by Calculated Risk on 11/20/2011 03:50:00 PM

"In the near future", the NAR is expected to revise down their estimates of existing home sales for the last few years. Tom Lawler wrote back in January 2011:

As many readers may recall, over the last year and a half I have noted numerous times that the NAR’s estimates for existing home sales appear to have understated the decline in existing home sales since 2006, with the “gap” increasing from 2007 through 2009. The basis for that assertion was that existing home sales based on property records in some key states declined materially more than did the NAR’s estimate of existing home sales in those states. In addition, CoreLogic’s estimates of existing home sales based on property records in its database (which covers “over 80%”of the US housing market) show materially larger declines since 2006 than do the NAR’s estimates.

The NAR is aware of these “discrepancies” and has been since at least 2009, but changing its methodology is not a trivial task. However, reportedly the NAR (working with others) has been looking into this issue, and is exploring whether it needs to change its methodology to get better estimates of “actual” existing home sales.

And from CoreLogic in February 2011: CoreLogic: NAR’s 2010 existing home sales are overstated by 15% to 20%

Historically, the CoreLogic existing sales data have covered about 85% to 90% of all NAR’s existing home sales data. However, in 2006 NAR’s sales data became elevated relative to the CoreLogic, MBA, HMDA and Census sales related data, and that trend has continued and become more pronounced through 2010. There are several reasons for the divergence, including benchmarking drift, more sales going through MLS systems due to consolidation and a lower share of for sale by owners (FSBO) home sales. Net, NAR’s existing home sales data are overstated by about 15% to 20%.

Apparently the NAR is getting close to releasing the new methodology for estimating sales, from the NAR on November 11th:

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.

The most important aspect of this revision is the "improved measurement methodology" so that we will have more accurate information in the future. The next most important part of the revision is the level of "visible" inventory. According to the NAR release, inventory will be revised down for the last several years by the same amount as sales, keeping the months of supply the same as originally released. With the NAR revisions, I expect listed inventory to be at the lowest level since late 2005.

That means we can estimate the downward revisions to sales by looking at other sources of inventory data. I've been using the monthly inventory data from deptofnumbers (aka housingtracker) for 54 metro areas.

Click on graph for larger image.

This graph adjusts the reported NAR inventory by the HousingTracker changes, using 2006 as the starting point.

The gap between the NAR reported inventory and the HousingTracker inventory steadily increased over the last 5 years. The "drift" was fairly gradual, but cumulative over the last 5 years or so.

Using the HousingTracker data, here is what the adjustment to the NAR sales would look like (this is NOT the NAR adjustment):

Year	Sales, as Reported	YoY Change, as Reported	Adjustment	Sales, Adjusted	YoY Change, Adjusted
2007	5,652,000	-12.7%	-2.8%	5,495,000	-15.2%
2008	4,913,000	-13.1%	-4.5%	4,691,000	-14.6%
2009	5,156,000	4.9%	-10.0%	4,642,000	-1.0%
2010	4,908,000	-4.8%	-13.4%	4,250,000	-8.4%
20112	4,950,000	0.9%	-15.1%	4,201,000	-1.2%
1An example of adjustment, this is NOT the NAR adjustment, 2estimate for 2011

These adjustments might be a little high, but I expect the current year sales to be revised down by 10% to 15%. CoreLogic expects 2010 sales to be revised down by 15% to 20%.

Hopefully the revisions will be released soon.

by Calculated Risk on 11/20/2011 09:15:00 AM

From the WaPo: Supercommittee likely to admit defeat on debt deal

The congressional committee tasked with reducing the federal deficit is poised to admit defeat as soon as Monday ...

... many economists consider particularly urgent the need to extend jobless benefits and the one-year payroll tax cut. ... the payroll tax cut, enacted last December, allows most American workers to keep an additional 2 percent of their earnings, a boon to tight household budgets as well as the economic recovery. Economists at J.P. Morgan Chase recently estimated that if Congress does not extend the two measures, economic growth next year could take a hit of as much as two percentage points — enough to revive fears of a recession.

Just about everyone expected the committee to fail. The key is how much fiscal tightening happens next year - as I've noted before, the two most significant downside risks to the U.S. economy in 2012 are the European financial crisis and more fiscal tightening.

As Goldman Sachs economist noted on November 11th, the impact from not extending the payroll tax cut would be significant: "Our forecast assumes that the payroll tax cut is extended for another year; if that failed to happen, the fiscal drag in early 2012 would rise significantly." And their forecast for Q1 2012 is for 0.5% GDP growth ...

Yesterday:
• Summary for Week Ending Nov 18th
• Schedule for Week of Nov 20th
• Lawler: Household Growth by Age Group: 2010 – 2015 “Conservative” Forecasts

by Calculated Risk on 11/19/2011 07:13:00 PM

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

Here is the unofficial problem bank list for Nov 18, 2011. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Activity on the Unofficial Problem Bank List picked-up this week. There were five removals, one addition, and assets were updated through September 30, 2011. After these changes, the list includes 977 institutions with assets of $399.1 billion. During the quarter, assets for remaining banks on the Unofficial Problem Bank List declined by $5.9 billion. A year ago, the list had 903 institutions with assets of $419.6 billion.

The removals include one action termination -- Royal Bank America, Narberth, PA ($900 million Ticker: RBPAA); two unassisted mergers -- The Bank of Texas, Devine, TX ($51 million) and United Kentucky Bank of Pendleton County, Inc., Falmouth, KY ($28 million); and two failures -- Central Progressive Bank, Lacombe, LA ($398 million) and Polk County Bank, Johnston, IA ($99 million).

Added this week is Village Bank, Midlothian, VA ($600 million Ticker: VBFC). We do not expect the FDIC to close any banks next week because of the holiday but we do anticipate for the FDIC and OCC to provide an update on their problem bank activities for the past month.

Earlier:
• Summary for Week Ending Nov 18th
• Schedule for Week of Nov 20th
• Lawler: Household Growth by Age Group: 2010 – 2015 “Conservative” Forecasts

by Calculated Risk on 11/19/2011 03:44:00 PM

Some food for thought from economist Tom Lawler:

The tables below assume continued low immigration and two scenarios for headship rates: 1) an average of Census 2000 and 2010 headship rates, and 2) just Census 2010 headship rates.

CR Note: Under both scenarios - the average of Census 2000 and 2010 headship rates and just using the 2010 headship rates - there will be a fairly strong increase in younger households over the next few years (the apartment analysts have been making this argument).

Even with a 50%+ increase in multi-family starts in 2011, the builders will have only started around 150,000 to 160,000 units this year. Based on these projections, multi-family starts will increase further over the next few years.

And look at the projected increase in 55 to 74 year old households. That will probably be a key segment of growth for households. Of course headships rates could fall further (the older people could move in with their kids), but this suggests positive demographics for housing over the next several years.

Tables and calculations by Tom Lawler:

US Households by Age Group: Headship Rates Equal to 2000 and 2010 Average
Age	2010	2015	Avg. Annual Change
15-24	5,401	5,781	76
25-34	17,957	19,448	298
35-44	21,291	21,277	-3
45-54	24,907	24,324	-117
55-64	21,340	24,053	543
65-74	13,505	17,033	706
75+	12,315	12,692	75
Total	116,716	124,608	1,578

US Households by Age Group: Headship Rates Stay at 2010 Lows
Age	2010	2015	Avg. Annual Change
15-24	5,401	5,401	0
25-34	17,957	18,983	205
35-44	21,291	21,024	-53
45-54	24,907	24,069	-168
55-64	21,340	24,012	534
65-74	13,505	16,981	695
75+	12,315	12,918	121
Total	116,716	123,388	1,334

by Calculated Risk on 11/19/2011 12:41:00 PM

Earlier:
• Summary for Week Ending Nov 18th

The key U.S. economic reports for the coming week are the October Personal Income and Outlays report, and the second estimate of Q3 GDP report. Also Existing Home sales for October will be released on Monday.

Several high frequency releases will be closely watched: weekly initial unemployment claims, consumer sentiment (final) and two more regional Fed manufacturing surveys. Because of the Thanksgiving Holiday on Thursday, weekly initial unemployment claims will be released on Wednesday.

----- Monday, Nov 21st -----
8:30 AM ET: Chicago Fed National Activity Index (October). This is a composite index of other data.

10:00 AM: Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for sales of 4.80 million at a Seasonally Adjusted Annual Rate (SAAR) in October. Economist Tom Lawler estimates the NAR will report sales of 4.86 million.

Note: the NAR is working on benchmarking existing home sales for previous years with other industry data (expectations are for large downward revisions). There is no firm date for the release of these revisions.

Expected: The Moody's/REAL Commercial Property Price Index (commercial real estate price index) for September.

----- Tuesday, Nov 22nd -----
8:30 AM: Gross Domestic Product, 3rd quarter 2011 (second estimate); Corporate Profits, 3rd quarter 2011 (preliminary estimate). This is the second estimate from the BEA. The consensus is that real GDP increased 2.4% annualized in Q3, down from the advance estimate of 2.5%.

The graph shows quarterly GDP growth (annualized) with the advance estimate in blue.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for November. The consensus is for the index to be at -1, up from -6 in October (below zero is contraction).

10:00 AM: Regional and State Employment and Unemployment (Monthly) for October 2011

2:00 PM: FOMC Minutes, Meeting of November 1-2, 2011. These minutes will be fairly negative with a discussion of the significant downside risks from Europe, and the negative revision to forecasts.

----- Wednesday, Nov 23rd -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been especially weak since early August, although this doesn't include cash buyers.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a slight increase to 390,000 from 388,000 last week. The 4-week average has recently declined below 400,000.

8:30 AM: Durable Goods Orders for October from the Census Bureau. The consensus is for a 1.0% decrease in durable goods orders after decreasing 0.8% in September.

8:30 AM: Personal Income and Outlays for October. The graph shows real Personal Consumption Expenditures (PCE) through September (2005 dollars).

PCE increased 0.6 in September, and real PCE increased 0.5%. The price index for PCE increased 0.2 percent in September.

The consensus is for a 0.3% increase in personal income in October, and a 0.3% increase in personal spending, and for the Core PCE price index to increase 0.1%.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for November). The consensus is for a slight increase to 64.6 from the preliminary reading of 64.2.

11:00 AM: Kansas City Fed regional Manufacturing Survey for November.

----- Thursday, Nov 24th -----
Thanksgiving Day: All Markets Closed.

----- Friday, Nov 25th -----
Markets open, will close early at 1:00 PM ET.