by Calculated Risk on 1/18/2012 08:33:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

The Refinance Index increased 26.4 percent from the previous week to its highest level since August 8, 2011. The seasonally adjusted Purchase Index increased 10.3 percent from one week earlier to its highest level since December 12, 2011.

"Interest rates dropped last week due to continuing anxieties regarding the fragile economic situation in Europe," said Michael Fratantoni, MBA's Vice President of Research and Economics. Fratantoni continued, "With mortgage rates reaching new lows, refinance volume jumped and MBA's refinance index reached its highest level in the last six months. Purchase activity also increased as buyers returned to the market after the holiday season."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.06 percent from 4.11 percent ...

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.40 percent from 4.34 percent
...

The following graph shows the MBA Purchase Index and four week moving average since 1990.

Click on graph for larger image.

The purchase index increased last week, and the 4-week average also increased. This index has mostly been sideways for the last 2 years - and even with the recent increase, this is at about the same level as in 1997.

by Calculated Risk on 1/18/2012 12:23:00 AM

The BuildFax Residential Remodeling Index was at 137.9 in November, down from 147.6 in October, but up 33.5% from November 2010. This is based on the number of properties pulling residential construction permits in a given month.

From BuildFax Remodeling Index

The Residential BuildFax Remodeling Index rose 33.5% year-over-year in November--for the twenty-fifth straight month of growth--to 137.9. However, this also marked the first month-over-month drop since February, likely due to seasonal factors. Residential remodels in November were down month-over-month 9.7 points (6.6%) from the October value of 147.6, and up year-over-year 34.6 points from the November 2010 value of 103.3.
...
"Residential remodeling in 2011 grew substantially above 2010 rates and remained strong through the end of the year," said Joe Emison, Vice President of Research and Development at BuildFax. "However, we do expect to see the number of remodeling permits decrease on a month-over-month basis for the duration of the winter."

Click on graph for larger image.

Although the index declined in November, this is the highest level for a November since the index started in 2004, even above the levels from 2004 through 2006 during the home equity ("home ATM") withdrawal boom.

Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

Since there is a strong seasonal pattern for remodeling, the second graph shows the year-over-year change from the same month of the previous year.

The remodeling index is up 33.5% from November 2010. This is the 25th consecutive month with a year-over-year increase.

Even though new home construction is still moving sideways, two other components of residential investment probably increased in 2011: multi-family construction and home improvement.

Data Source: BuildFax, Courtesy of Index.BuildFax.com

by Calculated Risk on 1/17/2012 07:43:00 PM

From the WSJ: From Bottom Up, Signs of Housing Recovery (ht Brian)

Across Westchester, the number of buyers in contract to buy homes priced less than $500,000 at the end of 2011 rose by nearly 40% compared to a year earlier, according to a market report issued by the broker Houlihan Lawrence. Sales weakened at higher price points.

Analysts have noted a similar pattern in New Jersey. Sales have picked up due to buyers of properties priced less than $400,000, according to data compiled by the Otteau Valuation Group. The number of such contracts signed during the fourth quarter rose by 11.3% compared to the same period a year earlier.

Analysts said housing-market recoveries often begin at the bottom.

"It is nice when you get the high end of the market doing well," said Chris Meyers, chief operating officer of Houlihan Lawrence, the largest residential brokerage in Westchester, "but in our experience the strong markets get healthy from the bottom up."

The article doesn't discuss the role of investors buying, and investor buying is at record levels in California and other bubble states.

Also the article doesn't mention the higher conforming loan limits from Fannie and Freddie in Westchester. But there is some truth to the quote "markets get healthy from the bottom up".

by Calculated Risk on 1/17/2012 03:21:00 PM

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported - and possible hints about the trade report for November. LA area ports handle about 40% of the nation's container port traffic.

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic is up 0.2% from November, and outbound traffic is up 0.1%.

On a rolling 12 month basis, outbound traffic is moving "sideways" for the last couple of months, and it appears inbound traffic has halted the recent decline.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

For the month of December, loaded inbound traffic was up 2% compared to December 2010, and loaded outbound traffic was up 1% compared to December 2010.

Exports have been increasing, although the rate of increase has slowed.

Imports have been somewhat soft - this is the first month with a year-over-year increase since May 2011.

All current trade graphs

by Calculated Risk on 1/17/2012 01:35:00 PM

This report is only for Southern California, but it contains useful information for analyzing the housing market. Over half the sales in SoCal were distressed in December (foreclosures and short sales), over one quarter of the sales were to absentee owners (usually investors), and new home sales were at a record low in December. Note: DataQuick reports new home sales at closing and the Census Bureau reports when contracts are signed - so this is for contracts signed last six months ago.

From DataQuick: Southland December Home Sales, Prices Fall Short of a Year Earlier

Southern California home sales surged last month from November – as they normally do – amid relatively strong activity under $300,000 and a record share of sales to “absentee” buyers, mainly investors. ... A total of 19,247 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in December. That was up 14.0 percent from 16,884 in November but down 1.4 percent from 19,528 in December 2010, according to San Diego-based DataQuick.
...
While December sales of existing (not new) houses and condos combined fell 0.5 percent from a year earlier, sales of newly built homes fell 12.0 percent year-over-year, to the lowest level on record for a December.

“Last year ended much the way it began, with pitifully low new-home sales, record investor activity, drum-tight credit, and lots of potential buyers and sellers just sitting tight,” said John Walsh, DataQuick president.
...
Distressed property sales accounted for 52.5 percent of the Southland resale market last month, up from 51.2 percent in November but down from 53.8 percent a year earlier. Nearly one out of three homes resold last month was a foreclosure, while about one in five was a “short sale.”
...
Absentee buyers, mainly investors and vacation-home buyers, purchased a record 26.4 percent of the Southland homes sold in December, paying a median $200,000. ... The December absentee figure was up from 25.1 percent in November and up from 23.4 percent a year earlier.

The National Association of Realtors (NAR) will report December existing home sales on Friday. The consensus is for sales of 4.6 million on seasonally adjusted annual rate basis.

Economist Tom Lawler estimates the NAR will report sales of 4.64 million, up about 5% from November’s pace. He also expects the NAR to report inventory declined to around 2.44 million, down 5.4% from November and down 19.2% from last December. This would put months-of-supply at around 6.3 months (lowest since early 2006), and would put listed inventory at the lowest level since early-2005.