by Calculated Risk on 11/11/2011 09:49:00 PM

Today NAR chief economist Lawrence Yun provided his annual overly optimistic forecast for next year, but more importantly he provided an update on the coming revisions:

NAR presently is benchmarking existing-home sales, and downward revisions are expected for totals in recent years, although there will be little change to previously reported comparisons based on percentage change. There will be will be no change to median prices or month’s supply of inventory. Publication of the improved measurement methodology is expected in the near future.

Sales will be revised down for the last few years, and inventory will also be revised down, with no change to months-of-supply. I expect sales for 2011 will be down around 10% to 15% (less for earlier years), and inventory by the same amount.

by Calculated Risk on 11/11/2011 08:01:00 PM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Nov 11, 2011. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Another quiet week for the Unofficial Problem Bank List. The list includes 981 institutions with assets of $405.9 billion after two removals. Removals include First Home Savings Bank, Mountain Grove, MO ($209 million Ticker: FBSI) and Service1st Bank of Nevada, Las Vegas, NV ($172 million Ticker: WLBC), which had their respective formal enforcement actions replaced by less stringent Memorandums of Understanding. The failure this week in Georgia -- Community Bank of Rockmart -- was not subject to an enforcement action. The other change this week was the FDIC issuing a Prompt Corrective Action Order against Tennessee Commerce Bank, Franklin, TN ($1.5 billion Ticker: TNCC).

Best wishes to all!

by Calculated Risk on 11/11/2011 04:19:00 PM

CR Note: In a short note on D.R. Horton today, economist Tom Lawler included a table of some selected home builders (below). This shows some increase in Q3 for these builders compared to last year, but last year was the worst year ever. And net home orders in Q3 were still 20.9% below Q3 2009, and that was a horrible year!

From Tom Lawler:

D.R. Horton, the nation’s largest home builder, reported that net home orders totaled 4,241 in the quarter ended September 30th, up 6.5% from the comparable quarter of 2010, though down 15.3% from the comparable quarter of 2009. The company’s sales cancellation rate, expressed as a % of gross orders, was 29%, down from 31% a year ago. Home deliveries totaled 4,987 last quarter, up 16.5% from the comparable quarter of last year. The company’s order backlog at the end of September was 4,854, up 17.5% from last September. The company’s margins fell a little south of “consensus,” apparently reflecting rising input costs that can’t be passed through in today’s “challenging conditions.”

Net Home Orders, Select Publicly-Traded Builders
Quarter Ended:	9/30/2011	9/30/2010	9/30/2009
D.R. Horton	4,241	3,979	5,008
PulteGroup	3,564	3,566	5,403
NVR	2,218	2,151	2,255
The Ryland Group	1,008	799	1,270
Meritage Homes	906	706	1,098
MDC Holdings	595	796	1,016
Standard Pacific	764	555	893
M/I Homes	587	489	619
Total	13,883	13,041	17,562
	2011 vs 2010	2011 vs. 2009
	6.5%	-20.9%

by Calculated Risk on 11/11/2011 01:41:00 PM

Yesterday I commented that I thought Europe was probably already in a recession. Since then I have received a number of questions about this comment, especially asking about a recession in the U.S.

First, I do not follow Europe nearly as closely as the U.S., and I was just reacting to the European Commission report that the “recovery in Europe has come to a standstill”. My recession comment was just a guess based on stories out of Europe, and my level of confidence is not very high. So take my comment for what it is worth - very little!

Second, my best guess is the U.S. stays out of recession even if Europe is currently in a recession. Of course there are significant downside risks, especially if there is a disorderly end to the euro.

If we look at the channels of contagion, it seems the impact from Europe – barring a blow-up – will be fairly small. Of course, with sluggish growth, the U.S. is very susceptible to economic shocks, and it also appears that the U.S. is moving to more austerity in 2012 – and that is an additional concern (If Congress does nothing, taxes will increase on working Americans, and more).

What are the channels of contagion from Europe? First, the trade channel – the impact on U.S. exports – is pretty small. Although Europe is a major trading partner, exports only make up a small portion of U.S. GDP. Some of the impact from trade would probably be offset by lower oil prices – and of course lower interest rates as investors seek safety (the European crisis is a key reason the U.S. 10 year bond yield is around 2%).

A more significant channel would be tightening of U.S. credit conditions in response to the European crisis. That is why I looked so closely at the Fed’s October Senior Loan Officer Opinion Survey on Bank Lending Practices that was released on Monday. The survey showed “considerable” tightening on lending to European banks, and some tightening to European firms, but the survey showed no tightening in the U.S. (although lending standards are already pretty tight).

Another possible channel of contagion is less European lending to emerging markets and a slowdown in those economies – and then fewer exports from the U.S. to those emerging markets. This is possible, but we haven’t seen any evidence of this yet. And if emerging markets slowed sharply we’d probably see an offsetting sharp decline in oil prices (hasn't happened).

So, right now, I’m sticking with my general forecast for sluggish GDP and employment growth in the U.S.

by Calculated Risk on 11/11/2011 09:55:00 AM

The preliminary November Reuters / University of Michigan consumer sentiment index increased to 64.2, up from the October reading of 60.9, and up from 55.7 in August.


Click on graph for larger image.

Consumer sentiment is usually impacted by employment (and the unemployment rate) and gasoline prices.

Gasoline prices have declined about 50 cents per gallon from the highs in early May, but prices are still well above the levels of early this year. And the unemployment rate is also very high at 9.0%. Both negatives for sentiment.

In addition, sentiment was probably negatively impacted by the debt ceiling debate in August. Back in August I looked at event driven declines in consumer sentiment. If this decline was "event driven", then we should have seen little impact on consumption (looks correct) and a bounce back fairly quickly, but only to the already low levels of June and July. It looks like we are seeing some bounce back.

However sentiment is still very weak, although above the consensus forecast of 61.5.