by Calculated Risk on 11/07/2011 04:40:00 PM

Another update: I've been using inventory numbers from HousingTracker / DeptofNumbers to track changes in inventory. Tom Lawler mentioned this back in June (Tom also discussed how the NAR estimates existing home inventory - they don't aggregate data from local boards!)

• In a few months, the NAR is expect to release revisions for their existing home sales and inventory numbers for the last few years. The sales revisions will be down (the NAR has pre-announced this), and the inventory is expected to be revised down too.

• Using the deptofnumbers.com for monthly inventory (54 metro areas), it appears inventory will be back to late 2005 levels this month. Unfortunately the deptofnumbers only started tracking inventory in April 2006.

Click on graph for larger image.

This graph shows the NAR estimate of existing home inventory through September (left axis) and the HousingTracker data for the 54 metro areas through October. The HousingTracker data shows a steeper decline in inventory over the last few years (as mentioned above, the NAR will probably revise down their inventory estimates in a few months).

The second graph shows the year-over-year change in inventory for both the NAR and HousingTracker.

HousingTracker reported that the November listings - for the 54 metro areas - declined 16.8% from the same week last year. The graph shows monthly inventory change (this is preliminary for November).

This is just "visible inventory" (inventory listed for sales). There is a large percentage of distressed inventory, and various categories of "shadow inventory" too.

All Existing Home Sales and Inventory graphs

by Calculated Risk on 11/07/2011 02:17:00 PM

The Federal Reserve released the quarterly October 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices today. The survey had a special question on lending to European banks and firms. With regards to banks, the tightening was "considerable", however to European firms the tightening was "moderage":

About one-half of the domestic bank respondents, mostly large banks, indicated that they make loans or extend credit lines to European banks or their affiliates or subsidiaries, and about two-thirds of the foreign respondents indicated the same. Among those domestic and foreign respondents, a large share--about two-thirds--reported having tightened standards on loans to European banks over the third quarter. Many domestic banks indicated that the tightening was considerable.

About three-fifths of the domestic respondents, mostly large banks, and all foreign respondents indicated that they make loans or extend credit lines to nonfinancial firms that have operations in the United States and significant exposures to European economies. Among those domestic and foreign respondents, a moderate fraction indicated that they had tightened standards on C&I loans to such firms.

On the U.S. Commercial and Industrial (C&I):

A small net fraction of domestic banks reported having eased standards on C&I loans during the third quarter, in contrast to more widespread reports of such easing in previous quarters. This moderate net reduction in easing was concentrated in loans to large and middle-market firms rather than in loans to smaller firms. ... Reports of weaker demand for C&I loans outnumbered reports of stronger demand in a reversal from recent quarters, particularly with respect to demand from large and middle-market firms.

For Commercial Real Estate:

Domestic banks continued to report little change in their standards on CRE loans, which were widely described in a special question in the previous survey as being at or near their tightest levels since 2005. In contrast, a large fraction of foreign respondents reported having tightened standards on CRE loans, in a substantial shift from the net easing reported by those institutions in the prior two surveys.

And on consumer lending:

Modest fractions of banks reported having eased standards on consumer credit card loans and on other non-auto loans. As in the previous survey, somewhat larger fractions of banks reported having eased standards on auto loans.

There are several charts here.

So far the European financial crisis hasn't led to tighter lending standards in the U.S., but standards are already pretty tight.

by Calculated Risk on 11/07/2011 01:16:00 PM

In October 2010, the Irish 10 year yield moved above 6.6%, and by the end of November the yield hit 9% and Ireland asked for help.

Now the Italian 10 year yield is at 6.65% and there is a sense of deja vu.

From the NY Times: Italy Bonds Push Higher

Interest rates on Italian bonds rose to new euro-era records on Monday, close to the level that earlier forced Greece, Ireland and Portugal to seek financial rescues.

And from the WSJ: Reasons to Be Fearful as Italian Yields Spike

Greek, Irish, and Portuguese 10-year bond yields spent an average of 43 trading days above 5.50% before they climbed above 6.00%, notes Gary Jenkins, head of fixed income at Evolution Securities.

The move to 6.50% took 24 days, while the move to 7.00% was even quicker, taking just 15 days, he said. An Italian treasury bill sale on Thursday will be a good test.

Italy's deficit to GDP is only around 4% - that is much lower than the other countries in trouble. But Italy already has a high debt to GDP ratio (around 118%), and slow (or no) growth ... not a good combination.

by Calculated Risk on 11/07/2011 10:30:00 AM

Notes: This CoreLogic Home Price Index report is for September. The Case-Shiller index released two weeks ago was for August. 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 July, August and September (September weighted the most) and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® September Home Price Index Shows Second Consecutive Month-Over-Month and Year-Over-Year Decline

CoreLogic ... today released its September Home Price Index (HPI®) which shows that home prices in the U.S. decreased 1.1 percent on a month-over-month basis, the second consecutive monthly decline. According to the CoreLogic HPI, national home prices, including distressed sales, also declined by 4.1 percent in September 2011 compared to September 2010.
...
“Even with low interest rates, demand for houses remains muted. Home sales are down in September and the inventory of homes for sale remains elevated. Home prices are adjusting to correct for the supply-demand imbalance and we expect declines to continue through the winter. Distressed sales remain a significant share of homes that do sell and are driving home prices overall,” said Mark Fleming, chief economist for CoreLogic.

Click on graph for larger image.

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

The index was down 1.1% in September, and is down 4.1% over the last year, and off 31.2% from the peak - and up 3.6% from the March 2011 low.

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.

All House Price Graphs

by Calculated Risk on 11/07/2011 09:18:00 AM

If we continue to see sluggish growth with 125,000 payroll jobs added per month (the pace this year), it will take an additional 52 months just to get back to the pre-recession level of payroll employment.

If job growth picks up a little - say to 200,000 payroll jobs per month - it will take an additional 33 months to get back to the pre-recession level.

The following two graphs show these projections.

The dashed red line is 125,000 payroll jobs added per month. The dashed blue line is 200,000 payroll jobs per month.

Click on graph for larger image.

If we follow the red line path, payroll jobs will return to the pre-recession level in February 2016. The dashed blue line returns to the pre-recession level in July 2014.

And this doesn't include population growth and new entrants into the workforce (the workforce has continued to grow).

The second graph shows the same data but aligned at peak job losses.

This really illustrates both the depth of the 2007 employment recession and the very sluggish recovery.

The recent debate has been between another recession and sluggish growth (I thought sluggish growth was more likely), but we have to remember even sluggish growth is a disaster for payroll employment.