by Calculated Risk on 10/03/2012 07:01:00 AM

From the MBA: Mortgage Refinance Applications Highest Since 2009 as Rates Reach Record Lows in Latest MBA Weekly Survey

The Refinance Index increased 20 percent from the previous week. This was the highest Refinance Index recorded in the survey since April of 2009. The seasonally adjusted Purchase Index increased 4 percent from one week earlier.

“Refinance application volume jumped to the highest level in more than three years last week as each of the five mortgage rates in MBA's survey dropped to new record lows in the survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Financial markets continue to adjust to QE3, as the ongoing presence of the Federal Reserve as a significant buyer of mortgage-backed securities applies downward pressure on rates."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.53 percent from 3.63 percent, with points decreasing to 0.35 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

Click on graph for larger image.

The first graph shows the refinance index.

The refinance activity is at the highest level since 2009. Refinance activity has been generally moving up over the last year, and really took off last week.

The second graph shows the MBA mortgage purchase index. The purchase index is up 5% over the last two weeks.

However the purchase index has been mostly moving sideways over the last two years.

by Calculated Risk on 10/02/2012 09:16:00 PM

Goldman Sachs released a research note today on house prices: "House Price News Continues to Be Good". In the note, economists Hui Shan and Sven Jari Stehn provide some projections:

[W]e provide an upside and a downside scenario for house prices in addition to our baseline projection. ... We construct the upside and downside cases by incorporating both economic scenarios and modeling uncertainties. ... Although our methodology does not allow us to precisely estimate the probability of each constructed scenario, one can roughly consider the upside and downside as the one standard deviation above and below the baseline.

[Our] model now projects house price gains of 2.0% from mid-2012 to mid-2013, and 2.8% in the year thereafter (Exhibit 1). This baseline forecast is broadly in line with the latest consensus forecast. Exhibit 1 also shows our scenario analysis, pointing to house price appreciation of 9.1% (4.1% for 2012Q2-2013Q2 and 5.0% for 2013Q2-2014Q2) and -0.4% (-0.2% for 2012Q2-2013Q2 and -0.2% for 2013Q2-2014Q2) over the next two years, respectively, for the upside and downside alternative scenarios.

Click on graph for larger image.

Here is exhibit 1 from the research note showing Goldman's baseline forecast, and upside and downside scenarios.

On Wednesday:
• Early: Reis will release the Q3 2012 Apartment vacancy rates. Last quarter Reis reported that the apartment vacancy rate declined to 4.7% in Q2 from 4.9% in Q1 2012. This was the lowest vacancy rate since Q4 2001.

• At 7:00 AM, The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. Excerpt a surge in refinance activity with low mortgage rates.

• At 8:15 AM, the ADP Employment Report for September will be released. This report is for private payrolls only (no government). The consensus is for 140,000 payroll jobs added in August, down from the 201,000 reported last month.

• At 10:00 AM, the ISM non-Manufacturing Index for September will be released. The consensus is for a decrease to 53.5 from 53.7 in August. Note: Above 50 indicates expansion, below 50 contraction.


Another question for the October economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 10/02/2012 07:25:00 PM

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 21.4% 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 August (left axis) and the HousingTracker data for the 54 metro areas through early October.

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 increases through the summer. Inventory only increased a little this spring and has been declining for the last five months by this measure. It looks like inventory peaked early this year.

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

HousingTracker reported that the early October listings, for the 54 metro areas, declined 21.4% from the same period last year.

The year-over-year declines will probably start to get smaller since inventory is already pretty low. I doubt we will see 20% year-over-year declines next summer!

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.