by Calculated Risk on 7/22/2013 04:59:00 PM

From housing economist Tom Lawler:

Based on a survey of a relatively small sample of realtors that does not necessarily represent the overall market, the NAR alleged that foreclosure sales were 8% of last month’s sales, down from 13% last June; that short sales were 7% of last month’s sales compared to 12% last June; that first-time home buyers comprised 29% of last month’s transactions, down from 32% last June; that all-cash buyers comprised 31% of last month’s sales, up from 29% last June; and that “individual investors” comprised 17% of last month’s sales, down from 19% last June.

CR Note: This is an updated table for a number of cities where distress sales are reported.  Lawler has included the NAR's Confidence Index Report.  Most of the reporting areas experienced a high percentage of distressed sales (Las Vegas, Phoenix, California, Florida, etc), and it appears that distressed sales are declining just about everywhere.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	Jun-13	Jun-12	Jun-13	Jun-12	Jun-13	Jun-12	Jun-13	Jun-12
Las Vegas	31.0%	34.2%	9.0%	27.8%	40.0%	62.0%	55.3%	54.0%
Reno	24.0%	37.0%	6.0%	21.0%	30.0%	58.0%
Phoenix	12.7%	32.8%	8.7%	14.1%	21.5%	46.8%	37.5%	46.9%
Sacramento	23.2%	31.0%	7.5%	19.7%	30.7%	50.7%	29.9%	33.4%
Minneapolis	6.0%	9.6%	15.7%	25.1%	21.7%	34.6%
Mid-Atlantic (MRIS)	7.6%	10.2%	6.3%	8.7%	13.9%	18.9%	15.9%	16.5%
Orlando	18.7%	28.5%	18.1%	25.2%	36.8%	53.7%	49.8%	51.7%
California (DQ)*	16.0%	24.3%	10.0%	24.9%	26.0%	49.2%
Bay Area CA (DQ)*	12.1%	22.7%	6.0%	17.8%	18.1%	40.5%	25.6%	27.3%
So. California (DQ)*	16.2%	24.4%	9.1%	24.4%	25.3%	48.8%	30.2%	32.3%
Miami MSA SF	16.8%	21.3%	9.6%	16.3%	26.4%	37.6%	43.3%	44.9%
Miami MSA C/TH	13.8%	19.5%	14.3%	18.3%	28.1%	37.8%	76.3%	79.1%
Northeast Florida					35.6%	39.9%
Chicago					28.0%	33.0%
Houston			8.4%	16.8%
Memphis*			18.2%	29.6%
Birmingham AL			19.4%	26.4%
Springfield IL			12.0%	9.2%
Tucson							32.8%	35.9%
Toledo							28.1%	33.0%
Des Moines							17.5%	18.9%
Omaha							14.9%	14.4%
Pensacola							29.8%	34.3%
NAR RCI**	7.0%	12.0%	8.0%	13.0%	15.0%	25.0%	31.0%	29.0%
*share of existing home sales, based on property records
**NAR Survey of Realtors, Realtor Confidence Index Report

by Calculated Risk on 7/22/2013 11:49:00 AM

First, the headline sales number was no surprise and not bad news (see Existing Home Sales: Expect Below Consensus Sales).

Second, I usually ignore the median price. The median price is distorted by the mix, and with more conventional sales - and more mid-to-high end sales - the median is increasing faster than actual prices (as reported by the repeat sales indexes).

The key number in the existing home sales report is inventory (not sales), and the NAR reported that inventory increased 1.9% in June from May, and is only down 7.6% from June 2012.  This fits with the weekly data I've been posting.

This is the lowest level of inventory for the month of June since 2001, but this is also the smallest year-over-year decline since June 2011. The key points are: 1) inventory is very low, but 2) the year-over-year inventory decline will probably end soon. With the low level of inventory, there is still upward pressure on prices - but as inventory starts to increase, buyer urgency will wane, and price increases will slow.

When will the NAR report a year-over-year increase in inventory?   Soon.  Right now I'm guessing inventory will be up year-over-year in September or October. 

Important: The NAR reports active listings, and although there is some variability across the country in what is considered active, most "contingent short sales" are not included. "Contingent short sales" are strange listings since the listings were frequently NEVER on the market (they were listed as contingent), and they hang around for a long time - they are probably more closely related to shadow inventory than active inventory. However when we compare inventory to 2005, we need to remember there were no "short sale contingent" listings in 2005. In the areas I track, the number of "short sale contingent" listings is also down sharply year-over-year.

Another key point: The NAR reported total sales were up 15.2% from June 2012, but conventional sales are probably up close to 30% from June 2012, and distressed sales down.  The NAR reported (from a survey):

Distressed homes – foreclosures and short sales – were 15 percent of June sales, down from 18 percent in May, and are the lowest share since monthly tracking began in October 2008; they were 26 percent in June 2012.

Although this survey isn't perfect, if total sales were up 15.2% from June 2012, and distressed sales declined to 15% of total sales (15% of 5.08 million) from 26% (26% of 4.41 million in June 2012), this suggests conventional sales were up sharply year-over-year - a good sign. However some of this increase is investor buying; the NAR is reporting:

All-cash sales made up 31 percent of transactions in June, down from 33 percent in May; they were 29 percent in June 2012. Individual investors, who account for many cash sales, purchased 17 percent of homes in June, down from 18 percent in May and 19 percent in June 2012.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Click on graph for larger image.

Sales NSA in June (red column) are above the sales for 2008 through 2012, however sales are well below the bubble years of 2005 and 2006.

The bottom line is this was a solid report. Conventional sales have increased sharply, although some of this is investor buying. And inventory is low, but the year-over-year decline in inventory is decreasing.

Earlier:
• Existing Home Sales in June: 5.08 million SAAR, 5.2 months of supply

by Calculated Risk on 7/22/2013 10:00:00 AM

The NAR reports: June Existing-Home Sales Slip but Prices Continue to Roll at Double-Digit Rates

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 1.2 percent to a seasonally adjusted annual rate of 5.08 million in June from a downwardly revised 5.14 million in May, but are 15.2 percent higher than the 4.41 million-unit level in June 2012.

Total housing inventory at the end of June rose 1.9 percent to 2.19 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace, up from 5.0 months in May. Listed inventory remains 7.6 percent below a year ago, when there was a 6.4-month supply.

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in June 2013 (5.08 million SAAR) were 1.2% lower than last month, and were 15.2% above the June 2012 rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 2.19 million in June up from 2.15 million in May.   Inventory is not seasonally adjusted, and inventory usually increases from the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory decreased 7.6% year-over-year in June compared to June 2012. This is the 28th consecutive month with a YoY decrease in inventory, and the smallest YoY decrease since 2011 (I expect the YoY to turn positive soon).

Months of supply increased to 5.2 months in June.

This was below expectations of sales of 5.27 million (just above economist Tom Lawler's forecast).  For existing home sales, the key number is inventory - and inventory is still down year-over-year, although the declines are slowing.   This was another solid report.  I'll have more later ...

by Calculated Risk on 7/22/2013 08:37:00 AM

The Chicago Fed released the national activity index (a composite index of other indicators): Economic Activity Slightly Improved in June

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to –0.13 in June from –0.29 in May.

The index’s three-month moving average, CFNAI-MA3, increased to –0.26 in June from –0.37 in May, marking its fourth consecutive reading below zero. June’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
emphasis added

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity was below the historical trend in June (using the three-month average).

According to the Chicago Fed:

What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

by Calculated Risk on 7/21/2013 09:19:00 PM

From Nick Timiraos at the WSJ on housing: Price Gains May Moderate, but It Remains a Seller's Market for Now

The surge in rates could test buyers' appetites to pay above asking prices, potentially slowing the run-up in home prices witnessed in the first half of the year. The biggest pinch will be felt by potential homeowners in high-cost housing markets that had been stretching to qualify for the largest loan possible.

"The frenzy has concluded," said Jim Klinge, a real-estate agent in Carlsbad, Calif. "The pool of crazy buyers—those willing to pay higher prices because they're tired of losing bidding wars—has diminished considerably."

Monday:
• At 8:30 AM ET, Chicago Fed National Activity Index for June. This is a composite index of other data.

• At 10:00 AM, Existing Home Sales for June from the National Association of Realtors (NAR). The consensus is for sales of 5.27 million on seasonally adjusted annual rate (SAAR) basis. Sales in May were at a 5.18 million SAAR. Economist Tom Lawler is estimating the NAR will report a June sales rate of 4.99 million.

Weekend:
• Schedule for Week of July 21st

• Existing Home Sales: Expect Below Consensus Sales

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 7 and DOW futures are up 57 (fair value).

Oil prices have increased recently with WTI futures at $108.40 per barrel and Brent at $108.42 per barrel.