember the '80s and keep the loan-to-value for farmland down. I hope the regulators are paying attention too.

by Calculated Risk on 8/17/2011 03:35:00 PM

DataQuick has developed a new resource for tracking home sales that is updated weekly. It can be accessed by going to the DataQuick news site and clicking on the National Home Sales at the top (or directly here: National Home Sales Snapshot).

DataQuick provides sales and median prices using the most current 30/31 days based on 98 of the Top 100 US MSAs (excluding Louisville and Wichita). DataQuick estimates this is almost two-thirds of all US home sales. These are real sales counts (as opposed to the NAR approach that will probably be changed later this year). DataQuick also provides median prices.

Right now DataQuick is combining existing and new home sales, and they were kind enough to break out the data for me.

This resource will allow us to track sales weekly, although we have to remember this data is Not Seasonally Adjusted (NSA), and both the NAR and Census Bureau headline numbers are reported on a Seasonally Adjusted Annual Rate (SAAR) basis.

I decided to compare the DataQuick numbers to the NAR and Census Bureau reports. Both the NAR and Census Bureau report monthly, and the DataQuick data is weekly.

Click on graph for larger image in graph gallery.

This graph shows the NSA data for DataQuick and the NAR. The dashed line is scaling up the DataQuick numbers by .6625 (their estimate of sales coverage).

The NAR recognizes that their estimate are too high - and they are planning revising down their estimates this fall. However this suggests that the NAR might be overestimating by even more than the 10% to 15% that many analysts think. This also suggests sales in 2011 are very weak.

The second graph compares the DataQuick new home sales numbers with the Census Bureau. The Census Bureau reports when contracts are signed and DataQuick reports when the purchase is closed. So there are some timing issues.

The dashed line is using the same scaling factor as for existing homes. The new home data from the Census Bureau appears to be fairly close to the DataQuick numbers - although it is hard to tell because of the large spikes due to the homebuyer tax credit and because of the lag between contract signings and closings.

This appears to be very useful data for tracking home sales.