by Calculated Risk on 6/18/2013 08:30:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 914,000. This is 6.8 percent above the revised April estimate of 856,000 and is 28.6 percent above the May 2012 rate of 711,000.

Single-family housing starts in May were at a rate of 599,000; this is 0.3 percent above the revised April figure of 597,000. The May rate for units in buildings with five units or more was 306,000.

Building Permits:
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 974,000. This is 3.1 percent below the revised April rate of 1,005,000, but is 20.8 percent above the May 2012 estimate of 806,000.

Single-family authorizations in May were at a rate of 622,000; this is 1.3 percent above the revised April figure of 614,000. Authorizations of units in buildings with five units or more were at a rate of 374,000 in April.

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) increased in May following the sharp decrease in April (Multi-family is volatile month-to-month).

Single-family starts (blue) increased slightly to 599,000 SAAR in May (Note: April was revised down from 610 thousand to 597 thousand).

The second graph shows total and single unit starts since 1968.

This shows the huge collapse following the housing bubble, and that housing starts have been generally increasing after moving sideways for about two years and a half years.

This was below expectations of 950 thousand starts in May.  Total starts in May were up 28.6% from May 2012; however single family starts were only up 16.3% year-over-year.  I'll have more later ...

by Calculated Risk on 6/17/2013 09:22:00 PM

Earlier today, Robin Harding at the Financial Times released a market moving story of the Fed: Fed likely to signal tapering move is close

Ben Bernanke is likely to signal that the US Federal Reserve is close to tapering down its $85bn-a-month in asset purchases when he holds a press conference on Wednesday, but balance that by saying subsequent moves depend on what happens to the economy.
excerpt with permission

This depends on the definition of "close". I think it is very unlikely the Fed will start to taper before September, and based on my expectations of only a slow improvement in the unemployment rate and continued low inflation, I think they will wait even longer.

Tuesday economic releases:
• At 8:30 AM, Housing Starts for May. The consensus is for total housing starts to increase to 950 thousand (SAAR) in May.

• Also at 8:30 AM, the Consumer Price Index for May will be released. The consensus is for a 0.2% decrease in CPI in May and for core CPI to increase 0.2%.

by Calculated Risk on 6/17/2013 05:56:00 PM

In addition to Case-Shiller, CoreLogic, FHFA and LPS, I'm also watching the FNC, Zillow and several other house price indexes.

From FNC: FNC Index: Rise in Home Prices Picks up in April

The latest FNC Residential Price Index™ (RPI) shows that U.S. home prices continue to rise in April, up 0.7% from the previous month. April’s gain marks the largest price acceleration since June 2012, caused in part by rising seasonal demand entering spring and summer.

... Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the FNC 100-MSA composite index shows that April home prices rose much faster than in the previous months. The two narrower indices (30-MSA and 10-MSA composites) similarly recoded a nearly 1.0% increase. On a year-over-year basis, home prices were up 4.6% from a year ago. The indices have been revised downward for the prior months, resulting in more moderate annual price accelerations.

Note: This increase is partially seasonal.  This year prices were up 0.7% in April (from March).  Last year, in April 2012, prices were up 1.0% in April - so this is slower seasonal price appreciation.

The year-over-year change slowed in April, with the 100-MSA composite up 4.6% compared to April 2012. The FNC index turned positive on a year-over-year basis in July, 2012.

Click on graph for larger image.

This graph shows the year-over-year change for the FNC Composite 10, 20, 30 and 100 indexes. Note: The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

Even with the recent increase, the FNC composite 100 index is still off 28.6% from the peak.

by Calculated Risk on 6/17/2013 02:10:00 PM

Weekly Update: One of key questions for 2013 is Will Housing inventory bottom this year?. Since this is a very important question, I'm tracking inventory weekly in 2013. 

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data was for April).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years. This is displayed on the graph below as a percentage change from the first week of the year (to normalize the data).

In 2010 (blue), inventory increased more than the normal seasonal pattern, and finished the year up 7%. However in 2011 and 2012, there was only a small increase in inventory early in the year, followed by a sharp decline for the rest of the year.

Click on graph for larger image.

Note: the data is a little weird for early 2011 (spikes down briefly).

So far in 2013, inventory is up 14.9%, however inventory is down over the last few weeks.  I expect further increases over the next few months.

Inventory is well above the peak percentage increases for 2011 and 2012 and this suggests to me that inventory is near the bottom. It now seems likely - at least by this measure - that inventory bottomed early this year (it could still happen early next year). 

It is important to remember that inventory is still very low, and is down 15.8% from the same week last year according to Housing Tracker.  Once inventory starts to increase (more than seasonal), I expect price increases to slow.

by Calculated Risk on 6/17/2013 12:47:00 PM

The bottom for inventory is a key topic for 2013 ...

From Tim Ellis at Redfin: Here Comes the Inventory

Increasing home prices are giving more sellers sufficient equity to sell, and sellers who already had equity are being lured into the market after seeing their neighbor’s homes sell in record time and in fierce bidding wars.

More inventory begets more inventory, too. “I have several clients who are ready to take the plunge and list their homes—they’ve even decluttered and we have the listing ready to hit the MLS,” explained Redfin listing specialist Paul Stone. “The sellers are just waiting to get under contract on a home to buy, at which point we’ll pull the trigger and list their current home.”

Here’s what the inventory recovery looks like so far, along with a forecast for the rest of the year, should the trend hold:

Total active listings are still down 22% from a year ago as of May, but even that is an improvement compared to the 32% year-over-year drop we experienced in January.

New listings have turned around completely in just four months, from a 10% year-over-year decline in January to a 15% year-over-year increase in May.
...
As supply and demand are brought back into balance bidding wars will ease and price gains will moderate.

CR Notes: I've been tracking inventory very closely this year. Ellis thinks (first graph) that inventory in the areas Redfin tracks will continue to build until September or October, and only decline slightly at the end of the year. He thinks inventory will be up year-over-year towards the end of this year. (that is pretty close to my current outlook for inventory).

As more inventory comes on the market, buyer urgency will wane and price increases will slow and even decline seasonally in many areas this winter. IMO this will be another step towards a more normal housing market.