by Calculated Risk on 2/24/2012 12:09:00 PM

Even with the upward revisions to new home sales in October, November and December, 2011 was the worst year for new home sales since the Census Bureau started tracking sales in 1963. The three worst years were 2011, 2010, and 2009 with sales of 304, 323 and 375 thousand respectively.

Sales will probably increase in 2012, and sales will also probably be higher than the 323 thousand in 2010. But I expect this year will still be the third worst on record.

The following graph shows the recent minor increase off the bottom for new home sales:

Click on graph for larger image.

Not much of an increase.

Last month I posted a few housing forecasts for 2012. The forecasts for new home sales ranged from 330 thousand to 365 thousand (excluding Moody's) - and that wouldn't be much of an increase from the current level.

The second graph shows existing home sales (left axis) and new home sales (right axis) through January. This graph starts in 1994, but the relationship has been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of 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 eventually close once the number of distressed sales starts to decline.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

On January New Home Sales:
• New Home Sales in January at 321,000 Annual Rate
• New Home Sales graphs

Earlier this week on Existing Home sales:
• Existing Home Sales in January: 4.57 million SAAR, 6.1 months of supply
• Existing Home Sales: Inventory and NSA Sales Graph
• Existing Home Sales graphs

by Calculated Risk on 2/24/2012 10:00:00 AM

The Census Bureau reports New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 321 thousand. This was down from a revised 324 thousand in December (revised up from 307 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 January 2011 were at a seasonally adjusted annual rate of 321,000. This is below the revised December rate of 324,000 and is 3.5 percent above the January 2011 estimate of 310,000.

Click on graph for larger image.

The second graph shows New Home Months of Supply.

Months of supply decreased to 5.6 in January. This is the lowest level since January 2006.

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

This is now normal (less than 6 months supply is normal).

The seasonally adjusted estimate of new houses for sale at the end of January was 151,000. This represents a supply of 5.6 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 57,000 units in January. 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 January 2012 (red column), 22 thousand new homes were sold (NSA). This was the second weakest January since this data has been tracked. The record low for January was 21 thousand set in 2011. The high for January was 92 thousand in 2005.

This was above the consensus forecast of 315 thousand, and sales for October, November and December were revised up.

It appears New Home sales have started to slowly increase. I'll have more later.

by Calculated Risk on 2/24/2012 08:44:00 AM

Just passing along some of what I'm reading ...

From Catherine Reagor the Arizona Republic: Report: Upbeat findings for Arizona housing market

Metro Phoenix home prices are up. Fewer inexpensive homes are for sale, and the number of pending foreclosures is down.

The positive housing-market update comes from Arizona State University's newest real-estate report.
...
The median price of all home sales, including new homes, reached $120,500 in January of this year, Orr reports. That compares with $113,166 a year earlier.

The average price per square foot of Valley houses has climbed 3 percent since last year.
...
"Many people think there's a glut of homes the banks are hiding somewhere, and that may be the case in other markets, but not here in the Phoenix area," [Mike Orr, director of the Center for Real Estate Theory and Practice for ASU's W.P. Carey School of Business].

"We've gone through so many foreclosures that the system has been working itself out for about five years."
...
The supply of homes listed for sale in metro Phoenix is down 42 percent from a year earlier.

We have to be careful using median prices because the median can be impacted by the mix. As an example, fewer foreclosures at the low end could lead to higher median prices, even if repeat sale prices are still falling. However the most recent Case-Shiller price index for Phoenix (through November) did show a small increase over the previous three months.

The sharp decline in inventory is a clear positive, although in most areas there will be more foreclosures this year - and that will add to inventory a little (for more on inventory, see my post yesterday: Comments on Existing Home Inventory)

by Calculated Risk on 2/23/2012 08:37:00 PM

From Jacob Gaffney at HousingWire: Bank of America stops selling mortgages to Fannie Mae

Bank of America is faced with numerous reps and warrants challenges on the mortgage front, and as a result of growing uncertainty, it will no longer sell certain mortgage refinances into Fannie Mae mortgage-backed securities.

"The issue is tied to ongoing disagreements between Bank of America and Fannie Mae in regards to repurchases," said Dan Frahm, spokesman for BofA.

Specifically, Bank of America will no longer place non-Making Home Affordable Program (MHA) refinance first-lien residential mortgage products into Fannie mortgage-backed securities.
...
"We continue to deliver MHA programs, including loan modifications and refinancing[sp] through HARP to our customers whose loans are owned by Fannie Mae," Frahm said, adding mortgage origination levels will not drop at the bank. "We're adequately prepared for this, there will be no impact to our customers." BofA will likely do more business with Freddie Mac and Ginnie Mae as a result of this decision.
...
At the heart of the decision is recent changes in mortgage insurance policies. The filing notes Fannie Mae policy where MI rescission must be resolved in a timely fashion. As of Dec. 31, 2011, 74% of the MI rescission notices received had not been resolved, and Fannie began exercising repurchases with Bank of America.

I'm not sure what to say about this. BofA will continue to make HARP refinance loans through BofA (reps and warrants will be waived starting in March), and will also sell loans to Freddie Mac.

by Calculated Risk on 2/23/2012 06:36:00 PM

From HotelNewsNow.com: New Orleans benefits from Mardi Gras visitors

Overall, the U.S. hotel industry reported a 1.5% increase in occupancy to 59.7%, a 2.9% increase in ADR to $102.59 and a 4.4% increase in RevPAR to $61.27.

Hotel occupancy and RevPAR have improved from 2011, but are still below the per-recession levels.

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using a four week average.

Click on graph for larger image.

The red line is for 2012, yellow is for 2011, blue is "normal" and black is for 2009 - the worst year since the Great Depression for hotels.

Better than 2011, but the 4-week average of the occupancy rate is still below normal. Looking forward, business travel usually increases in the March to May period - and then increases during the summer with all the leisure travel.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com