by Calculated Risk on 8/17/2012 10:50:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were generally little changed or slightly higher in July. Forty-four states recorded unemployment rate increases, two states and the District of Columbia posted rate decreases, and four states had no change, the U.S. Bureau of Labor Statistics reported today.
...
Nevada continued to record the highest unemployment rate among the states, 12.0 percent in July. Rhode Island and California posted the next highest rates, 10.8 and 10.7 percent, respectively. North Dakota again registered the lowest jobless rate, 3.0 percent.

Click on graph for larger image in graph gallery.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). Two states - New Jersey and New York - are at the maximum unemployment rate for the recession and set new cycle highs in July.

The New York unemployment rate increased to 9.1%, the previous cycle high was 8.9%. The New Jersey unemployment rate increased to 9.8%, the previous cycle high was 9.7%. Every other state has some blue indicating some improvement.

The states are ranked by the highest current unemployment rate. Only three states still have double digit unemployment rates: Nevada, Rhode Island, and California. This is the fewest since January 2009, although New Jersey is close. In early 2010, 18 states and D.C. had double digit unemployment rates.

All current employment graphs

by Calculated Risk on 8/17/2012 09:55:00 AM

Click on graph for larger image.

The preliminary Reuters / University of Michigan consumer sentiment index for August increased to 73.6, up from the July reading of 72.3.

This was above the consensus forecast of 72.0 but still fairly low. Sentiment remains weak due to the high unemployment rate and sluggish economy - and rising gasoline prices probably aren't helping.

by Calculated Risk on 8/16/2012 09:15:00 PM

First from Bloomberg: U.S. to sell off some mortgages

A $1.7 billion portfolio of nonperforming, federally insured home loans will be offered for sale at auction next month [on Sept 12th].

The loans will be auctioned in pools consisting of homes in Chicago; Phoenix; Newark, N.J.; and Tampa, Fla. ... the portfolio ... consists of 9,442 loans with an average balance of $182,000, for the Department of Housing and Urban Development.

• At 9:55 AM ET, the Reuter's/University of Michigan's Consumer sentiment index (preliminary for August) will be released. The consensus is for sentiment to decrease slightly to 72.0 from 72.3 in July.

• At 10:00 AM, the Conference Board Leading Indicators for August will be released. The consensus is for a 0.2% increase in this index..

• Also at 10:00 AM, the Regional and State Employment and Unemployment (Monthly) for July 2012 is scheduled to be released.

Earlier on housing starts:
• Housing Starts declined to 746 thousand in July
• Quarterly Housing Starts by Intent compared to New Home Sales
• Comment on Housing, and Starts and Completions
• On Yahoo Daily Ticker: Housing Starts Jump 20% in One Year: Recovery Ahead, Says Bill McBride

by Calculated Risk on 8/16/2012 02:57:00 PM

This is a very important year for housing and for the economy. The budding recovery for housing starts and new home sales is positive for GDP and employment. Even though housing starts are increasing, it is from a very low level, and 2012 will still be one of the worst years for housing starts (only 2009, 2010, and 2011 will be worse). But that is good news for the economy: housing starts are on pace to be up 20% from last year (how many sectors are growing 20% this year?), and housing starts could double again over the next several years.

This reminds me of the recovery for auto sales. Auto sales bottomed in February 2009 at close to a 9 million annual sales rate. Now auto sales are running at a 14 million pace; over a 50% increase. That strong increase in auto sales really contributed to GDP growth over the last few years, see from Cardiff Garcia at FT Alphaville: Car-driven GDP growth.

Now we are starting to see a rebound for housing. And housing will have an even larger impact on GDP and employment growth than autos; and housing will probably double from here (more than the 50% increase for autos). Even with the downside risks from Europe and the fiscal cliff, this suggests more growth in the medium term (policy mistakes in the US and Europe are probably the biggest economic risk).

Through July, single family starts are on pace for over 500 thousand in 2012, and total starts are on pace for about 730 thousand. That is up from 431 thousand single family starts in 2011, and 609 thousand total starts. Starts are running above the forecasts for most analysts (however Lawler and the NAHB were close).

But even with the increase in starts, completions will be near record lows again in 2012. Here is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

Click on graph for larger image.

The blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) has been increasing steadily, and completions (red line) is lagging behind - but completions will follow starts up over the course of the year (completions lag starts by about 12 months).

This means there will be an increase in multi-family deliveries next year.

The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions. Completions have barely turned up, but will increase over the next several months.

For the sixth consecutive month, the rolling 12 month total for starts has been above completions - that usually only happens after housing has bottomed.

Earlier on housing starts:
• Housing Starts declined to 746 thousand in July
• Quarterly Housing Starts by Intent compared to New Home Sales
• On Yahoo Daily Ticker: Housing Starts Jump 20% in One Year: Recovery Ahead, Says Bill McBride (Note: Doing the interview was a little more difficult than I expected. The room was mostly dark except the lights in my face. There was a green screen behind me, and I couldn't see Aaron.

by Calculated Risk on 8/16/2012 01:42:00 PM

In addition to housing starts for July, the Census Bureau released Housing Starts by Intent for Q2. This is a very useful report.

First, we can't directly compare single family housing starts to new home sales. For starts of single family structures, the Census Bureau includes owner built units and units built for rent that are not included in the new home sales report. For an explanation, see from the Census Bureau: Comparing New Home Sales and New Residential Construction

We are often asked why the numbers of new single-family housing units started and completed each month are larger than the number of new homes sold. This is because all new single-family houses are measured as part of the New Residential Construction series (starts and completions), but only those that are built for sale are included in the New Residential Sales series.

However it is possible to compare "Single Family Starts, Built for Sale" to New Home sales on a quarterly basis.

The quarterly report released this morning showed there were 106,000 single family starts, built for sale, in Q2 2012, and that was just above the 103,000 new homes sold for the same quarter (Using Not Seasonally Adjusted data for both starts and sales).

This graph shows the NSA quarterly intent for four start categories since 1975: single family built for sale, owner built (includes contractor built for owner), starts built for rent, and condos built for sale.

Click on graph for larger image.

Single family starts built for sale were up about 28% compared to Q2 2011. This is the highest level since 2008.

Owner built starts were up slightly year-over-year from Q2 2011. And condos built for sale are still near the record low.

The 'units built for rent' has increased significantly and is up about 48% year-over-year.

The second graph shows quarterly single family starts, built for sale and new home sales (NSA).

In 2005, and most of 2006, starts were higher than sales, and inventories of new homes increased. The difference on this graph is pretty small, but the builders were starting about 30,000 more homes per quarter than they were selling (speculative building), and the inventory of new homes soared to record levels. Inventory of under construction and completed new home sales peaked at 477,000 in Q3 2006.

In 2008 and 2009, the home builders started far fewer homes than they sold as they worked off the excess inventory that they had built up in 2005 and 2006.

For the last 3 years, the builders have sold a few more homes than they started, and inventory levels are now at record lows (117,000 under construction and completed as of June 2012).

Note: new home sales are reported when contracts are signed, so it is appropriate to compare sales to starts (as opposed to completions). This is not perfect because of the handling of cancellations, but it does suggest the builders are keeping inventories under control, and also suggests that the year-over-year increase in housing starts is directly related to an increase in demand and not renewed speculative building.