by Calculated Risk on 2/19/2015 10:11:00 AM

From the Philly Fed: February Manufacturing Survey

Firms responding to the Manufacturing Business Outlook Survey indicated continued modest growth in the region’s manufacturing sector in February. Although the current activity index fell for the third consecutive month, it remained positive, and the employment indicator increased from its reading last month. The survey’s future activity index also fell but continues to reflect general optimism about manufacturing growth in the region over the next six months.
...
The diffusion index for current general activity fell slightly, from a reading of 6.3 in January to 5.2 this month ...

The survey’s indicators for current labor market conditions suggest a slight improvement this month, as the employment index increased 6 points and returned to a positive reading ...
emphasis added

This was below the consensus forecast of a reading of 8.5 for January.

Click on graph for larger image.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The light blue line is an average of the NY Fed (Empire State) and Philly Fed surveys through February. The ISM and total Fed surveys are through January.

The average of the Empire State and Philly Fed surveys declined in February, and this suggests a slightly weaker ISM report for February.

by Calculated Risk on 2/19/2015 08:33:00 AM

The DOL reported:

In the week ending February 14, the advance figure for seasonally adjusted initial claims was 283,000, a decrease of 21,000 from the previous week's unrevised level of 304,000. The 4-week moving average was 283,250, a decrease of 6,500 from the previous week's unrevised average of 289,750.

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

The previous week was unrevised at 304,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

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 283,250.

This was below the consensus forecast of 290,000, and the low level of the 4-week average suggests few layoffs.

by Calculated Risk on 2/18/2015 08:02:00 PM

From DataQuick: Bay Area January Home Sales Slowest in Seven Years; Single-Digit Annual Price Gain

January home sales dropped sharply month over month, which is normal for the season, and dipped year over year to the lowest level for a January in seven years. ... A total of 4,439 new and resale houses and condos sold in the nine-county Bay Area in January 2015. That was down month over month by 40.5 percent from 7,456 sales in December 2014 and down year over year by 5.5 percent from 4,696 sales in January 2014, according to CoreLogic DataQuick data.
...
“January isn’t really a bellwether month when it comes to housing trends. For that we’ll have to wait until spring,” said Andrew LePage,” CoreLogic DataQuick data analyst. “But the latest data do indicate the market continues to struggle with challenges that many in the industry hoped would be resolved last year – challenges such as inactive groups of buyers and sellers and a mortgage market that remains difficult for many. More job and income growth, coupled with low mortgage rates, could fuel demand this year in a market still running short on supply and struggling with affordability constraints. It will be interesting to see whether recent home price appreciation will trigger a more pronounced ‘supply response’ – an increase in the number of homes listed for sale.”
...
Foreclosure resales accounted for 4.5 percent of all resales in January, up from a revised 3.6 percent in December 2014 and down from 5.2 percent in January 2014. Foreclosure resales in the Bay Area peaked at 52.0 percent in February 2009, while the monthly average over the past 17 years is about 10 percent. Foreclosure resales are purchased homes that have been previously foreclosed upon in the prior 12 months.

Short sales made up an estimated 4.0 percent of Bay Area resales in January, the same as in December 2014 and down from 8.5 percent in January 2014. Short sales are transactions in which the sale price fell short of what was owed on the property.
emphasis added

Thursday:
• At 8:30 AM ET, initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 290 thousand from 304 thousand.

• At 10:00 AM, the Philly Fed manufacturing survey for February. The consensus is for a reading of 8.5, up from 6.3 last month (above zero indicates expansion).

by Calculated Risk on 2/18/2015 05:30:00 PM

For the second consecutive month, inventory was down year-over-year in Phoenix.  This is a significant change.

This is a key distressed market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.  These key markets hopefully show us changes in trends for sales and inventory.

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in January were down 0.3% year-over-year.

2) Cash Sales (frequently investors) were down about 12% to 32.0% of total sales. Non-cash sales were up 6.4% year-over-year.

3) Active inventory is now down 4.9% year-over-year.   Note: House prices bottomed in Phoenix in 2011 at about the current level of inventory.

More inventory (a theme in 2014) - and less investor buying - suggested price increases would slow sharply in 2014.  And prices increases did slow.

According to Case-Shiller, Phoenix house prices bottomed in August 2011 (mostly flat for all of 2011), and then increased 23% in 2012, and another 15% in 2013.  Those large increases were probably due to investor buying, low inventory and some bounce back from the steep price declines in 2007 through 2010.  With more inventory, price increases flattened out in 2014.

As an example, the Phoenix Case-Shiller index through November shows prices up less than 2% in 2014, and the Zillow index shows Phoenix prices up 2.4% over the last year.

Now, with falling inventory, prices might increase a little faster in 2015 (something to watch if inventory continues to decline).

January Residential Sales and Inventory, Greater Phoenix Area, ARMLS
	Sales	YoY Change Sales	Cash Sales	Percent Cash	Active Inventory	YoY Change Inventory
Jan-08	2,907	---	553	19.0%	56,8741	---
Jan-09	4,736	62.9%	1,625	34.3%	53,581	-5.8%
Jan-10	5,789	22.2%	2,475	42.8%	41,506	-22.5%
Jan-11	6,539	13.0%	3,263	49.9%	42,881	3.3%
Jan-12	6,455	-1.3%	3,198	49.5%	25,025	-41.6%
Jan-13	5,790	-10.3%	2,555	44.1%	22,090	-11.7%
Jan-14	4,799	-17.1%	1,740	36.3%	28,630	29.6%
Jan-15	4,785	-0.3%	1,529	32.0%	27,238	-4.9%
1 January 2008 probably included pending listings

by Calculated Risk on 2/18/2015 03:18:00 PM

During the recession, I started following the Sacramento market to look for changes in the mix of houses sold (equity, REOs, and short sales). For some time, not much changed. But over the last 2+ years we've seen some significant changes with a dramatic shift from foreclosures (REO: lender Real Estate Owned) to short sales, and the percentage of total distressed sales declining sharply.

This data suggests healing in the Sacramento market and other distressed markets are showing similar improvement.  Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In January, 16.6% of all resales were distressed sales. This was up from 12.8% last month, and down from 19.5% in January 2013. Since distressed sales happen year round, but conventional sales decline in December and January, the percent of distressed sales bumps up in January (seasonal).

The percentage of REOs was at 9.2%, and the percentage of short sales was 7.4%.

Here are the statistics for January.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional (equity) sales that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Active Listing Inventory for single family homes increased 24.8% year-over-year (YoY) in January.  In general the YoY increases have been trending down after peaking at close to 100%.  This is the smallest YoY increase in inventory since June 2013.

Cash buyers accounted for 20.6% of all sales (frequently investors).

Total sales were down 5.2% from January 2014, and conventional equity sales were down 1.8% compared to the same month last year.

Summary: There was a seasonal bump in the percent of distressed sales, but overall this is an improving market.