by Calculated Risk on 6/08/2012 03:41:00 PM

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities. Prices, as of the March Case-Shiller report, were off 61.5% from the peak, and off 7.5% over the last year.

Sales in 2011 were at record levels - even more than during the bubble - and it looks like 2012 will be an even stronger year, even with some new rules that slow the foreclosure process.

From the GLVAR: GLVAR reports local home prices and sales are rising, as local housing inventory shrinks

“Basically, we’re seeing a classic case of supply and demand,” said GLVAR President Kolleen Kelley, a longtime local REALTOR®. “Our local housing supply is going down, primarily because banks are putting fewer homes on the market. As a result, prices are going up.”

The local housing inventory was already tightening throughout 2011. But Kelley said it has been shrinking at a more rapid rate in 2012. Based on the current sales pace, she said “our local housing supply is down to about a month’s worth of inventory.”

Even with fewer homes listed for sale, Kelley said existing home sales remain ahead of the record sales pace set in 2011, when GLVAR reported that 48,186 existing properties were sold in Southern Nevada.

According to GLVAR, the total number of local homes, condominiums and townhomes sold in May was 4,134. That’s up from 3,924 in April and up from 3,991 total sales in May 2011.
...
GLVAR reported a total of 3,728 condos and townhomes listed for sale on its MLS at the end of May. That’s down 2.8 percent from 3,836 condos and townhomes listed at the end of April, and down 29.1 percent from one year ago. As in recent months, the number of available homes listed for sale without any sort of pending or contingent offer also dropped sharply compared to the previous month and year. By the end of May, GLVAR reported 3,800 single-family homes listed without any sort of offer. That’s down 8.7 percent from 4,162 such homes listed in April and down 66.3 percent from one year ago. ...
32.6 percent of all existing local homes sold during May were short sales ... That’s up from 29.9 percent in April

Bank-owned homes accounted for 34.7 percent of all existing home sales in May, down from 36.9 percent in April.

Inventory continues to decline (down 66.3% year-over-year for single family homes) and sales are on a record pace. Still over 2/3s of all sales are distressed (short and REO), as the shift from foreclosure to short sales continues.

by Calculated Risk on 6/08/2012 12:18:00 PM

Once again rail traffic was "mixed". This was mostly due to the sharp decline in coal traffic (mild winter, low natural gas prices). Most commodities were up, such as building related commodities such as lumber and crushed stone, gravel, sand. Lumber was up 16.9% from May 2011.

From the Association of American Railroads (AAR): AAR Reports Mixed Rail Traffic for May

The Association of American Railroads (AAR) today reported U.S. rail carloads originated in May 2012 totaled 1,392,352, down 40,405 carloads or 2.8 percent, compared with May 2011. Intermodal volume in May 2012 was 1,178,312 trailers and containers, up 39,696 units or up 3.5 percent, compared with May 2011. The May 2012 weekly intermodal average of 235,662 trailers and containers is the highest May average in history.
...
Thirteen of the 20 commodity categories tracked by the AAR saw carload gains in May 2012 compared with May 2011, including: motor vehicles, up 17,066 cars or 27.7 percent; petroleum and petroleum products, up 16,460 carloads, or 49.2 percent; crushed stone, sand and gravel, up 7,535 carloads, or 8.2 percent; lumber and wood products, up 2,357 carloads, or 16.9 percent, and primary metal products, up 2,260 carloads, or 4.3 percent.

Commodities with carload declines in May were led by coal, down 74,469 carloads, or 12.1 percent compared with May 2011. Other commodities with declines included grain, down 13,322 carloads, or 11.8 percent; chemicals, down 3,563 carloads, or 2.4 percent, and nonmetallic minerals, down 2,181 carloads, or 8.7 percent. Carloads excluding coal and grain were up 47,386 carloads, or 6.7 percent.

Click on graph for larger image.

This graph shows U.S. average weekly rail carloads (NSA).

It’s a broken record (for those of who you still remember what that phrase means) to say this, but coal and grain were again to blame for the U.S. carload decline in May. Coal carloads were down 12.1% (74,469 carloads) in May 2012 to 542,503 carloads. To look on the bright side, that’s an improvement over the 16.6% decline in April 2012 and the 15.8% decline in March 2012.

U.S. rail grain carloads totaled 99,372 in May 2012, down 11.8% (13,322 carloads) from May 2011.

Grains are down due to fewer exports.

The second graph is just for coal and shows the sharp decline this year.

From AAR:

It was another tough month for coal, in the U.S. at least. Coal carloads on U.S. railroads in May 2012 were down 12.1% (74,469 carloads) from May 2011, equivalent to 573 130-car coal trains. ... It would take a really, really hot summer for coal consumption in 2012 to come close to what it was in 2011.

The third graph is for intermodal traffic (using intermodal or shipping containers):

Graphs reprinted with permission.

Intermodal traffic is now at peak levels.

U.S. intermodal traffic, which is not included in carloads, was up 3.5% (39,696 containers and trailers) in May 2012 over May 2011 to 1,178,312 units. The weekly average in May 2012 was 235,662 intermodal units, which is the highest average of any May in history and the 16th highest of any month in history.

The top months for intermodal are usually in the fall.

by Calculated Risk on 6/08/2012 08:30:00 AM

The Department of Commerce reported:

[T]otal April exports of $182.9 billion and imports of $233.0 billion resulted in a goods and services deficit of $50.1 billion, down from $52.6 billion in March, revised. April exports were $1.5 billion less than March exports of $184.4 billion. April imports were $4.1 billion less than March imports of $237.1 billion.

The trade deficit was above the consensus forecast of $49.3 billion.

The first graph shows the monthly U.S. exports and imports in dollars through April 2012.

Click on graph for larger image.

Exports decreased in April. Imports decreased even more. Exports are 11% above the pre-recession peak and up 4% compared to April 2011; imports are 2% above the pre-recession peak, and up about 6% compared to April 2011.

The second graph shows the U.S. trade deficit, with and without petroleum, through April.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil averaged $109.94 per barrel in April, up from $107.95 in March. Import oil prices will probably start to decline in May. The trade deficit with China increased to $24.6 billion in April, up from $21.6 billion in April 2011. Once again most of the trade deficit is due to oil and China.

Exports to the euro area were $16.3 billion in April, down from $17.1 billion in April 2011, so the euro area recession appears to be a drag on US exports.

by Calculated Risk on 6/07/2012 09:57:00 PM

First, the next two key dates in Europe:
• Monday, June 11th: IMF Report on Spanish Banks
• Sunday, June 17th: Greek Election.

And the last two weeks of June will be very busy!

Also China will be releasing several key economic indicators on Saturday. From Reuters: China rate cut raises fears of grim May economic data

China's surprise rate cut unveiled late on Thursday boosted hopes that cheaper credit would help combat its faltering economic growth ...

But the central bank's cut ... has also raised concerns about a deluge of May Chinese data due this weekend, with Asian shares losing ground on Friday, bracing for ugly numbers.

"The concern is that with industrial production and CPI data coming out of China at the weekend that it's indicative of them knowing something about weak data going forward," said Adrian Schmidt, currency strategist at Lloyds Bank in London.

In the US on Friday:

• At 8:30 AM ET, the Trade Balance report for April will be released. The consensus is for the U.S. trade deficit to decrease to $49.3 billion in April, down from from $51.8 billion in March. Export activity to Europe will be closely watched due to economic weakness. Also oil prices started to decline in April, but that probably won't reduce import prices until May.

• At 10:00 AM, the Monthly Wholesale Trade: Sales and Inventories for April will be released. The consensus is for a 0.5% increase in inventories.

by Calculated Risk on 6/07/2012 07:29:00 PM

Just an update because the effective date is next week ... As announced back in March, HUD is lowering the costs on the FHA's Streamline Refinance Program effective Monday, June 11th.

From HUD back in March: FHA Announces Price Cuts to Encourage Streamline Refinancing

Acting Federal Housing (FHA) Commissioner Carol Galante announced significant price cuts to FHA’s Streamline Refinance Program that could benefit millions of borrowers whose mortgages are currently insured by FHA. Beginning June 11, 2012, FHA will lower its Upfront Mortgage Insurance Premium (UFMIP) to just .01 percent and reduce its annual premium to .55 percent for certain FHA borrowers.

To qualify, borrowers must be current on their existing FHA-insured mortgages which were endorsed on or before May 31, 2009. [In February], FHA also announced it will increase its upfront premiums on most other loans by 75 basis points to 1.75 percent. In addition, FHA will raise annual premiums 10 basis points and 35 basis points on mortgages higher than $625,500. ...

Currently, 3.4 million households with loans endorsed on or before May 31, 2009, pay more than a five percent annual interest rate on their FHA-insured mortgages. By refinancing through this streamlined process, it’s estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month. FHA’s new discounted prices assume no greater risk to its Mutual Mortgage Insurance (MMI) Fund and will allow many of these borrowers to refinance into a lower cost FHA-insured mortgage without requiring additional underwriting.

I expect this program will add to the recent increase in refinance activity.