by Calculated Risk on 8/11/2014 10:27:00 AM

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

FNC released their June index data today.  FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.8% from May to June (Composite 100 index, not seasonally adjusted). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased between 0.8% and 0.9% in June. 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 (YoY) change slowed in May, with the 100-MSA composite up 8.0% compared to June 2013.   For FNC, the YoY increase has been slowing since peaking in February at 9.4%.

The index is still down 20.0% 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 June 2014. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

All of the price indexes are now showing a slowdown in price increases.

The June Case-Shiller index will be released on Tuesday, August 26th, and I expect Case-Shiller to show a further slowdown in YoY price increases.

by Calculated Risk on 8/11/2014 08:31:00 AM

From Fed Vice Chairman Stanley Fischer: The Great Recession--Moving Ahead. Here is a brief excerpt:

In the United States, three major aggregate demand headwinds appear to have kept a more vigorous recovery from taking hold. The unusual weakness of the housing sector during the recovery period, the significant drag--now waning--from fiscal policy, and the negative impact from the growth slowdown abroad--particularly in Europe--are all prominent factors that have constrained the pace of economic activity.

The housing sector was at the epicenter of the U.S. financial crisis and recession and it continues to weigh on the recovery. After previous recessions, vigorous rebounds in housing activity have typically helped spur recoveries. In this episode, however, residential construction was held back by a large inventory of foreclosed and distressed properties and by tight credit conditions for construction loans and mortgages. Moreover, the wealth effect from the decline in housing prices, as well as the inability of many underwater households to take advantage of low interest rates to refinance their mortgages, may have reduced household demand for non-housing goods and services. Indeed, some researchers have argued that the failure to deal decisively with the housing problem seriously prolonged and deepened the crisis. ...

Fischer is referring to the research of Atif Mian and Amir Sufi (see: House of Debt).  I expected a slow recovery in housing due to the overhang of distressed properties, but I do think more could have been done to deal with housing (although some attempts at helping housing - like the housing tax credit - were clear policy blunders). 

From Fischer:

The stance of U.S. fiscal policy in recent years constituted a significant drag on growth as the large budget deficit was reduced. Historically, fiscal policy has been a support during both recessions and recoveries. In part, this reflects the operation of automatic stabilizers, such as declines in tax revenues and increases in unemployment benefits, that tend to accompany a downturn in activity. In addition, discretionary fiscal policy actions typically boost growth in the years just after a recession. In the U.S., as well as in other countries--especially in Europe--fiscal policy was typically expansionary during the recent recession and early in the recovery, but discretionary fiscal policy shifted relatively fast from expansionary to contractionary as the recovery progressed. ...

A third headwind slowing the U.S. recovery has been unexpectedly slow global growth, which reduced export demand. Over the past several years, a number of our key trading partners have suffered negative shocks.

Both the second headwind (U.S. fiscal policy) and third headwind (slow global growth) are related to the pivot to austerity in both the U.S. and Europe.

by Calculated Risk on 8/10/2014 07:58:00 PM

Joe Weisenthal at Business Insider does a great job of tying together some of my recent posts on demographics (Thanks Joe!): The Analyst Who Nailed The Housing Crash Is Quietly Revealing The Next Big Thing.

Weisenthal concludes with some very interesting analysis from Matt Busigin:

And while we're talking about housing, we should also take just a minute to talk about inflation. Matt Busigin wrote a great piece last year, talking about the non-monetary causes of inflation, and how demographics is a much bigger driver of inflation than people realize. Many of the same factors discussed above could contribute to higher inflation, as a younger workforce moves into its first homes and first cars, and has real buying power for the first time.

Monday:
• At 3:15 AM ET, Speech by Fed Vice Chairman Stanley Fischer, The Great Recession: Moving Ahead, At the Swedish Ministry of Finance Conference: The Great Recession – Moving Ahead, Stockholm, Sweden

Weekend:
• Schedule for Week of Aug 10th

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are flat and DOW futures are up 12 (fair value).

Oil prices were down slightly over the last week with WTI futures at $97.67 per barrel and Brent at $104.91 per barrel.  A year ago, WTI was at $104, and Brent was at $109 - so prices are down a little year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.47 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

by Calculated Risk on 8/10/2014 02:33:00 PM

Here is another graph on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs. Then prices declined over 25% from the highs by mid-year 2013.

The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).

Prices didn't increase as much early in 2014 (more supply, smaller "surge" in demand), however prices haven't fallen as sharply either.

Click on graph for larger image in graph gallery.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Right now Random Lengths prices are up about 8% from a year ago, and CME futures are up about 7% year-over-year.

by Calculated Risk on 8/09/2014 01:01:00 PM

The key report this week is July retail sales on Wednesday.

For manufacturing, the July Industrial Production and Capacity Utilization report, and the August NY Fed (Empire State) survey, will be released this week. 

For prices, PPI will be released on Friday.

Also the NY Fed Q2 Report on Household Debt and Credit will be released on Thursday.

----- Monday, August 11th -----
3:15 AM ET: Speech by Fed Vice Chairman Stanley Fischer, The Great Recession: Moving Ahead, At the Swedish Ministry of Finance Conference: The Great Recession – Moving Ahead, Stockholm, Sweden

----- Tuesday, August 12th -----
7:30 AM ET: NFIB Small Business Optimism Index for July.

10:00 AM: Job Openings and Labor Turnover Survey for June from the BLS.

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

In May, the number of job openings (yellow) were up 19% year-over-year compared to May 2013, and Quits were up 15% year-over-year.

2:00 PM ET: The Monthly Treasury Budget Statement for July. Note: The CBO's estimate is the deficit through July in fiscal 2014 was $462 billion, compared to $607 billion for the same period in fiscal 2013.

----- Wednesday, August 13th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM ET: Retail sales for July will be released.

This graph shows retail sales since 1992 through June 2014. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). On a monthly basis, retail sales increased 0.2% from May to June (seasonally adjusted), and sales were up 4.3% from June 2013.

The consensus is for retail sales to increase 0.2% in July, and to increase 0.4% ex-autos.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for June.  The consensus is for a 0.4% increase in inventories.

----- Thursday, August 14th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 295 thousand from 289 thousand.

11:00 AM: The Q2 2014 Quarterly Report on Household Debt and Credit will be released by the Federal Reserve Bank of New York.

----- Friday, August 15th -----
8:30 AM: NY Fed Empire Manufacturing Survey for August. The consensus is for a reading of 20.0, down from 25.6 in July (above zero is expansion).

8:30 AM: The Producer Price Index for July from the BLS. The consensus is for a 0.1% increase in prices.

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for July.

This graph shows industrial production since 1967.

The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 79.2%.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (preliminary for August). The consensus is for a reading of 82.3, up from 81.8 in July.