by Calculated Risk on 1/20/2012 10:00:00 AM

The NAR reports: December Existing-Home Sales Show Uptrend

The latest monthly data shows total existing-home sales rose 5.0 percent to a seasonally adjusted annual rate of 4.61 million in December from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010.
...
Total housing inventory at the end of December dropped 9.2 percent to 2.38 million existing homes available for sale, which represents a 6.2-month supply at the current sales pace, down from a 7.2-month supply in November.

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in December 2011 (4.61 million SAAR) were 5.0% higher than last month, and were 3.6% above the December 2010 rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 2.38 million in December from 2.62 million in November. This is the lowest level of inventory since March 2005.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory decreased 21.2% year-over-year in December from December 2010. This is the tenth consecutive month with a YoY decrease in inventory.

Months of supply decreased to 6.2 months in December, down from 7.2 months in November. This is still a little higher than normal.

These sales numbers were right at the Tom Lawler's estimate of 4.64 million.

All current Existing Home Sales graphs

by Calculated Risk on 1/20/2012 09:01:00 AM

Landon Thomas at the NY Times DealBook has some details: Greece Inches Toward a Deal With Its Bondholders

[A] compromise seems to be at hand, with the Greeks close to locking in an interest rate just below 4 percent on the new bonds, according to officials involved in the negotiations. ... In a concession to creditors, the coupon is expected to escalate beyond 4 percent over time, linked to the growth of the Greek economy.

Assuming all goes according to plan, investors would be offered the opportunity to exchange their old bonds for new ones carrying the agreed-upon terms in early to mid-February.

Bankers say that the creditors believe 50 to 60 percent of private sector bond holders might accept the proposal ... The challenge for Greece and the creditor group is to persuade investors on the fence to join in the deal in order to reach a figure of about 75 percent.

With a 75 percent participation rate, Greece could well be in a position to take advantage of the collective-action clauses that are set to be attached to the Greek law bonds, forcing the terms of the agreement on all bondholders.

And from the AthensNews: Debt swap talks to continue in the evening

The government will continue debt swap negotiations with private sector bondholders at around 7.30pm, Finance Minister Evangelos Venizelos said after concluding a first round of talks with Institute of International Finance (IIF) chief Charles Dallara.
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Investors have also bridled at the government’s threat to enforce losses if not enough bondholders sign up to the deal.

by Calculated Risk on 1/19/2012 10:35:00 PM

It sounds like they need a deal in the next few days.

From Reuters: Greece, Creditors Move Closer to Deal in Race Against Time

Greece and its private bondholders resume debt swap talks on Friday amid signs they are inching closer to a long-awaited deal ... A large chunk of the bond swap must be agreed by noon on Friday and formalized before Monday's meeting of euro zone finance ministers, [Finance Minister Evangelos Venizelos] has said.

Adding to the pressure, officials from the "troika" of foreign lenders are due to begin meetings with the Greek government on Friday to discuss reforms and plans to finalize that bailout package.

"Now is the crucial moment in the final battle for the debt swap and the crucial moment in the final and definitive battle for the new bailout," Venizelos told parliament. "Now, now! Now is the time to negotiate for the sake of the country."

Earlier:
• Housing Starts declined in December
• Housing: Record Low Total Completions in 2011
• Weekly Initial Unemployment Claims decline to 352,000
• Key Measures of Inflation moderate in December
• Philly Fed: "Regional manufacturing activity continued to expand at a moderate pace in January"

by Calculated Risk on 1/19/2012 05:26:00 PM

From economist Tom Lawler:

At the beginning of 2011, the “consensus” forecast for total housing starts was in the 690,000 to 700,000 range, with most analysts looking for an increase in both Single Family (SF) and Multifamily (MF) starts. Early last year one well-respected analysts who regularly surveys SF builders said that on average builders planned to increase SF starts by 15-20% in 2011. As I noted at the time, however, such an increase seemed highly unlikely given new and existing inventories, distressed sales, and pricing relative to where builders were willing to sell homes. It turned out, of course, that new home sales in the early months of last year were “quite disappointing” in aggregate, and builders in aggregate quickly changed their “plans.”

MF starts, in contrast, exceeded “consensus” forecasts, as the combination of very low completion rates (completions lag starts considerably), a moderate rebound in household growth, and a shift toward more renters than buyers (both voluntary and involuntary) resulted in a sharp reduction in apartment rental vacancy rates, as well as rising rents.

While the labor market has shown some signs of improving, household growth is highly likely to be faster in 2012 than 2011, active government intervention has pushed mortgage rates to yet new lows (AND with a record low “handle”), new and existing home inventories are down significantly from a year ago, last year’s subdued housing production helped further reduce the “excess” supply of housing, and last year’s SF activity was still depressed by the earlier and ill-conceived home buyer tax credits, this year’s “consensus” forecast for housing starts in 2012 appears to be lower than last year’s forecast for 2011 – especially on the SF side!

Quite frankly, that doesn’t seem to make a lot of sense to me.

So ... just like a year ago I thought the consensus forecast for housing starts was too high, this year I believe it is too low.

Right now, my “best guess” for housing starts, new SF home sales, existing home sales, and housing completions, would be as follows.

Housing Starts and Home Sales (000s)
	Housing Starts		Single Family		Multifamily (2+)
	Total	Built for Sale	SF	Built for Sale	MF	Built for Sale	New SF Home Sales	Existing Home Sales
2010	587	321	471	306	116	15	323	4,182
2011	607	315	429	295	178	20	305	4,272
2012(F)	740	385	515	360	225	25	365	4,550

Note: My 2010 existing home sales numbers is the sum of the NAR’s NOT SEASONALLY ADJUSTED sales figures from its re-benchmarking release. In the past the NAR’s annual number always “footed” to the sum of the NSA numbers, but that was not the case when it released its benchmark revisions.

And for completions in 2012:

Housing Completions (000s)
	Housing Completions		Single Family		Multifamily (2+)
	Total	Built for Sale	SF	Built for Sale	MF	Built for Sale	Mfg. Housing Placements	Total
2010	652	362	496	331	155	31	50	702
2011	584	309	445	294	139	15	46	630
2012(F)	635	359	470	340	165	19	60	695

CR Note: The following table shows several forecasts for 2012:

Some Housing Forecasts for 2012 (000s)
	New Home Sales	Single Family Starts	Total Starts
Merrill Lynch	330		713
Fannie Mae	336	473	704
Wells Fargo	350	457	690
John Burns	359		717
NAHB	360	501	709
Tom Lawler	365	515	740
Moody's	530	687
2011 Actual	302	431	609

CR Note: table updated on Feb 16, 2012 (Merrill's actual forecast added)

by Calculated Risk on 1/19/2012 03:08:00 PM

Earlier today the BLS reported:

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in December on a seasonally adjusted basis ... The index for all items less food and energy increased 0.1 percent in December after rising 0.2 percent in November.

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.9% annualized rate) in December. The 16% trimmed-mean Consumer Price Index increased 0.1% (1.5% annualized rate) during the month.
...
The CPI less food and energy increased 0.1% (1.8% annualized rate) on a seasonally adjusted basis.

Over the last 12 months, the median CPI rose 2.3%, the trimmed-mean CPI rose 2.5%, the CPI rose 3.0%, and the CPI less food and energy rose 2.2%.

Note: The Cleveland Fed has the median CPI details for December here.

On a monthly basis, the rate of increase is mostly below the Fed's target (Median is above, trimmed-mean and core are below).

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.3%, the trimmed-mean CPI rose 2.5%, and core CPI rose 2.2%. Core PCE is for November and increased 1.7% year-over-year. On a monthly basis, the median Consumer Price Index increased 2.9% at an annualized rate, the 16% trimmed-mean Consumer Price Index increased 1.5% annualized, and core CPI increased 1.8% annualized.

These measures show inflation has moderated.