by Calculated Risk on 9/03/2014 02:00:00 PM

Fed's Beige Book "Prepared at the Federal Reserve Bank of Philadelphia and based on information collected on or before August 22, 2014."

Reports from the twelve Federal Reserve Districts indicated that economic activity has expanded since the previous Beige Book report; however, none of the Districts pointed to a distinct shift in the overall pace of growth. The New York, Cleveland, Chicago, Minneapolis, Dallas, and San Francisco Districts characterized their growth rates as moderate; Philadelphia, Atlanta, St. Louis, and Kansas City reported modest growth. Boston reported that business activity appeared to be improving, and Richmond reported further strengthening. Philadelphia, Atlanta, Chicago, Kansas City, and Dallas explicitly reported that contacts in their Districts generally remained optimistic about future growth; most of the other Districts cited various examples of ongoing optimism from specific sectors.

And on real estate:

Barely half of the Districts reported stable or growing residential real estate activity related to the construction of new homes and sales of existing houses. New construction and existing home sales generally grew modestly; market conditions tended to vary by metropolitan area and by neighborhood within metropolitan areas. Boston, New York, and Dallas reported high levels of ongoing multifamily construction projects; Chicago reported a moderate pace of growth, and San Francisco noted a pickup in activity.

A little over half of the Districts reported some degree of growth in nonresidential real estate activity, with increased construction, leasing, or both tied to steady or falling vacancy rates and to rent increases. None of the Districts reported a decline in overall activity, although New York and St. Louis described activity as mixed. In addition to traditional office space, certain Districts reported increased demand for specific projects: Boston noted demand for construction in the hospitality sector, Philadelphia cited industrial and warehouse projects, Richmond noted distribution centers, and St. Louis reported new retail and mixed-use projects as well as new industrial facility construction.
emphasis added

Very cautious comments on residential real estate, although nonresidential is seeing some growth.

by Calculated Risk on 9/03/2014 11:50:00 AM

From John Sousanis at WardsAuto Counting Cars: Summer Sales Heat Up

SUMMARY: With a few exceptions, automakers are reporting higher than expected August sales, pointing to the possibility that the forecasted July 17-million SAAR, which failed to materialize, just may have been a month late coming.

WardsAuto is currently projecting sales in August at 17.06 million seasonally adjusted annual rate (SAAR).  This would be the highest sales rate since July 2006.

A few excerpts:

Toyota beat WardsAuto expections by nearly 9%, delivering 246,100 LVs in August. The automaker's daily sales rose 10.2% from same-month year-ago ...

[Ford] daily deliveries up just 3.9% over same-month year-ago, on total LV sales of 217,040.
...
General Motors poored a little cold water on August sales reports, recording a 2.4% DSR gain on year-ago, with LV deliveries of 272,243 units - 3% below WardsAuto's expectations for the company ...

Nissan is reporting August sales of almost 135,000 LVs, a 15.7% rise in DSR compared with same-month 2013. Volkswagen brand daily sales fell 9.6%, but the result was better than expected, with VW moving 35,181 units during the month.

Fiat-Chrysler reports over 197,000 LV deliveries in August, a massive 24.2% leap over year-ago sales

by Calculated Risk on 9/03/2014 07:01:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 0.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 29, 2014. ...

The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. ...
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.25 percent, the lowest level since June 2013, from 4.28 percent, with points decreasing to 0.24 from 0.25 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index.

The refinance index is down 73% from the levels in May 2013.

As expected, refinance activity is very low this year.


The second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is down about 12% from a year ago.

by Calculated Risk on 9/02/2014 05:30:00 PM

Wednesday:
• All day, Light vehicle sales for August. The consensus is for light vehicle sales to increase to 16.5 million SAAR in August from 16.4 million in July (Seasonally Adjusted Annual Rate).

• 10:00 AM, Manufacturers' Shipments, Inventories and Orders (Factory Orders) for July. The consensus is for a 10.5% increase in July orders.

• At 2:00 PM, Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their District

Oil prices were down sharply today with Brent October futures down to $100.58 per barrel according to Bloomberg.  A year ago Brent was at $115 per barrel - so this is a significant year-over-year decline.

The recent decline in prices could give a little boost to consumer spending on other items. This decline will also hold down the annual cost-of-living-adjustment (COLA) for this year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.43 per gallon (down about a 15 cents per gallon 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 9/02/2014 12:03:00 PM

Notes: This CoreLogic House Price Index report is for July. The recent Case-Shiller index release was for June. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic Reports Home Prices Rose by 7.4 Percent Year Over Year in July

Home prices nationwide, including distressed sales, increased 7.4 percent in July 2014 compared to July 2013. This change represents 29 months of consecutive year-over-year increases in home prices nationally. On a month-over-month basis, home prices nationwide, including distressed sales, increased 1.2 percent in July 2014 compared to June 2014.
...
Excluding distressed sales, home prices nationally increased 6.8 percent in July 2014 compared to July 2013 and 1.1 percent month over month compared to June 2014. ...

“While home prices have clearly moderated nationwide since the spring, the geographic drivers of price increases are shifting,” said Sam Khater, deputy chief economist for CoreLogic. “Entering this year, price increases were led by western and southern states, but over the last few months northeastern and midwestern states are migrating to the forefront of home price rankings.”
emphasis added

Click on graph for larger image.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was up 1.2 in July, and is up 7.4% over the last year.

This index is not seasonally adjusted, so a solid month-to-month gain was expected for July.


The second graph is from CoreLogic. The year-over-year comparison has been positive for twenty nine consecutive months suggesting house prices bottomed early in 2012 on a national basis (the bump in 2010 was related to the tax credit).

The YoY increase was slightly higher in July than in June (revised), however I expect the year-over-year increases to continue to slow.