by Calculated Risk on 7/10/2014 11:44:00 AM

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

FNC released their May index data today.  FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 1.0% from April to May (Composite 100 index, not seasonally adjusted). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased between 1.1% and 1.3% in May. 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 May, with the 100-MSA composite up 8.2% compared to May 2013.  The index is still down 20.9% 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 May 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 May Case-Shiller index will be released on Tuesday, July 29th, and I expect Case-Shiller to show a further slowdown in price increases.

by Calculated Risk on 7/10/2014 10:07:00 AM

From Trulia chief economist Jed Kolko: Despite Home Price Slowdown, Wages Can’t Keep Up With Prices

In June 2014, prices were up 8.1% year-over-year and 2.6% quarter-over-quarter, compared with 9.5% and 3.1%, respectively, in June 2013. ... But despite this national slowdown in price gains, price increases continue to be widespread, with 97 of 100 metros posting year-over-year price gains – the most since the recovery began. Furthermore, asking prices in June rose at their highest month-over-month rate (1.2%) in sixteen months.

The price slowdown has been particularly sharp in the boom-and-bust markets of California and the Southwest, where the recession was severe, the recovery was dramatic, and the slowdown is now most pronounced. In Phoenix, Las Vegas, Sacramento, and Orange County, price gains have skidded to a stop or gone into reverse in the past quarter after posting gains of more than 20% year-over-year in June 2013. Although these four housing markets all still have average or above-average year-over-year price increases in June 2014, their slowdowns or reversals in the most recent quarter foreshadow a continued deceleration in year-over-year gains ...
...
Rental Affordability Worsens as Rents Rise 5.5% Year-over-Year
Rent increases outpaced wage increases in all of the 25 largest Rents rose more than 10% year-over-year in Miami, Oakland, San Francisco, San Diego, and Denver. Among these five markets with the largest rent increases, all but Denver are among the nation’s least affordable rental markets.
emphasis added

Asking prices had been slowing down, although there was a slight increase in year-over-year prices in June ... in November 2013, year-over-year asking prices were up 12.2%, in December, the year-over-year increase slowed slightly to 11.9%. In January 11.4%, in February 10.4%, in March 10.0%, April 9.0%, May 8.0%, but now 8.1% in June.


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

by Calculated Risk on 7/10/2014 08:34:00 AM

The DOL reports:

In the week ending July 5, the advance figure for seasonally adjusted initial claims was 304,000, a decrease of 11,000 from the previous week's unrevised level of 315,000. The 4-week moving average was 311,500, a decrease of 3,500 from the previous week's unrevised average of 315,000.

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

The previous week was unrevised at 315,000.

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 decreased to 311,400.

This was lower than the consensus forecast of 316,000.  The 4-week average is now at normal levels for an expansion.

by Calculated Risk on 7/09/2014 08:17:00 PM

Here is an updated housing and mortgage forecast from Goldman Sachs economist Hui Shan: Housing at half time: activity picks up while prices slow down

There are clear signs of house price growth deceleration. Across various indices, year over year appreciation rate has declined from double digits to high single digits. ... We update our bottom-up house price forecast model. At the national level, we expect house price growth to fall from 9.0% during the past year to 4.7% in the coming year and 3.0% in the year thereafter.
...
We now expect mortgage rate to rise to 4.5% by year-end.
...
the underlying housing recovery continues. ... Although we see housing activity improving further in the second half of 2014, we expect the pace of the recovery to be moderate.
emphasis added

CR Note: I also expect house price increases to slow, and for activity to pickup going forward. At the end of 2013, mortgage rates were around 4.62%, so Goldman is forecasting rates will down year-over-year (rates are currently down about 45 bps compared to a year ago according to Mortgage News Daily).

Thursday:
• Early: Trulia Price Rent Monitors for June. 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 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 316 thousand from 315 thousand.

• At 10:00 AM, the Monthly Wholesale Trade: Sales and Inventories report for May. The consensus is for a 0.6% increase in inventories.

• At 4:30 PM, Speech by Fed Vice Chairman Stanley Fischer, Financial Sector Reform, At the Martin Feldstein Lecture, hosted by the National Bureau of Economic Research, Cambridge, Massachusetts

by Calculated Risk on 7/09/2014 04:49:00 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 June were down 11% year-over-year and at the lowest for June since 2008.

2) Cash Sales (frequently investors) were down about 40%, so investor buying appears to be declining. Non-cash sales were up about 6% year-over-year.

3) Active inventory is now increasing rapidly and is up 43% year-over-year - and at the highest level for June 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 April, but the Zillow index shows Phoenix prices up slightly year-to-date through May.

June Residential Sales and Inventory, Greater Phoenix Area, ARMLS
	Sales	YoY Change Sales	Cash Sales	Percent Cash	Active Inventory	YoY Change Inventory
June 2008	5,748	---	1,093	19.0%	53,8262	---
June 2009	9,325	62.2%	3,443	36.9%	38,358	---2
June 2010	9,278	-0.5%	3,498	37.7%	41,869	9.2%
June 2011	11,134	20.0%	5,001	44.9%	29,203	-30.3%
June 2012	9,133	-18.0%	4,272	46.8%	19,857	-32.0%
June 2013	8,150	-10.8%	3,055	37.5%	19,541	-1.6%
June 2014	7,239	-11.2%	1,854	25.6%	27,954	43.1%
1 June 2008 does not include manufactured homes, ~100 more 2 June 2008 Inventory includes pending