by Calculated Risk on 10/09/2014 07:10:00 PM

A couple of notes today from housing economist Tom Lawler:

NAR on Pending Home Sales Index in the West --- We Know Already

In one of last week’s reports I highlighted how the National Association of Realtors’ Pending Home Sales Index for the West region (not seasonally adjusted) was inconsistent both with the pattern of closed sales in the West and with local realtor/MLS reports from that region.

 It turns out that the NAR is “aware of the fact that (their) pending data in the West does not look correct,” and they are going through their records to see if they can figure out why. The NAR argues, however, that the YOY trend changes look fine, and “line up” better with other reported data.

 From my perspective, if the underlying, unadjusted data are wrong, I’d be leery of the YOY trends as well. As such, analysts are cautioned not to place much weight in the PHSI until the NAR fixes the underlying data.

HMDA Data on Mortgage Originations Suggest All-Cash Share Peaked in 2011

HMDA data show that the number of purchase mortgage originations by HMDA reporters in 2013 was up 13.6% from 2012. HMDA purchase mortgage originations in 2012 were up 13.1% from 2011. In both years the percentage increase in the number of purchase mortgage originations modestly exceeded the percentage increase in estimated total home sales. That was in stark contrast to the previous six years, when the number of purchase mortgage originations fell relative to the estimated number of home sales - with especially steep relative declines from 2008 to 2011. These data suggest that the “all-cash” share of home sales hit an annual high in 2011, but still remained unusually high last year.

by Calculated Risk on 10/09/2014 03:10:00 PM

From HotelNewsNow.com: STR: US results for week ending 4 October

The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 28 September through 4 October 2014, according to data from STR, Inc.

In year-over-year measurements, the industry’s occupancy rose 2.8 percent to 66.5 percent. Average daily rate increased 3.7 percent to finish the week at US$115.93. Revenue per available room for the week was up 6.6 percent to finish at US$77.04.
emphasis added

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

There is always a dip in occupancy after the summer (less leisure travel), and then more business travel in the Fall.

Click on graph for larger image.

The red line is for 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.  Purple is for 2000.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and is at about the level as for the same week in 2000 (the previous high). 

Right now it looks like 2014 will be the best year since 2000 for hotels.   Since it takes some time to plan and build hotels, I expect 2015 will be a record year for hotel occupancy.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 10/09/2014 01:02:00 PM

Watching existing home "for sale" inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing.

And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here.

And at the beginning of this year I argued house price increases would slow in 2014 because of the increase in inventory.

I don't have a crystal ball, but watching inventory helps understand the housing market.   If inventory kept increasing rapidly in certain markets, then we would eventually see price declines.  However it now appears the inventory build is slowing in some former distressed markets.  

The table below shows the year-over-year change for non-contingent inventory in Las Vegas, Phoenix and Sacramento (September not available yet).  Inventory declined sharply through early 2013, and then inventory started increasing sharply year-over-year. It now appears the inventory build is slowing in these markets.

This makes sense.  Prices increased rapidly in these markets in 2012 and 2013 (bouncing off the bottom with low inventory).  Higher prices attracted more people to list their homes.  But now that prices have flattened out - and there is plenty of inventory - potential sellers aren't as motivated to list their homes.  Unlike following the housing bubble, most of these potential sellers probably don't need to sell, so listings will not grow to the moon!

I still expect overall inventory to continue to increase, but this is something to watch.

Year-over-year Change in Active Inventory
Month	Las Vegas	Phoenix	Sacramento
Jan-13	-58.3%	-11.7%	-61.1%
Feb-13	-53.4%	-8.5%	-51.1%
Mar-13	-42.1%	-5.2%	-37.8%
Apr-13	-24.1%	-4.9%	-10.3%
May-13	-13.2%	-2.1%	5.3%
Jun-13	3.7%	-1.6%	18.3%
Jul-13	9.0%	-1.6%	54.3%
Aug-13	41.1%	2.4%	46.8%
Sep-13	60.5%	7.8%	77.3%
Oct-13	73.4%	15.7%	93.2%
Nov-13	77.4%	15.2%	56.8%
Dec-13	78.6%	20.9%	44.2%
Jan-14	96.2%	29.6%	96.3%
Feb-14	107.3%	37.7%	87.8%
Mar-14	127.9%	45.5%	71.2%
Apr-14	103.1%	48.8%	46.3%
May-14	100.6%	47.4%	83.7%
Jun-14	86.2%	43.1%	91.0%
Jul-14	55.2%	35.1%	68.0%
Aug-14	38.8%	21.9%	60.6%
Sep-14	29.5%	13.2%	NA

by Calculated Risk on 10/09/2014 10:45:00 AM

From Trulia chief economist Jed Kolko: Condo Prices and Apartment Rents Outpacing Single-Family Home Costs

Nationally, the month-over-month increase in asking home prices rose to 0.8% in September. Year-over-year, asking prices rose 6.4%, down from the 10.4% year-over-year increase in September 2013. Asking prices rose year-over-year in 92 of the 100 largest U.S. metros.
...
Nationally, rents rose 6.5% year-over-year in September. Apartment rents were up 6.9%, while single-family home rents gained 5.2%. Like the for-sale market, the rental market is tighter for multi-unit buildings than for single family homes.
emphasis added

Note: These asking prices are SA (Seasonally Adjusted) - and adjusted for the mix of homes - and although year-over-year price increases have slowed, the month-to-month increase suggests further house price increases over the next few months on a seasonally adjusted basis.

by Calculated Risk on 10/09/2014 08:30:00 AM

The DOL reports:

In the week ending October 4, the advance figure for seasonally adjusted initial claims was 287,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 287,000 to 288,000. The 4-week moving average was 287,750, a decrease of 7,250 from the previous week's revised average. This is the lowest level for this average since February 4, 2006 when it was 286,500. The previous week's average was revised up by 250 from 294,750 to 295,000.

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

The previous week was revised up to 288,000.

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 287,750.

Note: The low for the 4-week average in 2006 was 286,500 - so just a little lower and this will be the lowest since early 2000.

This was below the consensus forecast of 293,000 and in the normal range for an expansion.