by Calculated Risk on 10/02/2012 03:47:00 PM

Based on an estimate from Autodata Corp, light vehicle sales were at a 14.96 million SAAR in September. That is up 14% from September 2011, and up 3% from the sales rate last month.

This was above the consensus forecast of 14.5 million SAAR (seasonally adjusted annual rate).

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for September (red, light vehicle sales of 14.96 million SAAR from Autodata Corp).

Click on graph for larger image.

Sales have averaged a 14.25 million annual sales rate through the first nine months of 2012, up from 12.5 million rate for the same period of 2011. Last year sales were depressed for several months (May through August) due to supply chain issues related to the tsunami in Japan. By September 2011, the supply chain issues were mostly resolved, and this year-over-year increase for September is significant.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate.

This shows the huge collapse in sales in the 2007 recession.

It looks like auto sales were up about 2.7% in Q3 compared to Q2, and auto sales will make another small positive contribution to GDP. However it appears there is a shift to smaller cars, so total revenue might not increase much.

by Calculated Risk on 10/02/2012 02:03:00 PM

Note: I'll post an estimate of the total sales rate around 4 PM ET after all the results are reported. It looks like consumers are responding to high gasoline prices and buying smaller cars ...

From MarketWatch: Chrysler’s September sales soar; GM, Ford flat

It was a mixed bag for U.S. auto makers in September as Chrysler Group LLC reported Tuesday some of its best sales increases in years, while results for Ford Motor Co. and General Motors Co. were largely flat.

Foreign car makers were pretty much up across the board, with Toyota’s sales surging 42% and Volkswagen’s jumping 34%.

Overall, sales have been “slightly better than expected,” said Jesse Toprak, analyst at Truecar.com.
...
The pace of sales wasn’t so brisk for Ford ... One bright spot for the company however, was in small cars.
...
Sales of GM’s mini, small and compact cars rose a combined 97%, the company said.

by Calculated Risk on 10/02/2012 12:23:00 PM

I've been writing about real estate for years, and I've received several emails over the years saying "Sam Zell disagrees with you, and he knows!". Hmmm ... well, one of us has been wrong.

Sam Zell was on CNBC today arguing the US economy is heading back into recession:

"Nobody wants to make commitments beyond tomorrow," Zell said during a"Squawk Box" interview. "One of these (recession) triggers is when enterprise projects start getting delayed. We're heading for a recession and that's exactly what you're looking at now. You're looking at capital expenditures across the board being deferred for a reason: There's no confidence."

Actually a recession is unlikely right now. Of course Zell's economic forecasting track record is very poor. A few examples ...

Sam Zell in April 2005 at the Milken Institute Global Conference:

"The housing bubble has been created more by the business press than reality," said Sam Zell, chairman of Equity Office Properties Trust and Equity Group Investments LLC. "You can't have a crash without oversupply."

According to Sam Zell there was no housing bubble, and there would be no crash.  How did that work out?

And from my notes at the April 2008 Milken conference:

Commercial [real estate] will be fine in his view (not my view). Also Zell thinks losses are overstated for investment banks and CDOs.

Actually losses for investment banks were understated (ask Lehman) and commercial real estate was about to be hit hard (look at the office vacancy rate released this morning).

And here is Sam Zell calling the price bottom for houses in 2009:

[T]he residential real estate market has reached an equilibrium where prices will stop falling, said Sam Zell, founder and chairman of Equity Group Investments.

According to Case-Shiller house prices declined another 5% in nominal terms and about 11% adjusted for inflation.

Obviously Zell was a very successful commercial real estate investor, but I rarely agree with him on the economy.

by Calculated Risk on 10/02/2012 09:58:00 AM

Notes: This CoreLogic House Price Index report is for August. The Case-Shiller index released last week was for July. Case-Shiller is currently the most followed house price index, however CoreLogic is used by the Federal Reserve and is followed by many analysts. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® August Home Price Index Rises 4.6 Percent Year-Over-Year

Home prices nationwide, including distressed sales, increased on a year-over-year basis by 4.6 percent in August 2012 compared to August 2011. This change represents the biggest year-over-year increase since July 2006. On a month-over-month basis, including distressed sales, home prices increased by 0.3 percent in August 2012 compared to July 2012. The August 2012 figures mark the sixth consecutive increase in home prices nationally on both a year-over-year and month-over-month basis. The HPI analysis from CoreLogic shows that all but six states are experiencing price gains.

Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 4.9 percent in August 2012 compared to August 2011. On a month-over-month basis excluding distressed sales, home prices increased 1 percent in August 2012 compared to July 2012, also the sixth consecutive month-over-month increase. Distressed sales include short sales and real estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that September 2012 home prices, including distressed sales, are expected to rise by 5 percent on a year-over-year basis from September 2011 and fall by 0.3 percent on a month-over-month basis from August 2012 as the summer buying season closes out. Excluding distressed sales, September 2012 house prices are poised to rise 6.3 percent year-over-year from September 2011 and by 0.6 percent month-over-month from August 2012

“Again this month prices rose on a year-over-year basis and our expectation is for that to continue in September based on our pending HPI forecast,” said Mark Fleming, chief economist for CoreLogic. “The housing markets gains are increasingly geographically diverse with only six states continuing to show declining prices.”

Click on graph for larger image.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was up 0.3% in August, and is up 4.6% over the last year.

The index is off 26.7% from the peak - and is up 10.1% from the post-bubble low set in February (the index is NSA, so some of the increase is seasonal).

The second graph is from CoreLogic. The year-over-year comparison has been positive for six consecutive months suggesting house prices bottomed earlier this year on a national basis.

Excluding the tax credit bump in 2010, these are the first year-over-year increases since 2006 - and this is the largest year-over-year increase since 2006.

On a month-to-month basis, this index will probably turn negative in September (normal seasonal decline); the key will be the year-over-year change.

by Calculated Risk on 10/02/2012 08:36:00 AM

From Reuters: U.S. office market barely gains in third quarter

[T]he vacancy rate dipped in the third quarter by a scant 0.1 percentage point to 17.2 percent from the second quarter. The vacancy rate declined by just 0.30 percentage points compared with a year earlier.
...
[T]he average asking rent for U.S. office space rose only 1.4 percent over the past 12 months and just 0.2 percent to $28.23 per square foot from the second quarter.

Effective rent, which takes into account months of free rent and other perks landlords offer to lure or keep tenants, rose 0.3 percent to $22.78 per square foot.
...
"We're stuck," said Ryan Severino, senior economist for Reis Inc, which released its third-quarter office report on Tuesday.

Reis also sees no significant improvement for the rest of the year.

"The office market is not going to move in the right direction until the labor market starts to move in the right direction," Severino said. "Nobody is going to lease space until they're hiring, and nobody is going to hire until they feel more confident about the direction of the economy."

Click on graph for larger image.

This graph shows the office vacancy rate starting in 1980 (prior to 1999 the data is annual).

Reis is reporting the vacancy rate declined in Q3 to 17.1%, down slightly from 17.2% in Q2, and down from 17.4% in Q3 2011. The vacancy rate peaked in this cycle at 17.6% in Q3 and Q4 2010.

This is a sluggish recovery for office space.