by Calculated Risk on 8/07/2012 10:10:00 PM

The only economic release scheduled for Wednesday is the weekly MBA mortgage activity index at 7 AM ET.

By request, the monthly contest (on right sidebar and two questions below) uses both Facebook and OpenID logins. More new features soon.

For bloggers, you can contact Ehpik and add your own contest to your site. It is easy to use (people are using it for sports, American Idol and more).

Here are two more questions for August (both on Thursday):

by Calculated Risk on 8/07/2012 08:13:00 PM

If I’m correct about house prices bottoming earlier this year – and the CoreLogic report released this morning is another indicator that prices might be increasing a little - a key question is: What will be the economic impact of slightly increasing house prices?

We saw the impact on Freddie Mac this morning. Freddie reported net income of $3 billion compared to a $2.4 billion loss in Q2 2011. Freddie noted that the decline in its loss provision was due to “improvements in the number of newly impaired loans and to lower estimated future losses due to the positive impact of an increase in national home prices.”

Also I expect CoreLogic and Zillow to report a meaningful decline in the number of homeowners with negative equity in Q2. We might see something like 1 million households that regained a positive equity position at the end of Q2 2012. These are borrowers who might find it easier to refinance, or sell if needed.

We will probably also see a meaningful decline in the number of newer mortgage delinquencies. Note: The MBA Q2 National Delinquency Survey results will be released this Thursday.

Another impact that we've discussed before is the impact on listed “For sale” inventory. Seller psychology is very different if prices are perceived to be falling, as opposed to if prices are stabilizing or even increasing. If potential sellers think prices will fall further, then they will rush to sell and list their homes right away. That behavior pushes up inventory. But if potential sellers think prices are stabilizing, and may increase, then they are more willing to wait until it is more convenient to sell. I think we've been seeing this change in psychology for some time.

And private mortgage lenders and homebuilders will regain confidence in the mortgage and housing market. Flat to rising prices give homebuilders a better idea of the pricing needed to compete in the market - while more consumer confidence in house prices is leading to more demand for new homes. Note: Residential investment is the best leading indicator for the economy, so this pickup in new home sales and housing starts suggests a pickup in the overall economy (barring exogenous events - like the European crisis - or policy mistakes).

In conclusion: There are many positive economic impacts from flat to rising house prices and we are just beginning to see the positive impact on the overall economy.

by Calculated Risk on 8/07/2012 03:30:00 PM

From Tom Lawler:

Freddie Mac reported that its GAAP net income “attributable” to Freddie Mac was $3.020 billion last quarter, up from $577 million in the previous quarter and a net loss of $2.371 billion in the second quarter of 2011. The biggest “swing” factor last quarter was a sharp drop in the provision for credit losses -- $155 million last quarter compared to $1.825 billion in the previous quarter and $2.529 billion in the comparable quarter of last year.

Freddie attributed the sharp drop in its loss provision – which fell far short of charge-offs, resulting in a steep drop in its loan loss reserves – to “improvements in the number of newly impaired loans and to lower estimated future losses due to the positive impact of an increase in national home prices.” Freddie’s internal national home price index, which is based on repeat transactions of homes backed by mortgages owned or guaranteed by Freddie or Fannie with state weights based on Freddie’s SF mortgage book, jumped by 4.8% from March to June, and the June HPI was up about 1.0% from a year ago.

Freddie’s GAAP net income “attributable” to stockholders last quarter was $1.212 billion, reflecting the $1.808 billion in dividends paid to Treasury’s senior preferred stock. Freddie’s GAAP net worth at the end of June was $1.086 billion, and as a result Freddie does not need another Treasury “draw.”

On the SF REO front, Freddie’s SF REO acquisitions last quarter totaled 20,003, down from 23,805 in the previous quarter and 24,788 in the second quarter of last year. Freddie’s SF REO dispositions last quarter totaled 26,069, up from 25,033 in the previous quarter but down from 29,348 in the second quarter of last year. As a result, Freddie’s SF REO inventory at the end of June was 53,271, down from 59,307 at the end of March and 60,599 a year ago.

Freddie attributed the relatively low level of REO acquisitions last quarter to (1) the length of the foreclosure process, especially in states that require a judicial foreclosure process; and (2) resource constraints on foreclosure activities for five large servicers involved in a recent settlement with a coalition of state attorneys general and federal agencies.

Click on graph for larger image.

From CR: The following graph shows REO inventory for Freddie.

REO inventory for Freddie decreased in Q2. After Fannie announces results I'll post a graph of REO for the F's (Fannie, Freddie, and the FHA). FHA REO increased in Q2 to 40,217 from 35,613 in Q1.

by Calculated Risk on 8/07/2012 02:30:00 PM

Teacher town hall meeting with Fed Chairman Ben Bernanke: Financial Education

Follow on Twitter #FedTownHall

If Bernanke hints at QE3, it will probably happen in the Q&A.

Live broadcasting by Ustream

by Calculated Risk on 8/07/2012 11:38:00 AM

Press Release: Trulia Reveals Asking Prices Up for Sixth Straight Month

Trulia today released the latest findings from the Trulia Price Monitor and the Trulia Rent Monitor ... Based on the for-sale homes and rentals listed on Trulia, these monitors take into account changes in the mix of listed homes and reflect trends in prices and rents for similar homes in similar neighborhoods through July 31, 2012.

Asking prices on for-sale homes–which lead sales prices by approximately two or more months – increased 0.5 percent in July month over month (M-o-M), seasonally adjusted, for a sixth straight monthly gain. Meanwhile, asking prices rose nationally 1.2 percent quarter over quarter (Q-o-Q), seasonally adjusted. Year-over-year (Y-o-Y) asking prices rose by 1.1 percent; excluding foreclosures, asking prices rose Y-o-Y by 2.7 percent. For the first time, a majority (62 out of 100) of large metros had Y-o-Y price increases.
...
Rents increased Y-o-Y in 24 of the 25 largest rental markets, with rent increases topping 10 percent in San Francisco, Miami, Oakland, Denver, Seattle and Boston. Three months ago, only two large rental markets – San Francisco and Miami – had Y-o-Y rent increases of 10 percent or more. Rents are rising faster than asking prices in 21 of the 25 largest rental markets Y-o-Y.

More from Jed Kolko, Trulia Chief Economist: Step Aside, Florida: Biggest Price Gains Now in the West

Asking prices were up once again month over month in July, by 0.5%. Asking prices have moved up six straight months since February (the May number was revised slightly upward). This means that the sales price gains starting to be reported by Case-Shiller and other indexes should continue throughout the year.

Note: In a few months, Case-Shiller, CoreLogic and others will probably report a month-over-month decline in house prices, Not Seasonally Adjusted (NSA). That is the normal seasonal pattern and doesn't mean prices are turning down. These asking prices are SA (Seasonally Adjusted) and suggest further house price increases through August and September on a SA basis. The key later this year will be to look at the SA indexes and the year-over-year change in prices.