by Calculated Risk on 6/09/2014 04:27:00 PM

Here is another weekly update on housing inventory ...

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then usually 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.

Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

In 2013 (Blue), inventory increased for most of the year before declining seasonally during the holidays.  Inventory in 2013 finished up 2.7% YoY compared to 2012.

Inventory in 2014 (Red) is now 10.9% above the same week in 2013. 

Inventory is still very low - but I expect inventory to be above the same week in 2012 in July (prices bottomed in early 2012).   This increase in inventory should slow price increases, and might lead to price declines in some areas.

Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess was inventory would be up 10% to 15% year-over-year at the end of 2014.  Right now it looks like inventory might increase a little more than I expected.

by Calculated Risk on 6/09/2014 03:24:00 PM

From housing economist Tom Lawler:

Hovnanian Enterprises, the 7th largest US home builder in 2013, reported that net home orders, including unconsolidated joint ventures, totaled 1,907 in the quarter ending April 30, 2014, down 2.2% from the comparable quarter of 2013. Sales per community were down 8.5% from a year ago. The average net order price last quarter was $368,668, up 3.3% from a year ago. Home deliveries last quarter including JVs) totaled 1,331 last quarter, down 6.5% from the comparable quarter of 2013, at an average sales price of $354,405, up 4.3% from a year ago. The company’s order backlog at the end of April was 3,032, up 7.3% from last April, at an average order price of $374,584, up 3.4% from a year ago.

Here is an excerpt from the company’s press release.

"We launched our national sales campaign, Big Deal Days, in March and were encouraged by the 728 net contracts signed during the month of March 2014, the highest level of monthly net contracts since April 2008. In addition, the 3.6 net contracts per active selling community in March was the highest level of monthly net contracts per community since September 2007," stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "However, our sales pace during April and May was choppy and the total monthly sales pace per active selling community in both months fell short of last year's levels."

Hovnanian’s “Big Deal Days” campaign, which offered “the biggest savings of the year” on a selection of “quick move-in” homes, ended at the end of March.

In the company’s conference call presentation Hovnanian broke out net orders by month, and included net orders for May. Net orders for April and May combined were down 12.4% from net orders in April and May of 2013.

Hovnanian owned or controlled 37,787 lots (including JVs) at the end of April, up 25.8% from last April.

by Calculated Risk on 6/09/2014 02:01:00 PM

This is a key distressed market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in May were down 21% year-over-year and at the lowest for May since 2008.

2) Cash Sales (frequently investors) were down 40%, so investor buying appears to be declining. Non-cash sales were down about 9% year-over-year.

3) Active inventory is now increasing rapidly and is up 47% year-over-year - and at the highest level for May since 2011.

Inventory has clearly bottomed in Phoenix (A major theme for housing in 2013).   And more inventory (a theme this year) - and less investor buying - suggests price increases should slow sharply in 2014.

According to Case-Shiller, Phoenix house prices bottomed in August 2011 (mostly flat for all of 2011), and then increased 23% in 2012, and another 15% in 2013.  Those large increases were probably due to investor buying, low inventory and some bounce back from the steep price declines in 2007 through 2010.  Now, with more inventory, price increases should flatten out in 2014.

We only have Case-Shiller through March, but the Zillow index shows Phoenix prices down slightly year-to-date through April.

May Residential Sales and Inventory, Greater Phoenix Area, ARMLS
	Sales	YoY Change Sales	Cash Sales	Percent Cash	Inventory	YoY Change Inventory
May-08	5,6371	---	1,062	18.8%	54,1611	---
May-09	9,284	64.7%	3,592	38.7%	39,902	-26.3%
May-10	9,067	-2.3%	3,341	36.8%	41,326	3.6%
May-11	9,8112	8.2%	4,523	46.1%	31,661	-23.4%
May-12	8,445	13.5%	3,907	46.3%	20,162	-36.3%
May-13	9,440	11.8%	3,669	38.9%	19,734	-2.1%
May-14	7,442	-21.2%	2,193	29.5%	29,091	47.4%
1 May 2008 does not include manufactured homes, ~100 more 2 Error corrected for 2011 sales and percent cash sales.

by Calculated Risk on 6/09/2014 11:00:00 AM

To make a few simple points on the Labor Force Participation Rate, yesterday I posted 41-Year-Olds and the Labor Force Participation Rate . In the previous post I only used men for each age group to simplify.

By request here is a look at the participation rate of women in the prime working age groups over time.

Click on graph for larger image.

The first graph shows the trends for each prime working age women 5-year age group.

Note: This is a rolling 12 month average to remove noise (data is NSA), and the scale doesn't start at zero to show the change.

For women, the participation rate increased significantly until the late 90s, and then started declining slowly.  This is a more complicated story than for men, and that is why I used prime working age men only yesterday to show the gradual downward decline in participation that has been happening for decades (and is not just recent economic weakness).

The second graph shows the same data for women but with the full scale (0% to 100%).  The upward participation until the late 80s is very clear, and the decline since then has been gradual.

The third graph is a repeat of the full scale graph for prime working age men.  The participation rate has been trending down for decades.

To repeat: The bottom line is that the participation rate was declining for prime working age workers before the recession, there are several reasons for this decline (not just recent "economic weakness") and many estimates of "missing workers" are probably way too high.

by Calculated Risk on 6/08/2014 08:10:00 PM

On the Employment Report:
• May Employment Report: 217,000 Jobs, 6.3% Unemployment Rate
• Comment: U.S. Employment at All Time High
• Employment Recovery: Great Recession, Great Depression, and other Financial Crises

Weekend:
• 41-Year-Olds and the Labor Force Participation Rate
• Schedule for Week of June 8th

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up slightly and DOW futures are up 11 (fair value).

Oil prices moved mostly sideways over the last week with WTI futures at $102.67 per barrel and Brent at $108.61 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.64 per gallon (might have peaked for the Spring / early Summer, and at about the same level as a year ago).  If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com