by Calculated Risk on 10/07/2011 12:17:00 AM

From Reuters: U.S. mall Q3 vacancy rate at 11-year high -report

Preliminary figures by real estate research firm Reis Inc show the average vacancy rate at regional malls rose to 9.4 percent in the third quarter, the highest level since Reis began tracking regional mall vacancy rates in 2000 and up from 9.3 percent in the second quarter.
...
The vacancy rate at ... local retail strips was 11 percent, flat with the second quarter, Reis said. ... "With demand remaining so weak and more new completions anticipated to come online in the remainder of 2011, there is still a good chance that the vacancy rate will match the 11.1 percent record high observed in 1990 sometime later this year," Reis senior economist Ryan Severino said.

Click on graph for larger image in graph gallery.

The vacancy rate for regional malls is the highest on record, and the vacancy rate for strip malls is just below the record set in 1990. It is still very ugly for malls ...

• On the employment report tomorrow: Employment Situation Preview: Another Weak Report

Earlier:
• CoreLogic: Home Price Index declined 0.4% in August
• Weekly Initial Unemployment Claims increase to 401,000
• Reis: Apartment Vacancy Rate falls to 5.6% in Q3

by Calculated Risk on 10/06/2011 07:18:00 PM

Note: NFIB’s monthly small business survey for September will be released on Tuesday, October 11, 2011.

From the National Federation of Independent Business (NFIB): NFIB Jobs Statement: No News is Bad News; More Jobs Lost

“There is no good news to report. Until sales improve, until it becomes cost-effective to hire new workers, we cannot expect small-business owners to take advantage of new hiring tax credits and increase their employee rolls. ... For the fourth month in a row, small-business owners reported an overall reduction in employment, posting an average reduction of 0.3 workers per firm." [said William C. Dunkelberg, Chief economist for (NFIB)]
...
And looking ahead, 11 percent plan to increase employment (unchanged) over the next three months, while 12 percent plan to reduce their workforce (also unchanged), yielding a seasonally adjusted net 4 percent of owners planning to create new jobs, one point lower than August and far below the double digit readings that are typical during an expansion.

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Here is a graph of the net hiring plans for the next three months since 1986.

Hiring plans were still low in September, but still positive and the trend is up.

It is no surprise that small businesses are struggling due to the high concentration of real estate related companies in the survey. But as Dunkelberg noted, until sales improve (lack of demand) small business hiring will remain weak.

• On the employment report tomorrow: Employment Situation Preview: Another Weak Report

Earlier:
• CoreLogic: Home Price Index declined 0.4% in August
• Weekly Initial Unemployment Claims increase to 401,000
• Reis: Apartment Vacancy Rate falls to 5.6% in Q3

by Calculated Risk on 10/06/2011 03:40:00 PM

The first three stories are more evidence for sluggish growth in the U.S. economy. Also the ECB is offering more liquidity, and protests spread in the U.S.

• From MasterCard: SpendingPulse September 2011 U.S. Retail Sector Report: Momentum Continues With Strong Results in Most Sectors

... Most sectors reported positive year-over-year sales results, with particularly strong results in the Apparel, Hardware, and Department Store sectors.

According to Michael McNamara, VP of Research and Analysis for MasterCard Advisors SpendingPulse, the results showed the continuing resilience of the U.S. consumer, even in the face of a lackluster labor environment and volatile financial markets. “The US consumer continues to spend across multiple sectors outside of the sectors tied to the housing market. This resilience in retail sales growth has been impressive in spite of disruptive weather, high gasoline prices and generally negative economic news,” he observed.

McNamara suggested that some of the boost in year-over-year results may be due to the aftermath of Hurricane Irene back in August, particularly in stores with a strong presence on the East Coast. The strong performance in Hardware may reflect some repair work, and September’s Apparel sales may have been boosted by delayed back-to-school shopping. Meanwhile, the poor housing market continues to be reflected in declines in Furniture, Furnishings, and Electronics and Appliances.

• From the WSJ: September Retail Sales Are Solid Ahead of Holiday Push

The 23 retailers tracked by Thomson Reuters reported a 5.1% rise in stores open more than a year, or same-store sales. The figure beat expectations for 4.6% and compares with 2.7% growth last year.

• From the Association of American Railroads: AAR Reports Gains for September Rail Traffic

The Association of American Railroads (AAR) today reported ... U.S. railroads originating 1,195,671 carloads, up 1.1 percent [from September 2010], and 949,606 trailers and containers, up 2.3 percent.
...
“Carloads have been closely tracking last year’s levels for six months, and intermodal continues to grow, though more moderately than earlier this year,” said AAR Senior Vice President John T. Gray. “Rail traffic is consistent with an economy that is probably still growing, but far more slowly than any of us would want.”

• From Reuters: ECB gears up crisis measures, tussles over rates

The European Central Bank reinstated some of its ... crisis-fighting tools on Thursday ... but opted to keep interest rates at 1.5 percent despite some of the bank's policymakers calling for cuts.
...
[Jean-Claude Trichet] said [the ECB] will offer struggling banks two new injections of ultra-cheap 1-year funding and buy another 40 billion euros ($54 billion) of 'covered bonds' -- assets backed by mortgage loans or public sector lending and perceived as safe to own.

"The economic outlook remains subject to particularly high uncertainty and intensified downside risks," Trichet told a news conference, offering a more gloomy prognosis than last month when he merely talked of downside risks.

• From Reuters: Wall St protests spread

Protests that began in New York against U.S. economic inequality spread around America on Thursday ...

Dallas Fed President Richard Fisher told a group of business people in Fort Worth, Texas: "I am somewhat sympathetic - that will shock you."

The anger and frustration is understandable, and I'm definitely sympathetic. The economy needs to benefit everyone.

• And on the employment report tomorrow: Employment Situation Preview: Another Weak Report

by Calculated Risk on 10/06/2011 12:21:00 PM

Another record ... from Freddie Mac: 30-Year Fixed Mortgage Rate Falls Below 4 Percent

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the average rate for the conventional 30-year fixed mortgage dropping below 4 percent for the first time in history amid increasing global economic concerns. The 15-year fixed, a popular refinancing option, also fell to the lowest level on record for the sixth consecutive week.
...
"Average 30-year conventional fixed mortgage rates fell below 4 percent for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew. Average 15-year fixed rates fell to a record low in the PMMS as well. Interest rates for 1-year ARMs, however, rose, as the Fed began replacing $400 billion of its short-term Treasury securities, which serve as benchmarks for many ARMs." [said Frank Nothaft, vice president and chief economist, Freddie Mac]
...
30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.

15-year FRM this week averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. A year ago at this time, the 15-year FRM averaged 3.72 percent.

by Calculated Risk on 10/06/2011 10:19:00 AM

Notes: This CoreLogic Home Price Index report is for August. The Case-Shiller index released last week was for July. Case-Shiller is currently the most followed house price index, but CoreLogic is used by the Federal Reserve and is followed by many analysts. The CoreLogic HPI is a three month weighted average of June, July and August (August weighted the most) and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® August Home Price Index Shows Month-Over-Month and Year-Over-Year Decline

CoreLogic ... today released its August Home Price Index (HPI) which shows that home prices in the U.S. decreased 0.4 percent on a month-over-month basis, the first monthly decline in four months. According to the CoreLogic HPI, national home prices, including distressed sales, also declined on a year-over-year basis by 4.4 percent in August 2011 compared to August 2010. This follows a decline of 4.8 percent in July 2011 compared to July 2010. Excluding distressed sales, year-over-year prices declined by 0.7 percent in August 2011 compared to August 2010 and by 1.7 percent in July 2011 compared to July 2010. ...

“Although the calendar says August, the end of the summer traditionally marks the beginning of ‘fall’ for the housing market as it begins to prepare for ‘winter.’ So the slight month-over-month decline was predictable, particularly given the renewed concerns over a double-dip recession, high negative equity, and the persistent levels of shadow inventory. The continued bright spot is the non-distressed segment of the market, which is only marginally lower than a year ago and continues to exhibit relative strength,” said Mark Fleming, chief economist for CoreLogic.

Click on graph for larger image in graph gallery.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was down 0.4% in August, and is down 4.4% over the last year, and off 30.4% from the peak - and up 4.8% from the March 2011 low.

As Mark Fleming noted, some of this decrease is seasonal (the CoreLogic index is NSA). Month-to-month prices changes will probably remain negative through February or March 2012 - the normal seasonal pattern. It is likely that there will be new post-bubble lows for this index late this year or early in 2012.