by Calculated Risk on 11/28/2011 01:37:00 PM

As part of the new home sales report, the Census Bureau reported that the average price for new homes fell to the lowest level since September 2003.

From the Census Bureau: "The median sales price of new houses sold in October 2011 was $212,300; the average sales price was $242,300."

The following graph shows the median and average new home prices. The average new home price is at the lowest level since August 2003.

Click on graph for larger image.

This makes sense - to compete with all the distressed sales, the builders have had to build smaller and less expensive homes.

The second graph shows the percent of new home sales by price. At the peak of the housing bubble, almost 40% of new homes were sold for more than $300K - and over 20% were sold for over $400K. In October, only 20% were sold for more than $300K - and only 8% for over $400K.

Almost half of all home sales in October were under $200K - and about 80% of home sales were under $300K. This is the lowest percentage under $300K since November 2002.

The third graph shows existing home sales (left axis) and new home sales (right axis) through October.

This graph starts in 1994, but the relationship has been fairly steady back to the '60s. Then along came the housing bubble and bust, and the "distressing gap" appeared due mostly to distressed sales.

The flood of distressed sales has kept existing home sales elevated, and depressed new home sales since builders can't compete with the low prices of all the foreclosed properties.

I expect this gap to close over the next few years once the number of distressed sales starts to decline.

Note: The National Association of Realtors (NAR) is working on a benchmark revision for existing home sales numbers and I expect significant downward revisions to sales estimates for the last few years - perhaps as much as 10% to 15% for 2011. Even with these revisions, most of the "distressing gap" will remain.

Earlier:
• New Home Sales in October: 307,000 SAAR
• All current New Home Graphs

by Calculated Risk on 11/28/2011 11:56:00 AM

From the NY Fed: Consumer Debt Falls in Third Quarter

Aggregate consumer debt fell approximately $60 billion to $11.66 trillion in the third quarter of 2011 according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit.
...
"The decline in outstanding consumer debt reveals that households continue to try and deleverage in the wake of a challenging economic environment and large declines in home values," said Andrew Haughwout, vice president in the Research and Statistics Group at the New York Fed. "However, our findings also provide evidence that consumer credit demand continues to increase, a positive sign for consumer sentiment."

Here is the Q3 report: Quarterly Report on Household Debt and Credit. Here are two graphs:

Click on graph for larger image.

The first graph shows aggregate consumer debt decreased slightly in Q3. From the NY Fed:

Aggregate consumer debt fell slightly in the third quarter. As of September 30, 2011, total consumer indebtedness was $11.66 trillion, a reduction of $60 billion (0.6%) below its (revised) June 30, 2011 level. The 2011Q2 and 2011Q3 totals reflect improvements in our measurement of student loan balances, which we had previously undercounted ... As a result, student loan and total debt balances for 2011Q2 and 2011Q3 are not directly comparable to earlier data ...

Mortgage balances shown on consumer credit reports fell noticeably ($114 billion or 1.3%) during the quarter; home equity lines of credit (HELOC) balances rose by $14 billion (2.3%). Household mortgage and HELOC indebtedness are now 9.6% and 10.5%, respectively, below their peaks. Consumer indebtedness excluding mortgage and HELOC balances rose slightly ($32 billion or about 1.3%) in the quarter. Consumers’ non-real estate indebtedness now stands at $2.62 trillion.

The second graph shows the percent of debt in delinquency. In general, the percent of delinquent debt is declining (there was a small increase in Q3), but what really stands out is the percent of debt 90+ days delinquent (Yellow, orange and red).

From the NY Fed:

Total household delinquency rates rose in 2011Q3. As of September 30, 10.0% of outstanding debt was in some stage of delinquency, compared to 9.8% on June 30. About $1.2 trillion of consumer debt is currently delinquent, with $834 billion seriously delinquent (at least 90 days late or “severely derogatory”).

About 264,000 individuals had a foreclosure notation added to their credit reports between June 30 and September 30, a 7% decrease from the 2011Q2 level of new foreclosures. New bankruptcies in 2011Q3 were 18.8% below their levels of 2010Q3, at 423,000.

There are a number of credit graphs at the NY Fed site.

Earlier:
• New Home Sales in October: 307,000 SAAR

by Calculated Risk on 11/28/2011 10:00:00 AM

The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 307 thousand. This was up from a revised 303 thousand in September (revised down from 313 thousand).

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Sales of new single-family houses in October 2011 were at a seasonally adjusted annual rate of 307,000 ... This is 1.3 percent (±19.7%)* above the revised September rate of 303,000 and is 8.9 percent (±17.2%)* above the October 2010 estimate of 282,000.

Click on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

Months of supply decreased to 6.3 in October.

The all time record was 12.1 months of supply in January 2009.

This is still slightly higher than normal (less than 6 months supply is normal).

The seasonally adjusted estimate of new houses for sale at the end of October was 162,000. This represents a supply of 6.3 months at the current sales rate.

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

This graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale was at 60,000 units in October. The combined total of completed and under construction is at the lowest level since this series started.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In October 2011 (red column), 25 thousand new homes were sold (NSA). This was just above the record low for October of 23 thousand set in 2010. The high for October was 105 thousand in 2005.

This was slightly below the consensus forecast of 310 thousand, and just above the record low for the month of October set last year (NSA).

New home sales have averaged only 299 thousand SAAR over the 18 months since the expiration of the tax credit ... mostly moving sideways at a very low level.

by Calculated Risk on 11/28/2011 08:47:00 AM

The OECD's track record hasn't been great lately, but it does seem likely that the euro zone is already in a recession ...

From Reuters: Euro Zone in Mild Recession, US May Follow: OECD

The global economic recovery is running out of steam, leaving the euro zone stuck in a mild recession ... In the absence of decisive action from euro zone leaders, the European Central Bank (ECB) alone has the power to contain the bloc's crisis, the Paris-based [Organization for Economic Cooperation and Development] said.
...
Its twice-yearly Economic Outlook forecast world growth would slow to 3.4 percent in 2012 from 3.8 percent this year.

And here is the report from the OECD: OECD calls for urgent action to boost ailing global economy

Yesterday:
• Summary for Week Ending Nov 25th
• Schedule for Week of Nov 27th

by Calculated Risk on 11/28/2011 12:07:00 AM

From MarketWatch: Europe agrees on EFSF; IMF may aid Italy: reports

Finance ministers from the euro zone are slated to meet Tuesday and expected to sign off on rules for borrowing against the European Financial Stability Facility (EFSF), as well as guidelines for intervening in the euro-zone bond markets and providing credit lines to governments, according to a Reuters report Sunday.
...
The reports on the EFSF deal came amid reports that the IMF may offer €400 billion to €600 billion in aid to Italy, Dow Jones Newswires reported Sunday, citing an unsourced account in Italy’s La Stampa.

And the denial from Dow Jones:

A report that the International Monetary Fund could offer Italy between EUR400 billion and EUR600 billion in financial support is not credible, people familiar with ongoing international discussions on the European debt crisis said Monday.

The report is "not credible," one of the people told Dow Jones Newswires

The Asian markets are mostly green tonight. The Nikkei is up about 1.8%, the Hang Seng is up 1.9%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 futures are up about 20 and Dow futures are up 160.

Oil: WTI futures are up to $98.29 and Brent is up to $107.64 per barrel.

Yesterday:
• Summary for Week Ending Nov 25th
• Schedule for Week of Nov 27th