by Calculated Risk on 5/08/2014 02:21:00 PM

From Trulia chief economist Jed Kolko: Yearly Price Gain Smallest in 11 Months, Despite Steady Monthly Rise

Nationally, asking prices rose 0.8% month-over-month and 2.8% quarter-over-quarter in April, seasonally adjusted. Those gains are in line with March increases and show that home prices continue to rapidly climb.

However, asking prices rose 9.0% year-over-year, which is the smallest year-over-year increase in 11 months. Why are year-over-year price increases slipping despite month-over-month and quarter-over-quarter increases holding steady? One reason is that the biggest price spike during the housing recovery happened between February and April 2013, and the year-over-year change in April 2014 no longer includes those months.
...
Nationally, rents have increased 4.5% year-over-year and are up more than 10% in San Francisco, Oakland, and Denver.
emphasis added

In November 2013, year-over-year asking prices were up 12.2%. In December, the year-over-year increase in asking home prices slowed slightly to 11.9%. In January, the year-over-year increase was 11.4%, in February, the increase was 10.4%, in March the increase was 10.0%, and now 9.0%.

This suggests prices are still increasing, but at a slightly slower pace.

Note: These asking prices are SA (Seasonally Adjusted) - and adjusted for the mix of homes - and this suggests further house price increases, but at a slower rate, over the next few months on a seasonally adjusted basis.

Note: in the linked article, Kolko also has an interesting discussion on why "construction still lags in housing markets with biggest price rebounds".

by Calculated Risk on 5/08/2014 11:41:00 AM

This is a quarterly index from the the National Association of Home Builders (NAHB) and is similar to the overall housing market index (HMI). The NAHB started this index in Q4 2008, so the readings have been very low.  Note that this index is Not Seasonally Adjusted (NSA)

From the NAHB: Single-family 55+ HMI Rises to Highest First Quarter Reading Since 2008

Builder confidence in the single-family 55+ housing market for the first quarter of 2014 is up year over year, according to the National Association of Home Builders’ (NAHB) latest 55+ Housing Market Index (HMI) released today. Compared to the first quarter of 2013, the single-family index increased 4 points to a level of 50, which is the highest first-quarter reading since the inception of the index in 2008 and the 10th consecutive quarter of year over year improvements.
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Two of the components of the 55+ single-family HMI posted increases from a year ago: present sales rose six points to 52 and expected sales for the next six months climbed nine points to 62. Meanwhile, traffic of prospective buyers held steady at a reading of 41.
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“The 55+ segment of the housing market is stronger now than it was a year ago,” said NAHB Chief Economist David Crowe, “helped by factors like rising house prices, which has increased owners’ equity and allowed them to buy in a 55+ community. But there are still some headwinds hampering a stronger recovery, as builders in many markets are facing tight credit conditions and a lack of lots and labor.”
emphasis added

Click on graph for larger image.

This graph shows the NAHB 55+ HMI through Q1 2014.  The index was unchanged in Q1 at 50 - however the index is up year-over-year.  This indicates that about the same numbers builders view conditions as good than as  poor.


There are two key drivers: 1) there is a large cohort moving into the 55+ group, and 2) the homeownership rate typically increases for people in the 55 to 70 year old age group. So demographics should be favorable for the 55+ market.

by Calculated Risk on 5/08/2014 09:15:00 AM

From Fannie Mae:

• Fannie Mae reported net income of $5.3 billion, the company’s ninth consecutive quarterly profit, and comprehensive income of $5.7 billion for the first quarter of 2014.
• Fannie Mae’s financial results for the first quarter of 2014 included $4.1 billion in revenue from legal settlements relating to private-label securities lawsuits.
• Fannie Mae expects to pay Treasury $5.7 billion in dividends in June 2014. With the expected June dividend payment, Fannie Mae will have paid a total of $126.8 billion in dividends to Treasury in comparison to $116.1 billion in draw requests since 2008. Dividend payments do not offset prior Treasury draws.
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The continued decrease in the number of our seriously delinquent single-family loans, as well as the slower pace of completed foreclosures we are experiencing due to lengthy foreclosure timelines in a number of states, have resulted in a reduction in the number of REO acquisitions, while the lower demand for foreclosed properties has resulted in fewer REO dispositions in the first quarter of 2014 as compared with the first quarter of 2013.
emphasis added

From Freddie Mac:

• First quarter 2014 net income was $4.0 billion – the company’s tenth consecutive quarter of positive earnings, compared to $8.6 billion in the fourth quarter of 2013
• First quarter 2014 comprehensive income was $4.5 billion, compared to $9.8 billion in the fourth quarter of 2013
...
• Recent level of earnings is not sustainable over the long term, and earnings may be volatile from period to period
Treasury Draws and Dividend Payments at March 31, 2014
• Based on March 31, 2014 net worth of $6.9 billion, the company’s June 2014 dividend obligation will be $4.5 billion, bringing total cash dividends paid to Treasury to $86.3 billion
• Senior preferred stock held by Treasury remains $72.3 billion, as dividend payments do not reduce prior Treasury draws
...
In 1Q14, REO inventory declined primarily due to lower single-family foreclosure activity as a result of Freddie Mac’s loss mitigation efforts and a declining amount of delinquent loans.

Click on graph for larger image.

Here is a graph of Fannie and Freddie REO.

REO inventory decreased in Q1 for both Fannie and Freddie.

Delinquencies are falling, but there are still a large number of properties in the foreclosure process with long time lines in judicial foreclosure states.

Fannie noted there was less demand for foreclosed properties.

by Calculated Risk on 5/08/2014 08:30:00 AM

The DOL reports:

In the week ending May 3, the advance figure for seasonally adjusted initial claims was 319,000, a decrease of 26,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 344,000 to 345,000. The 4-week moving average was 324,750, an increase of 4,500 from the previous week's revised average. The previous week's average was revised up by 250 from 320,000 to 320,250.

There were no special factors impacting this week's initial claims.

The previous week was revised up from 344,000.

The following graph shows the 4-week moving average of weekly claims since January 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 324,750.

This was below the consensus forecast of 330,000.  The 4-week average is close to normal levels for an expansion.

by Calculated Risk on 5/07/2014 07:02:00 PM

First, an update to an earlier comment:  The Mortgage Bankers Association (MBA) told me they have expanded coverage of the mortgage purchase index to include many smaller "purchase focused" lenders. The MBA doesn't believe their purchase index is "skewed" by large lenders who were focused on refinance applications.

Second, from Jon Hilsenrath at the WSJ: Yellen Offers Upbeat Outlook, but Points to Housing Risk

The fitful housing recovery poses one risk that could throw the Fed off track.

"The recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery," Ms. Yellen warned, dwelling on the housing slowdown more prominently than she or other Fed officials have in the recent past.

Her emphasis on this weak point in the recovery is notable because housing is highly sensitive to interest rates. If officials become more seriously worried about the pace of the housing recovery, they could decide to hold interest rates lower for longer.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 330 thousand from 344 thousand.

• Early, the Trulia Price Rent Monitors for April. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

• At 9:30 AM, Testimony by Fed Chair Janet Yellen, The Economic Outlook, Before the Committee on the Budget, U.S. Senate