by Calculated Risk on 7/21/2014 04:30:00 PM

From housing economist Tom Lawler:

NVR, Inc. the fourth largest US home builder with a heavy concentration in the Mid-Atlantic region, reported that net home orders in the quarter ended June 30, 2014 totaled 3,415, up 4.2% from the comparable quarter of 2013. Net orders per active community were down 4.7% YOY. NVR’s average net order price last quarter was $368,000, up 1.9% from a year ago, but virtually unchanged from the previous quarter.

For the first two quarters of 2014 NVR’s net home orders were down 0.7% from the first half of 2013, while net orders per active community were down 9.5%. Home settlements last quarter totaled 2,943, up 2.3% from the comparable quarter of 2013, at an average sales price of $368,200, up 6.8% from a year ago and up 1.9% from the previous quarter. Home settlements in the first half of 2014 were virtually unchanged from the first half of 2013.

 The company’s order backlog at the end of June was 6,513, down 1.3% from last June, at an average order price of $374,100, up 4.3% from last June but virtually unchanged from the previous quarter. NVR controlled (owned or optioned) 67,500 lots at the end of June, up 10.3% from a year earlier and up 22.7% from two years earlier.

by Calculated Risk on 7/21/2014 01:42:00 PM

CR Note: If you want to understand subprime lending, I strongly suggest the following post from my former co-blogger Doris "Tanta" Dungey. This was written in 2007, but the concepts are forever. Read it all.

What Is "Subprime"?

For other Tanta posts, see: The Compleat UberNerd and Compendium of Tanta's Posts

by Calculated Risk on 7/21/2014 11:05:00 AM

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 released was for May and indicated inventory was up 6.0% year-over-year).   Existing home sales for June will be released tomorrow.

Fortunately Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data, for 54 metro areas, 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 2014 (Red) is now 15.0% above the same week in 2013. (Note: There are differences in how the data is collected between Housing Tracker and the NAR).

Inventory is also about 2.7% above the same week in 2012.  According to several of the house price indexes, house prices bottomed in early 2012, and low inventories were a key reason for the subsequent price increases.  Now that inventory is back above 2012 levels, I expect house price increases to slow (and possibly decline 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 based on the NAR report.  Right now it looks like inventory might increase more than I expected.

by Calculated Risk on 7/21/2014 08:39:00 AM

The Chicago Fed released the national activity index (a composite index of other indicators): Index shows economic growth decelerated slightly in June

Led by slower growth in production-related indicators, the Chicago Fed National Activity Index (CFNAI) edged down to +0.12 in June from +0.16 in May. Two of the four broad categories of indicators that make up the index made nonpositive contributions to the index in June, but two of the four categories increased from May.

The index’s three-month moving average, CFNAI-MA3, decreased to +0.13 in June from +0.28 in May, marking its fourth consecutive reading above zero. June’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited 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 somewhat above 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 7/20/2014 09:39:00 PM

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

Weekend:
• Schedule for Week of July 20th

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

Oil prices moved up over the last week with WTI futures at $102.93 per barrel and Brent at $107.16 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.57 per gallon (down about a dime from 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