by Calculated Risk on 7/05/2012 01:20:00 AM

Reis reported that the apartment vacancy rate (82 markets) fell to 4.7% in Q2 from 4.9% in Q1 2012. The vacancy rate was at 5.9% in Q2 2011 and peaked at 8.0% at the end of 2009.

From Reuters: US apartment rents rise at highest rate since '07 -Reis

Renting an apartment in the U.S. became even more expensive during the second quarter, as vacancies set a new 10-year low and rents rose at a pace not seen since before the financial crisis, according to real estate research firm Reis Inc. ...

The average U.S. vacancy rate of 4.7 percent was the lowest since the fourth quarter of 2001 ...

Asking rents jumped to $1,091 per month, 1 percent higher than the first quarter and the biggest increase since the third quarter of 2007. Excluding special perks designed to lure tenants, like months of free rent, the average effective rent rose 1.3 percent to $1,041.

"The improvement in rents is pretty pervasive," said Ryan Severino, Senior Economist at Reis.

Click on graph for larger image.

This graph shows the apartment vacancy rate starting in 2005.

Reis is just for large cities, but this decline in vacancy rates - and increase in rents - is happening just about everywhere.

by Calculated Risk on 7/04/2012 09:43:00 PM

Back to work ... there are several key economic reports that will be released on Thursday. Also the European Central Bank (ECB) is expected to cut the benchmark interest rate from 1.0% to 0.75%.

• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This report will probably show record low mortgages rates.

• At 8:15 AM: The ADP Employment Report for June will be released. This report is for private payrolls only (no government). The consensus is for 95,000 payroll jobs added in June, down from the 133,000 reported in May.

• At 8:30 AM, the initial weekly unemployment claims report will be released. The consensus is for claims to be unchanged at 386 thousand.

• At 10:00 AM, the ISM non-Manufacturing Index for June will be released. The consensus is for a decrease to 53.0 from 53.7 in May. Note: Above 50 indicates expansion, below 50 contraction.

• Early: Reis is expected to release their Q2 Apartment vacancy report.

The Asian markets are mostly green tonight. The Nikkei is up slightly.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 are down 3 and Dow futures are down 30.


Oil: WTI futures are up to $86.85 (this is down from $109.77 in February, but up last week) and Brent is up to $99.89 per barrel.

Professor Hamilton has a new post on gasoline prices: Update on U.S. gasoline prices

Two weeks ago, I commented on the tendency of U.S. retail gasoline prices to follow the price of Brent crude oil, anticipating on the basis of the price of Brent, then at $91.50, that we might expect to see average U.S. retail gasoline prices, then at $3.47, to fall an additional 35 cents/gallon. The gasoline price has since come down about 11 cents. But with Brent now surging back up near $100, this is about all we can expect.

See his post for several charts.

by Calculated Risk on 7/04/2012 04:33:00 PM

I was going to write about this, but economist Josh Lehner beat me to it.

From Lehner: The Handoff – Manufacuturing to Housing

As you may have heard, the latest reading on the ISM Manufacturing index declined in June to a level of 49.7. The index is designed such that values of over 50 indicate expansion while values below 50 indicate contraction. This marked the first time since July 2009 that the index registered in contraction territory ...

Now, does that mean the economy is doomed? Not neccessarily. Even after a slowdown in manufacturing, the industry can and likely will continue to grow in the coming years, just that the growth is and was not expected to remain consistently strong. Second and more importantly ... is the transition from manufacturing to housing as a major economic driver. ... Residential Investment (new home construction) is now growing nearly 10% year-over-year while the manufacturing cycle is slowing.

In the recovery so far, beyond personal consumer expenditures, exports and investment – largely the manufacturing cycle – have been significant contributors, while the housing downturn continued to languish. Now, housing growth has returned but the industry is not yet doing the heavy lifting. The much stronger growth in housing is not expected until 2013 and 2014 in our forecast ...

Lehner has a couple of graphs showing the "handoff".

As I noted yesterday in Manufacturing vs. Housing, housing is usually a better leading indicator for the US economy than manufacturing. Manufacturing is more coincident. So the ISM index suggests some weakness now - mostly abroad - whereas housing suggests an ongoing sluggish recovery.

by Calculated Risk on 7/04/2012 12:52:00 PM

Happy 4th!

Here is another update using inventory numbers from HousingTracker / DeptofNumbers to track changes in listed inventory. Tom Lawler mentioned this last year.

According to the deptofnumbers.com for (54 metro areas), inventory is off 24.2% compared to the same week last year. Unfortunately the deptofnumbers only started tracking inventory in April 2006.

This graph shows the NAR estimate of existing home inventory through May (left axis) and the HousingTracker data for the 54 metro areas through early July.

Click on graph for larger image.

Since the NAR released their revisions for sales and inventory last year, the NAR and HousingTracker inventory numbers have tracked pretty well.

On a seasonal basis, housing inventory usually bottoms in December and January and then starts to increase again through the summer. So inventory might still increase a little over the next month or two, but the forecasts for a "surge" in inventory this summer were incorrect. In fact inventory might have already peaked for the year!

The second graph shows the year-over-year change in inventory for both the NAR and HousingTracker.

HousingTracker reported that the early July listings, for the 54 metro areas, declined 24.2% from the same period last year. So far in 2012, the NAR has reported only a small seasonal increase in inventory - and the housing tracker numbers are lower in early July than for January!

This decline in active inventory remains a huge story, and the lower level of inventory is helping stabilize house prices.

All current Existing Home Sales graphs

by Calculated Risk on 7/04/2012 09:55:00 AM

Martin Wolf has been a consistent critic of eurozone policymakers ...

From Martin Wolf at the Financial Times: A Step At Last in the Right Direction and here at CNBC.

The 19th crisis summit was better than many of its disappointing predecessors. But the game has not yet changed. Helpful steps were taken.

Wolf provides an overview of the steps taken, and concludes:

Let us not be too grudging: the decision to allow the ESM to recapitalize banks directly is possibly very important, both in itself and for what it portends.

... Nevertheless, the biggest danger is that the economics of the euro zone are deteriorating fast. Joblessness reached 11.1 percent in May, the highest on record for the zone.

Worse ... the ECB is hopelessly late in taking necessary monetary action. ...

It is conceivable that the euro zone will struggle through this economic trench warfare over the next several years. However, the costs – not just economic but also political – are likely to be enormous.

This is the least pessimistic I've seen Wolf, and his view is still very grim. Note: The ECB is expected to cut rates tomorrow.