by Calculated Risk on 1/23/2013 10:55:00 AM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From AIA: Fifth Consecutive Month of Gains in Architecture Billings Index

Business conditions at architecture firms continue to improve. As a leading economic indicator of construction activity, the Architecture Billings Index (ABI) reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI score was 52.0, down from the mark of 53.2 in November. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 59.4, down slightly from the 59.6 mark of the previous month.

“While it’s not an across the board recovery, we are hearing a much more positive outlook in terms of demand for design services,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Moving into 2013 we are expecting this trend to continue and conditions improve at a slow and steady rate. That said, we remain concerned that continued uncertainty over the outcomes of budget sequestration and the debt ceiling could impact further economic growth.”

• Regional averages: Midwest (55.7), Northeast (53.1), South (51.2), West (49.6)

• Sector index breakdown: commercial / industrial (53.4), mixed practice (53.0), institutional (50.9), multi-family residential (50.5)
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 52.0 in December, down from 53.2 in November. Anything above 50 indicates expansion in demand for architects' services.

Every building sector is now expanding and new project inquiries are strongly positive. Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. This suggests some increase in CRE investment in 2013.

by Calculated Risk on 1/23/2013 10:09:00 AM

From the Federal Housing Finance Agency (FHFA): FHFA House Price Index Up 0.6 Percent in November

U.S. house prices rose 0.6 percent on a seasonally adjusted basis from October to November, according to the Federal Housing Finance Agency’s monthly House Price Index (HPI). The previously reported 0.5 percent increase in October was revised upward to a 0.6 percent increase. For the 12 months ending in November, U.S. prices rose 5.6 percent.

This monthly index is for loans owned or guaranteed by Fannie or Freddie.

It appears price were up around 6% in 2012 on the repeat sales indexes (Case-Shiller, Corelogic, etc).   The Case-Shiller index for November will be released next Tuesday, January 29th.

by Calculated Risk on 1/23/2013 08:58:00 AM

LPS released their First Look report for December today. LPS reported that the percent of loans delinquent increased in December compared to November, and declined about 9% year-over-year. Also the percent of loans in the foreclosure process declined further in December and were down significantly in 2012.

LPS reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) increased to 7.17% from 7.12% in November. Note: the normal rate for delinquencies is around 4.5% to 5%.

 The percent of loans in the foreclosure process declined to 3.44% in December from 3.51% in November. 

The number of delinquent properties, but not in foreclosure, is down about 11% year-over-year (465,000 fewer properties delinquent), and the number of properties in the foreclosure process is down 20% or 434,000 properties year-over-year.

The percent (and number) of loans 90+ days delinquent and in the foreclosure process is still very high, but the number of loans in the foreclosure process is now declining.

LPS will release the complete mortgage monitor for December in early February.

LPS: Percent Loans Delinquent and in Foreclosure Process
	Dec 2012	Nov 2012	Dec 2011
Delinquent	7.17%	7.12%	7.89%
In Foreclosure	3.44%	3.51%	4.20%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	2,031,000	1,999,000	2,250,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,545,000	1,584,000	1,791,000
Number of properties in foreclosure pre-sale inventory:	1,716,000	1,767,000	2,150,000
Total Properties	5,292,000	5,350,000	6,192,000

by Calculated Risk on 1/22/2013 09:07:00 PM

Earlier on Existing Home Sales:
• Existing Home Sales: Another Solid Report
• Existing Home Sales in December: 4.94 million SAAR, 4.4 months of supply
• Existing Home Sales graphs

And on apartments: NMHC Apartment Survey: Market Conditions Loosen Slightly

From CNBC: GOP Moves to Suspend Debt Ceiling Until May

House Speaker John Boehner indicated Tuesday that Republicans will vote on an extension of the federal debt ceiling to allow Treasury to borrow money until mid-May. ...

... the next moment of high political and market drama will occur when the so-called "sequester" or automatic across the board spending cuts, kicks in on March 1.

After the "sequester" comes the "continuing resolution" on March 27th. Note: Congress decided last September to extend spending authority for six months with a "continuing resolution".

I expect something will be worked out on the sequester, but there is a strong possibility the “continuing resolution" will lead to a government shutdown. A government shutdown would be disruptive, but probably not catastrophic since most of the government expenditures would continue.

Of course I think they should suspend the debt ceiling permanently (the debt ceiling is about paying the bills). From Ezra Klein: Suspending the debt ceiling is a great idea. Let’s do it forever!

Wednesday economic releases:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• 8:45 AM, LPS will released their "First Look" report on December mortgage performance

• At 10:00 AM, FHFA House Price Index for November 2012. This was original a GSE only repeat sales, however there is also an expanded index that deserves more attention. The consensus is for a 0.7% increase in house prices.

• During the day: The AIA's Architecture Billings Index for December (a leading indicator for commercial real estate).

by Calculated Risk on 1/22/2013 06:11:00 PM

This is a minor indicator that I follow.

From ATA: ATA Truck Tonnage Index Jumped 2.8% in December

The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.8% in December after surging 3.9% in November. (The 3.9% gain in November was revised from a 3.7% increase ATA reported on December 18, 2012.) The back-to-back increases in November and December were by far the best of gains of 2012. As a result, the SA index equaled 121.6 (2000=100) in December versus 118.3 in November. Despite the solid monthly increase, compared with December 2011, the SA index was off 2.3%, the worst year-over-year result since November 2009. For all of 2012, tonnage was up 2.3%. In 2011, the index increased 5.8%.
...
“December was better than anticipated in light of the very difficult year-over-year comparison,” ATA Chief Economist Bob Costello said. In December 2011, the index surged 6.4% from the previous month. Costello anticipates more sluggishness in the index this year, especially early in the year, as the economy continues to face several headwinds.

“As paychecks shrink for all households due to higher taxes, I’m expecting a weak first quarter for tonnage and the broader economy” Costello said. “Since trucks account for the vast majority of deliveries in the retail supply chain, any reduction in consumer spending will have ramifications on truck tonnage levels.”
emphasis added

Note from ATA:

Trucking serves as a barometer of the U.S. economy, representing 67% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9.2 billion tons of freight in 2011. Motor carriers collected $603.9 billion, or 80.9% of total revenue earned by all transport modes.

Click on graph for larger image.

Here is a long term graph that shows ATA's For-Hire Truck Tonnage index.

The dashed line is the current level of the index.

Overall the index has been mostly moving sideways this year due to the slowdown in manufacturing. The spike down in October was related to Hurricane Sandy.