by Calculated Risk on 8/21/2014 10:00:00 AM

The NAR reports: Existing-Home Sales Continue to Climb in July

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.4 percent to a seasonally adjusted annual rate of 5.15 million in July from a slight downwardly-revised 5.03 million in June. Sales are at the highest pace of 2014 and have risen four consecutive months, but remain 4.3 percent below the 5.38 million-unit level from last July, which was the peak of 2013. ...

Total housing inventory at the end of July rose 3.5 percent to 2.37 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. Unsold inventory is 5.8 percent higher than a year ago, when there were 2.24 million existing homes available for sale.

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in July (5.15 million SAAR) were 2.4% higher than last month, but were 4.3% below the July 2013 rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 2.37 million in July from 2.29 million in June.   Headline inventory is not seasonally adjusted, and inventory usually increases from the seasonal lows in December and January, and peaks in mid-to-late summer.

The third graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory increased 5.8% year-over-year in July compared to July 2013.  

Months of supply was at 5.5 months in July.

This was above expectations of sales of 5.00 million.  For existing home sales, the key number is inventory - and inventory is still low, but up solidly year-over-year.    I'll have more later ...

by Calculated Risk on 8/21/2014 08:30:00 AM

The DOL reports:

In the week ending August 16, the advance figure for seasonally adjusted initial claims was 298,000, a decrease of 14,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 311,000 to 312,000. The 4-week moving average was 300,750, an increase of 4,750 from the previous week's revised average. The previous week's average was revised up by 250 from 295,750 to 296,000.

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

The previous week was revised up to 312,000.

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 increased to 300,750.

This was lower than the consensus forecast of 305,000. 

by Calculated Risk on 8/20/2014 08:30:00 PM

From Andrew Ross at the San Francisco Chronicle: Household income hasn't shared in recovery

As of June, median annual household income was 4.8 percent below December 2007, when the recession began, dropping from $56,000 to $54,000. Going back to the good old days, it's down 5.9 percent from January 2000, according to the Sentier Research Group, which compiled the numbers from the latest Current Population Survey by the U.S. Census Bureau.

I think this is real household income (adjusted for inflation). Hopefully, as the unemployment rate continues to decline, the median real household income will start to increase.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 305 thousand from 311 thousand.

• At 10:00 AM, Existing Home Sales for July from the National Association of Realtors (NAR). The consensus is for sales of 5.00 million on seasonally adjusted annual rate (SAAR) basis. Sales in June were at a 5.04 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 5.09 million SAAR. A key will be the reported year-over-year increase in inventory of homes for sale.

• Also at 10:00 AM, the Philly Fed manufacturing survey for August. The consensus is for a reading of 18.5, down from 23.9 last month (above zero indicates expansion).

by Calculated Risk on 8/20/2014 04:34:00 PM

Economist Tom Lawler sent me the updated table below of short sales, foreclosures and cash buyers for several selected cities in July.

Comments from CR: Tom Lawler has been sending me this table every month for several years. I think it is very useful for looking at the trend for distressed sales and cash buyers in these areas. I sincerely appreciate Tom sharing this data with us!

On distressed: Total "distressed" share is down in all of these markets, mostly because of a sharp decline in short sales.

Short sales are down in all of these areas.

Foreclosures are down in most of these areas too, although foreclosures are up a little in few areas like Nevada, Sacramento, Orlando, Miami and the Mid-Atlantic (areas with foreclosure delays related to a judicial foreclosure process or state law changes).

The All Cash Share (last two columns) is mostly declining year-over-year. As investors pull back, the share of all cash buyers will probably continue to decline.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	July-14	July-13	July-14	July-13	July-14	July-13	July-14	July-13
Las Vegas	11.5%	28.0%	10.1%	8.0%	21.6%	36.0%	35.6%	54.5%
Reno**	8.0%	21.0%	4.0%	7.0%	12.0%	28.0%
Phoenix	3.7%	11.5%	5.9%	9.4%	9.6%	20.8%	24.8%	35.8%
Sacramento	5.7%	17.9%	6.3%	5.1%	12.0%	23.0%	20.9%	25.5%
Minneapolis	3.0%	5.7%	9.5%	15.0%	12.5%	20.7%
Mid-Atlantic	4.3%	6.6%	7.7%	6.6%	12.1%	13.2%	17.1%	16.1%
Orlando	8.3%	17.9%	24.4%	17.5%	32.7%	35.4%	39.6%	47.8%
California *	6.6%	12.7%	5.6%	8.3%	12.2%	21.0%
Bay Area CA*	4.2%	8.5%	2.7%	4.6%	6.9%	13.1%	20.2%	23.5%
So. California*	5.9%	12.7%	5.2%	7.7%	11.1%	20.4%	24.5%	30.0%
Miami MSA SF	8.5%	17.8%	17.4%	12.9%	25.9%	30.7%	38.6%	43.2%
Miami MSA C/TH	5.1%	12.6%	21.7%	17.1%	26.8%	29.7%	68.1%	75.0%
Georgia***							24.1%	N/A
Toledo							32.9%	35.0%
Wichita							28.0%	24.1%
Des Moines							15.1%	15.1%
Peoria							18.4%	18.6%
Tucson							26.2%	29.1%
Omaha							17.0%	15.9%
Pensacola							32.9%	30.0%
Memphis*			13.4%	16.9%
*share of existing home sales, based on property records **Single Family Only ***GAMLS

by Calculated Risk on 8/20/2014 02:11:00 PM

Note: Most participants want to see more data - and several are still concerned that inflation is too low.

From the Fed: Minutes of the Federal Open Market Committee, July 29-30, 2014. Excerpts:

With respect to monetary policy over the medium run, participants generally agreed that labor market conditions and inflation had moved closer to the Committee's longer-run objectives in recent months, and most anticipated that progress toward those goals would continue. Moreover, many participants noted that if convergence toward the Committee's objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated. Indeed, some participants viewed the actual and expected progress toward the Committee's goals as sufficient to call for a relatively prompt move toward reducing policy accommodation to avoid overshooting the Committee's unemployment and inflation objectives over the medium term. These participants were increasingly uncomfortable with the Committee's forward guidance. In their view, the guidance suggested a later initial increase in the target federal funds rate as well as lower future levels of the funds rate than they judged likely to be appropriate. They suggested that the guidance should more clearly communicate how policy-setting would respond to the evolution of economic data. However, most participants indicated that any change in their expectations for the appropriate timing of the first increase in the federal funds rate would depend on further information on the trajectories of economic activity, the labor market, and inflation. In particular, although participants generally saw the drop in real GDP in the first quarter as transitory, some noted that it increased uncertainty about the outlook, and they were looking to additional data on production, spending, and labor market developments to shed light on the underlying pace of economic growth. Moreover, despite recent inflation developments, several participants continued to believe that inflation was likely to move back to the Committee's objective very slowly, thereby warranting a continuation of highly accommodative policy as long as projected inflation remained below 2 percent and longer-term inflation expectations were well anchored.
...
Members discussed their assessments of progress--both realized and expected--toward the Committee's objectives of maximum employment and 2 percent inflation and considered enhancements to the statement language that would more clearly communicate the Committee's view on such progress. Regarding the labor market, many members concluded that a range of indicators of labor market conditions--including the unemployment rate as well as a number of other measures of labor utilization--had improved more in recent months than they anticipated earlier. They judged it appropriate to replace the description of recent labor market conditions that mentioned solely the unemployment rate with a description of their assessment of the remaining underutilization of labor resources based on their evaluation of a range of labor market indicators. In their discussion, some members expressed reservations about describing the extent of underutilization in labor resources more broadly. In particular, they worried that the degree of labor market slack was difficult to characterize succinctly and that the statement language might prove difficult to adjust as labor market conditions continued to improve. Moreover, they were concerned that, despite the improvement in labor market conditions, the new language might be misinterpreted as indicating increased concern about underutilization of labor resources. At the conclusion of the discussion, the Committee agreed to state that labor market conditions had improved, with the unemployment rate declining further, while also stating that a range of labor market indicators suggested that there remained significant underutilization of labor resources. Many members noted, however, that the characterization of labor market underutilization might have to change before long, particularly if progress in the labor market continued to be faster than anticipated. Regarding inflation, members agreed to update the language in the statement to acknowledge that inflation had recently moved somewhat closer to the Committee's longer-run objective and to convey their judgment that the likelihood of inflation running persistently below 2 percent had diminished somewhat.
emphasis added