by Calculated Risk on 6/10/2014 07:18:00 PM

It is fun to try to guess future headlines, and it looks like we might see "Mortgage Rates down year-over-year" in a couple of weeks.

I use the weekly Freddie Mac Primary Mortgage Market Survey® (PMMS®) to track mortgage rates. The PMMS series started in 1971, so there is a fairly long historical series.

For daily rates, the Mortgage News Daily has a series that tracks the PMMS very well, and is usually updated daily around 3 PM ET. The MND data is based on actual lender rate sheets, and is mostly "the average no-point, no-origination rate for top-tier borrowers with flawless scenarios". (this tracks the Freddie Mac series).

MND reports that average 30 Year fixed mortgage rates increased today to 4.25% from 4.23% yesterday.

One year ago rates were at 4.05% and rising. If the current rate holds, mortgage rates will be down year-over-year in less than 2 weeks.

Here is a table from Mortgage News Daily:

Home Loan Rates

View More Refinance Rates

Click on graph for larger image.

Here is a graph of 30 year fixed mortgage rates - according to the Freddie Mac PMMS® - for 2013 (blue) and 2014 (red).

Mortgage rates jumped to 4.46% in late June 2013, and it is possible that rates will be lower in late June 2014 (currently 4.25% according to Mortgage News Daily).

by Calculated Risk on 6/10/2014 01:12:00 PM

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported Southern Nevada home prices rebound in May, GLVAR reports

According to GLVAR, the total number of existing local homes, condominiums and townhomes sold in May was 3,450, up from 3,215 in April, but down from 3,884 one year ago.

GLVAR said 40.2 percent of all existing local homes sold in May were purchased with cash. That’s down from 41.4 percent in April, well short of the February 2013 peak of 59.5 percent and suggesting that investors are accounting for a smaller percentage of local buyers.
...
In May, 7.9 percent of all existing local home sales were short sales, down substantially from 12.4 in April. Another 9.1 percent of all May sales were bank-owned properties, down from 11.4 in April.
...
The total number of single-family homes listed for sale on GLVAR’s Multiple Listing Service in May was 13,637. That’s down 1.4 percent from 13,833 in April and down 1.3 percent from one year ago.

By the end of May, GLVAR reported 6,615 single-family homes listed without any sort of offer. That’s up 3.0 percent from 6,420 such homes listed in April, and a 100.6 percent jump from one year ago. For condos and townhomes, the 2,258 properties listed without offers in May represented a 0.3 percent decrease from 2,264 such properties listed in April, but a 76.8 percent jump from one year ago.
emphasis added

There are several key trends that we've been following:

1) Overall sales were down about 11% year-over-year.

2) Conventional (equity, not distressed) sales were up 27% year-over-year.  In May 2013, only 57.9% of all sales were conventional equity.  This year, in May 2014, 83.0% were equity sales. 

3) The percent of cash sales has declined year-over-year from 57.9% in May 2013 to 40.2% in May 2014. (investor buying appears to be declining).

4) Non-contingent inventory is up 100.6% year-over-year (double)!

Inventory has clearly bottomed in Las Vegas (A major theme for housing last year).  And fewer distressed sales and more inventory (a major theme for 2014) suggests price increases will slow.

by Calculated Risk on 6/10/2014 12:31:00 PM

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

FNC released their April index data today.  FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.6% from March to April (Composite 100 index, not seasonally adjusted). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased between 0.6% and 0.7% in April. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).

The year-over-year change slowed in April, with the 100-MSA composite up 8.4% compared to April 2013.  The index is still down 21.7% from the peak in 2006.

Click on graph for larger image.

This graph shows the year-over-year change based on the FNC index (four composites) through April 2014. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

This might be the beginning of a slowdown in prices increases in the FNC index.

The April Case-Shiller index will be released on Tuesday, June 24th, and I expect Case-Shiller to show a slowdown in price increases.

by Calculated Risk on 6/10/2014 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

There were 4.5 million job openings on the last business day of April, up from 4.2 million in March, the U.S. Bureau of Labor Statistics reported today. ...
...
Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. ... The number of quits (not seasonally adjusted) increased over the 12 months ending in April for total nonfarm and total private and was little changed for government.

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for April, the most recent employment report was for May.

Click on graph for larger image.

Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings increased in April to 4.455 million from 4.166 million in March.   

The number of job openings (yellow) are up 17% year-over-year compared to April 2013.

Quits are up 11% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

It is a good sign that job openings are over 4 million for the third consecutive month, and that quits are increasing.

by Calculated Risk on 6/10/2014 08:33:00 AM

From the National Federation of Independent Business (NFIB): Small Business Sentiment: Improves a Bit But Is No Sign Of A Surge

NFIB Optimism Index rose 1.4 points in May to 96.6, the highest reading since September 2007. ...

Labor Markets. NFIB owners increased employment by an average of 0.11 workers per firm in May (seasonally adjusted), the eighth positive month in a row and the best string of gains since 2006.
emphasis added

In another good sign, the percent of firms reporting "poor sales" as the single most important problem has fallen to 12, down from 16 last year - and "taxes" are the top problem at 25 (taxes are usually reported as the top problem during good times).

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index increased to 96.6 in May from 95.2 in April.