by Calculated Risk on 2/20/2013 07:07:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier.
...
The refinance share of mortgage activity decreased to 77 percent of total applications, the lowest level since May 2012, from 78 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.78 percent, the highest rate since August 2012, from 3.75 percent, with points decreasing to 0.40 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the refinance index.

The refinance activity is down over the last four weeks, but activity is still very high - and has remained high for over a year.

There has been a sustained refinance boom, and 77 percent of all mortgage applications are for refinancing.

The second graph shows the MBA mortgage purchase index. The purchase index was off last week - and is still very low, but the index has generally been trending up over the last six months.

This index will probably continue to increase as conventional home purchase activity increases.

by Calculated Risk on 2/19/2013 09:28:00 PM

Oh my. From Bondad Blog, via Invictus (Big Picture), here is a funny parody Hitler "Downfall" parody: ECRI learns that their recession call has blown up (foul language).

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

• At 8:30 AM: Housing Starts for January will be released. The consensus is for total housing starts to decrease to 914 thousand (SAAR) in January, down from 954 thousand in December. Note: On a seasonally adjusted annual rate (SAAR) basis, starts in December were the highest since June 2008.

• At 8:30 AM: the Producer Price Index for January will be released. The consensus is for a 0.3% increase in producer prices (0.2% increase in core).

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

• At 2:00 PM: FOMC Minutes for January 29-30, 2013.

by Calculated Risk on 2/19/2013 07:49:00 PM

Business Insider had an article on housing today: A Troubling Divergence In The US Housing Market

One of the few concerns about U.S. housing recovery is that building has been outpacing the sales of new homes. As such, there are fears that new home construction is only adding to the inventory of new homes ...

This chart from TD Securities shows just why some experts are worried.

The article included the following chart from TD Securities:

Click on graph for larger image.

This chart compares cumulative housing completions and new home sales over the last 12 months. This is apparently the "troubling divergence".

However this is total completions (including apartments) and total completions is always higher than new home sales!

The second graph is a repeat of the above graph with the addition of single family completions over the last 12 months.

Just removing multi-family units reduces the "troubling divergence".

But some single family homes are built by owner (with or without a contractor) and are not built for sale. Plus a few single family homes are built to rent. So this comparison is also incorrect.

Here is a repeat of a post from last November: We can't directly compare single family housing starts to new home sales. 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 in November showed there were 104,000 single family starts, built for sale, in Q3 2012, and that was above the 96,000 new homes sold for the same quarter, so inventory increased a little (Using Not Seasonally Adjusted data for both starts and sales). Note: The Q4 report will be released tomorrow.

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 33% compared to Q3 2011. This is still very low, and only back to 2008 levels.

Owner built starts were unchanged from Q3 2011. And condos built for sale are just above the record low.

The 'units built for rent' has increased significantly and is up about 33% year-over-year.

The next 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.

Now it looks like builders are starting a few more homes than they are selling, and the inventory of under construction and completed new home sales increased slightly to 122,000 in Q3 (this is still near record lows).

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.

by Calculated Risk on 2/19/2013 01:40:00 PM

Way back in 2005, I posted a graph of "the Real Estate Agent Boom". I updated the graph last year The Real Estate Agent Bust .

Below is another update to the long term graph of the number of real estate licensees in California.

The number of agents peaked at the end of 2007 (housing activity peaked in 2005, and prices in 2006).

Click on graph for larger image.

The number of salesperson's licenses is off 31% from the peak, and is still declining. The number of salesperson's licenses has fallen to June 2004 levels.

However brokers' licenses are only off 8% and have only fallen to late 2006 levels.

Someday the number of licenses will start to increase again (probably a sign that people think they can money as an agent again), but for now the number is still declining.

by Calculated Risk on 2/19/2013 10:00:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) decreased 1 point in February to 46. Any number under 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Virtually Unchanged in February

Builder confidence in the market for newly built, single-family homes was virtually unchanged in February with a one-point decline to 46 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.
...
“Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases,” observed NAHB Chief Economist David Crowe. “The index remains near its highest level since May of 2006, and we expect home building to continue on a modest rising trajectory this year.”
...
Holding above the critical mid-point of 50 for a third consecutive month, the HMI component gauging current sales conditions fell by a single point to 51 in February. Meanwhile, the component gauging sales expectations in the next six months rose by one point, to 50, and the component gauging traffic of prospective buyers slipped four points, to 32.

Three-month moving averages for each region’s HMI score were mixed in February, with the Northeast up three points to 39 and the West up four points to 55 and the Midwest and South each down two points, to 48 and 47, respectively.

Click on graph for larger image.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the February release for the HMI and the December data for starts (January housing starts will be released tomorrow). This was below the consensus estimate of a reading of 48.

Housing Investment and Construction Graphs