by Calculated Risk on 8/25/2011 04:40:00 PM

With the release of the Q2 FDIC Quarterly Banking Profile, we can estimate the number of REOs held by FDIC insured banks and thrifts. From economist Tom Lawler:

"On the residential REO front, FDIC-insured institutions’ 1-4 family property REO holdings (in $’s of carrying value) declined to $12.0895 billion on June 30th, 2011 from $13.2795 billion on March 31st, 2011 and $13.7221 billion last June. The drop reflected the continued slow pace of REO acquisitions related to foreclosure delays, as well as a likely pick-up in REO dispositions last quarter.

While the FDIC does not collect data on the NUMBER of properties held by FDIC-insured institutions, a reasonable “guess” is that their average carrying value is about 50% higher than the GSEs, or in recent years around $150,000."

This gives an estimate of 80.6 thousand REO at FDIC insured institutions at the end of Q2, down from 88.5 thousand in Q1.

This graph shows REO inventory for Fannie, Freddie, FHA, Private Label Securities (PLS), and FDIC insured institutions. (economist Tom Lawler has provided some of this data).

Total REO decreased to 493,000 in Q2 from almost 550,000 in Q1.

As Tom Lawler noted: "This is NOT an estimate of total residential REO, as it excludes non-FHA government REO (VA, USDA, etc.), credit unions, finance companies, non-FDIC-insured banks and thrifts, and a few other lender categories." However this is the bulk of the REO - probably 90% or more. Rounding up the estimate (using 90%) suggests total REO is around 548,000 in Q2.

Important: REO inventories have declined over the last couple of quarters. This is a combination of more sales and fewer acquisitions due to the slowdown in the foreclosure process. There are many more foreclosures coming - see my earlier post on Mortgage Delinquencies and REOs.

Tom Lawler wrote today: "[I]f in fact REO inventories have declined in line with the Fannie, Freddie, FHA, and bank/thrift data, one shouldn’t view that as a “bullish” signal – after all, the main reason for the drop has been the artificially low pace of REO acquisitions associated with increasing foreclosure timelines/delays.

[I]n quite a few markets the lower REO inventories have reduce the REO shares of overall sales as well as the number of REO properties for sale, which has temporarily improved various measures of home prices. Many markets in Florida are prime examples, as judicial foreclosure delays have reduced substantially the pace of REO acquisitions as well as the inventory of REO properties for sale, even as the number of properties in the foreclosure process has remained at nosebleed levels."

by Calculated Risk on 8/25/2011 01:40:00 PM

Note: This is one of the industry specific measures that I follow. I only post this every few weeks or so. Looking back at this data during the recession, hotel occupancy first declined in Dec 2007, and then declined sharply in the fall of 2008. Right now the occupancy rate is holding up pretty well.

From HotelNewsNow.com: STR: Miami hotels report strong weekly results

Overall, the U.S. hotel industry’s occupancy rose 3.1% to 67.3%, its ADR increased 4.4% to US$101.80, and its RevPAR finished the week up 7.6% to US$68.53.

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using a four week average for the occupancy rate.

Click on graph for larger image in graph gallery.

The summer leisure travel season is ending, and the 4-week average of the occupancy rate is starting to decrease. Right now the occupancy rate is tracking just below the "median" level.

Smith Travel Research also reports that U.S. hotels sold a record number of rooms in July. From Jason Freed at HotelNewsNow Demand records are made to be broken

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 8/25/2011 11:00:00 AM

From the Kansas City Fed: Manufacturing Sector Continues to Expand Modestly

The Federal Reserve Bank of Kansas City released the August Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity continued to expand modestly, and producers remained generally positive about future months.

“Factory activity in our region continues to be buoyed by strong growth among agriculture and energy-related manufacturers,” said Wilkerson. “New orders accelerated at these firms in August even as some other firms experienced softness. But hiring and capital spending plans remain fairly solid across broader categories of producers.”
...
The month-over-month composite index was 3 in August, unchanged from 3 in July and down from 14 in June. ... Manufacturing activity slowed in nondurable goods factories, while growth in factory activity increased in durable goods producing plants, particularly for machinery, fabricated metal, and electronic equipment products. Other month-over-month indexes were mixed in August. The production index fell from 2 to -2, and the shipments index also moved into negative territory. However, the new orders index rebounded after dropping last month, and the employment and new orders for export indexes also rose.

Here is a table of the regional surveys in July and August; the Dallas Fed Texas Manufacturing will be released on Monday, August 29th.

Manufacturing Survey	July	August
Empire State	-3.76	-7.7
Philly Fed	3.2	-30.7
Richmond Fed	-1	-10
Kansas City Fed	3	3
Dallas Fed	10.8	---

Most of the regional surveys were very weak in August. The ISM index for August will be released Thursday, Sept 1st.

by Calculated Risk on 8/25/2011 08:30:00 AM

The DOL reports:

In the week ending August 20, the advance figure for seasonally adjusted initial claims was 417,000, an increase of 5,000 from the previous week's revised figure of 412,000. The 4-week moving average was 407,500, an increase of 4,000 from the previous week's revised average of 403,500.

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 increased this week to 407,500.

Weekly claims have increased for two consecutive weeks and the 4-week average is still elevated.

by Calculated Risk on 8/25/2011 12:10:00 AM

From the NY Times: U.S. May Back Refinance Plan for Mortgages (ht Ann)

One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent, according to two people briefed on the administration’s discussions ...

Administration officials said on Wednesday that they were weighing a range of proposals ... They are also working on a home rental program that would try to shore up housing prices by preventing hundreds of thousands of foreclosed homes from flooding the market. ...

But refinancing could have far greater breadth, saving homeowners, by one estimate, $85 billion a year. Despite record low interest rates, many homeowners have been unable to refinance their loans either because they owe more than their houses are now worth or because their credit is tarnished.

This is a recycled suggestion that Tom Lawler criticised last year. There is a already program to do this called Home Affordable Refinance Program (HARP) that wasn't very successful.