by Calculated Risk on 12/02/2014 02:44:00 PM

Based on a WardsAuto estimate, light vehicle sales were at a 17.08 million SAAR in November. That is up 5.5% from November 2013, and up 4.5% from the 16.35 million annual sales rate last month.

Click on graph for larger image.

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for November (red, light vehicle sales of 17.08 million SAAR from WardsAuto).

This was above the consensus forecast of 16.5 million SAAR (seasonally adjusted annual rate).

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate.

This was another strong month for vehicle sales - the second month with 17 million SAAR this year - and the seventh consecutive month with a sales rate over 16 million.

by Calculated Risk on 12/02/2014 12:39:00 PM

A few more updates ...

Update 12/5/2014 more from Zillow: 2015: A Big Year for Buyers

Update 12/2/2014 added CoreLogic.

Update 11/26/2014 for Merrill Lynch  (minor downward revisions) and Fannie Mae (Noveber update, no changes)

Update 11/24/2014: I've added Metrostudy's forecast.

Update: I've added the MBA and Goldman Sachs forecasts.  Also Wells Fargo updated their forecast (slight changes).

Towards the end of each year I collect some housing forecasts for the following year, and it looks like most analysts are optimistic for 2015.

Here is a summary of forecasts for 2014. In 2014, new home sales will be around 440 thousand, and total housing starts will be close to 1 million.  No one was close on New Home sales (all way too optimistic), and Michelle Meyer (Merrill Lynch) and Fannie Mae were the closest on housing starts (about 10% too high).

In 2014, many analysts underestimated the impact of higher mortgage rates and higher new home prices on new home sales and starts.

Note: Here is a summary of forecasts for 2013. In 2013, new home sales were 429 thousand, and total housing starts were 925 thousand.  Barclays were the closest on New Home sales followed by David Crowe (NAHB).  Fannie Mae and the NAHB were the closest on housing starts.

The table below shows several forecasts for 2015.

From Fannie Mae: Housing Forecast: November 2014

From NAHB: Single-Family Production Poised to Take Off in 2015

I don't have Moody's Analytics' forecast, but Mark Zandi, chief economist at Moody's Analytics said today "that single-family starts could be closing in on 1 million units by the end of 2015 and multifamily production could go as high as 500,000 units."  That seems too high.

I haven't worked up a forecast yet for 2015.

Housing Forecasts for 2015
	New Home Sales (000s)	Single Family Starts (000s)	Total Starts (000s)	House Prices1
Chapman U			1,056	2.4%
CoreLogic	498	743	1,124	5.2%5
Fannie Mae	523	783	1,170	4.9%2
Goldman Sachs	521		1,166	3.1%
Merrill Lynch	530		1,175	3.7%
Metrostudy	515	730	1,100	3.9%4
MBA	503	728	1,108	3.0%2
NAHB	547	802	1,158
NAR	620		1,300	4%3
Wells Fargo	530	770	1,160	3.3%
Zillow	501		1,113	2.5%4
1Case-Shiller unless indicated otherwise 2FHFA Purchase-Only Index 3NAR Median Home price 4Zillow Home Value Index, Oct 2014 to Oct 2015 5CoreLogic HPI

by Calculated Risk on 12/02/2014 10:03:00 AM

The Census Bureau reported that overall construction spending increased in October:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during October 2014 was estimated at a seasonally adjusted annual rate of $971.0 billion, 1.1 percent above the revised September estimate of $960.3 billion.

Both private and public spending increased in October:

Spending on private construction was at a seasonally adjusted annual rate of $692.4 billion, 0.6 percent above the revised September estimate of $688.0 billion. Residential construction was at a seasonally adjusted annual rate of $353.8 billion in October, 1.3 percent above the revised September estimate of $349.1 billion. Nonresidential construction was at a seasonally adjusted annual rate of $338.6 billion in October, 0.1 percent below the revised September estimate of $338.9 billion. ...

In October, the estimated seasonally adjusted annual rate of public construction spending was $278.6 billion, 2.3 percent above the revised September estimate of $272.3 billion.
emphasis added

Note: Non-residential for offices and hotels is increasing, but spending for oil and gas is declining. Early in the recovery, there was a surge in non-residential spending for oil and gas (because prices increased), but now, with falling prices, oil and gas is a drag on overall construction spending.

As an example, construction spending for lodging is up 16% year-over-year, whereas spending for power (includes oil and gas) construction is declining since peaking in May.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending is 48% below the peak in early 2006 - but up 55% from the post-bubble low.

Non-residential spending is 18% below the peak in January 2008, and up about 50% from the recent low.

Public construction spending is now 14% below the peak in March 2009 and about 7% above the post-recession low.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is now up 2%. Non-residential spending is up 6% year-over-year. Public spending is up 2% year-over-year.

Looking forward, all categories of construction spending should increase in 2015. Residential spending is still very low, non-residential is starting to pickup (except oil and gas), and public spending has probably hit bottom after several years of austerity.

This was a strong report - well above the consensus forecast of a 0.5% increase - and there were also upward revisions to spending in August and September.

by Calculated Risk on 12/02/2014 09:00:00 AM

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

From CoreLogic: CoreLogic Reports More Than Half of States At or Within 10 Percent of Pre-Crisis Home Price Peak

Home prices nationwide, including distressed sales, increased 6.1 percent in October 2014 compared to October 2013. This change represents 32 months of consecutive year-over-year increases in home prices nationally. On a month-over-month basis, home prices nationwide, including distressed sales, rose by 0.5 percent in October 2014 compared to September 2014.
...
Excluding distressed sales, home prices nationally increased 5.6 percent in October 2014 compared to October 2013 and 0.6 percent month over month compared to September 2014. Also excluding distressed sales, 49 states and the District of Columbia showed year-over-year home price appreciation in October, with Mississippi being the only state to experience a year-over-year decline (-1.2 percent). Distressed sales include short sales and real estate owned (REO) transactions. ...

“Home price growth is moderating as we head into the late fall and is currently running at half the pace it was in the spring of 2014,” said Sam Khater, deputy chief economist at CoreLogic. “However, there are still pockets of strength, especially in several Texas markets, as well as Seattle, Denver and other markets with strong economic fundamentals.”
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 0.5% in October, and is up 6.1% over the last year.

This index is not seasonally adjusted, and this month-to-month increase was fairly strong during the seasonally weak period.


The second graph is from CoreLogic. The year-over-year comparison has been positive for thirty two 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 increases had been slowing, but picked up a little in October.

by Calculated Risk on 12/01/2014 09:09:00 PM

Oh no! From the WSJ: Dodgy Home Appraisals Are Making a Comeback

An estimated one in seven appraisals conducted from 2011 through early 2014 inflated home values by 20% or more, according to data provided to The Wall Street Journal by Digital Risk Analytics, a subsidiary of Digital Risk LLC. The mortgage-analysis and consulting firm based in Maitland, Fla., was hired by some of the 20 largest lenders to review their loan files.

The firm reviewed more than 200,000 mortgages, parsing the homes’ appraised values and other information, including the properties’ sizes and similar homes sold in the areas at the times. The review was conducted using the firm’s software and staff appraisers.

Bankers, appraisers and federal officials in interviews said inflated appraisals are becoming more widespread as the recovery in the housing market cools.

During the bubble, the appraiser always seemed to "hit the number" - no matter how crazy.  I haven't seen anything like that in my area.

Tuesday:
• All day, Light vehicle sales for November. The consensus is for light vehicle sales to increase to 16.5 million SAAR in November from 16.3 million in October (Seasonally Adjusted Annual Rate).

• At 10:00 AM ET, Construction Spending for October. The consensus is for a 0.5% increase in construction spending.