by Calculated Risk on 7/31/2012 09:38:00 PM

Wednesday will be a busy day with most of the focus on the FOMC announcement, auto sales and the ISM manufacturing index:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. Expect more refinancing activity and record low mortgage 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 120,000 payroll jobs added in June, down from the 176,000 reported last month.

• At 10:00 AM, the ISM Manufacturing Index for July will be released. The consensus is for an increase to 50.1, up from 49.7 in June. (below 50 is contraction).

• Also at 10:00 AM, construction spending for June will be released. The consensus is for a 0.5% increase in construction spending.

• At 2:15 PM, the FOMC announcement will be released. Expectations range from doing nothing, to extending the period that the FOMC expects "exceptionally low levels for the federal funds rate" through 2015, to launching QE3. The FOMC is under pressure with unemployment forecast to remain very high for years, and inflation below the target rate - and projected to remain below the target rate for several years.

• At around 4:00 PM, the SAAR rate for auto sales will be released. The automakers will report sales during the day, and light vehicle sales are expected to decrease to 14.0 million from 14.1 million in June SAAR.

by Calculated Risk on 7/31/2012 07:49:00 PM

For the economic question contest in July, the leaders were (Congratulations all!):

1st: Alexander Petrov (2nd month in a row!)
2nd: Mayson Lancaster
3rd: Bob Dellar
4th tie: Vad Yazvinski, Richard Plaster, Bill Dawers, James White

Questions this week for August contest:

by Calculated Risk on 7/31/2012 05:58:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate declined in June to 3.53% from 3.57% May. The serious delinquency rate is down from 4.08% in June last year, and this is the lowest level since April 2009.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate declined in June to 3.45%, from 3.50% in May. Freddie's rate is only down from 3.50% in June 2011. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are loans that are "three monthly payments or more past due or in foreclosure".

Click on graph for larger image

I don't know why Fannie's delinquency rate is falling faster than for Freddie.

Although this indicates some progress, the "normal" serious delinquency rate is under 1%, so there is a long way to go. At the current rate of decline, Fannie will be back to "normal" in 2015, and Freddie in 2020.

by Calculated Risk on 7/31/2012 04:01:00 PM

From Nick Timiraos at the WSJ: Fannie, Freddie Won't Cut Loan Balances

The federal regulator for Fannie Mae and Freddie Mac FMCC -2.10%will not permit the taxpayer-supported mortgage giants to participate in an Obama administration program that reduces mortgage balances for certain troubled homeowners, the agency said on Tuesday.
...
"The potential benefit was too small and uncertain relative to known and unknown costs and risks," said Edward DeMarco, the FHFA's acting director, in a briefing on Tuesday.

Based on DeMarco's concerns about "strategic modifiers" (borrowers who default to get a principal reduction), I'm not surprised.

Earlier on house prices:
• Case Shiller: House Prices increased 2.2% in May
• House Price Comments, Real House Prices, Price-to-Rent Ratio
• All Current House Price Graphs

by Calculated Risk on 7/31/2012 01:14:00 PM

Some earlier news ...

• From Chicago ISM: Chicago Business Barometer gained incrementally

The PMI increased to 53.7 from 52.9. Expectations were for a decrease to 52.5.

The employment index decreased to 53.5 from 60.4, and new orders increased to 52.9 from 51.9.

• From Reuters: Consumer confidence rises in July

The Conference Board, an industry group, said its index of consumer attitudes climbed to 65.9 from a upwardly revised 62.7 in June, topping economists' expectations for a decline to 61.5.

This is still very low.

• From CoreLogic: CoreLogic Reports 60,000 Completed Foreclosures in June

According to the report, there were 60,000 completed foreclosures in the U.S. in June 2012 compared to 80,000 in June 2011 and 60,000 in May 2012.

Approximately 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the national foreclosure inventory as of June 2012 compared to 1.5 million, or 3.5 percent, in June 2011. Month-over-month, the national foreclosure inventory was unchanged from May 2012 to June 2012. The foreclosure inventory is the share of all mortgaged homes in some stage of the foreclosure process.

Earlier on house prices:
• Case Shiller: House Prices increased 2.2% in May
• House Price Comments, Real House Prices, Price-to-Rent Ratio
• All Current House Price Graphs