by Calculated Risk on 8/26/2010 11:06:00 AM

On the MBA conference call concerning the "Q2 2010 National Delinquency Survey", MBA Chief Economist Jay Brinkmann said this morning:

Survey covers about 88% of mortgage market.

Mixed news in Q2.

Percent of loans in foreclosure down.

Foreclosure starts fell.

90+ day delinquent category dropped sharply. Some of this decline is because modifications were included as delinquent until the borrower had made several payments - and some of these borrowers with modifications are now being considered current.

However short term delinquencies are increasing again.

Delinquencies and foreclosure starts continue to move to prime fixed rate and FHA loans.

"Improvements are more of a hope". Some of the key factors leading to improvement "may not continue through the year".

From MarketWatch: Foreclosure inventory down, new delinquencies up

The percentage of mortgage loans somewhere in the foreclosure process was 4.57% in the second quarter, down from 4.63% in the first quarter; the percentage is still up from 4.3% a year ago. However, the percent of loans one payment behind is now a seasonally adjusted 3.51%, said Jay Brinkmann, the MBA's chief economist

Note: I have not received the press release or materials. Hopefully I'll have more later today.

by Calculated Risk on 8/26/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Aug. 21, the advance figure for seasonally adjusted initial claims was 473,000, a decrease of 31,000 from the previous week's revised figure of 504,000. The 4-week moving average was 486,750, an increase of 3,250 from the previous week's revised average of 483,500.

The advance number for seasonally adjusted insured unemployment during the week ending Aug. 14 was 4,456,000, a decrease of 62,000 from the preceding week's revised level of 4,518,000.

Click on graph for larger image in new window.

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

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased this week by 3,250 to 486,750. This is the highest level since November 2009.

Weekly claims are very volatile, and most people follow the 4-week average to smooth out the weekly noise. It is good news that the number of initial claims declined from last week, but the level of claims - and the 4-week average - suggests a weak job market.

by Calculated Risk on 8/25/2010 10:51:00 PM

The 10-year Ireland-to-German bond spread has risen to 344 bps, up from 318 bps yesterday. This spread is larger than during the financial crisis in May when the spread peaked at 306 bps.

The 10-year Greece-to-German bond spread is now 926 bps, just below the peak level of 963 bps in May.

The MBA will release the Q2 2010 National Delinquency Survey (NDS) at 10 AM ET. I'll have a couple of post with graphs and conference call comments.

And a couple of posts today:

New Home Sales declined to Record Low in July

And a graph comparing the regional Fed manufacturing surveys and the ISM PMI. This shows why I think the PMI will decline further in August.

Best to all.

by Calculated Risk on 8/25/2010 06:31:00 PM

From the American Trucking Association: ATA Truck Tonnage Index Rose 1.5 Percent in July

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 1.5 percent in July, although June’s reduction was revised from 1.4 percent to 1.6 percent. The latest improvement raised the SA index from 108.3 (2000=100) in June to 110 in July.
...
Compared with July 2009, SA tonnage climbed 7.4 percent, which matched June’s increase and was the eighth consecutive year-over-year gain. Year-to-date, tonnage is up 6.7 percent compared with the same period in 2009.

ATA Chief Economist Bob Costello said that July’s data didn’t change his outlook for subdued tonnage growth in the months ahead, stating, “The economy is slowing and truck freight tonnage has essentially gone sideways since April 2010.”

This graph from the ATA shows the Truck Tonnage Index since Jan 2006 (no larger image).

This index has been moving sideways for several months ...

by Calculated Risk on 8/25/2010 03:05:00 PM

Yesterday, in a short preview of coming negative news, I mentioned that the Institute for Supply Management (ISM) PMI will be released next week (Wed, Sept 1st) - and that the ISM PMI will probably continue to decline based on the regional manufacturing reports.

Gavyn Davies at the Financial Times posted a graph of the New York and Philly Fed surveys compared to the ISM's PMI (ht Paulo). This was referenced in Davies' article: US economy is slowing more than the Fed has recognised

Below is a similar graph.

Click on graph for larger image in new window.

For this graph I averaged the New York and Philly Fed surveys (dashed green), and averaged five surveys including New York, Philly, Richmond, Dallas and Kansas City (blue). The August Kansas City survey will be released tomorrow, and the August Dallas survey will be released on Monday, August 30th.

The PMI (red) is through July.

Based on the regional surveys so far, it appears that the PMI will decline further in August - but still be above 50 (indicating expansion in August).

by Calculated Risk on 8/25/2010 12:25:00 PM

This is something I've been tracking for years ... this graph shows existing home sales (left axis) and new home sales (right axis) through July. This graph starts in 1994, but the relationship has been fairly steady back to the '60s. Then along came the housing bubble and bust, and the "distressing gap" appeared (due partially to distressed sales).

Note: it is important to note that existing home sales are counted when transaction are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

Click on graph for larger image in new window.

Initially the gap was caused by the flood of distressed sales. This kept existing home sales elevated, and depressed new home sales since builders couldn't compete with the low prices of all the foreclosed properties.

The two spikes in existing home sales were due primarily to the first time homebuyer tax credit (the initial credit last year, followed by the extension to April 30th / close by June 30th). There were also two smaller bumps for new home sales related to the tax credit.

Since new home sales are reported when contracts are signed, the 2nd spike for new home sales was in April and then sales collapsed in May. The 2nd spike for existing home sales was in May and June, and then existing home sales collapsed in July.

I expect that eventually this gap will be closed. However that will only happen after the huge overhang of existing inventory (especially distressed inventory) is significantly reduced.