by Calculated Risk on 5/17/2011 12:20:00 PM

Also from the Housing Starts report this morning ...

Although the number of multi-family starts can vary significantly month to month, apartment owners are seeing falling vacancy rates, and some have started to plan for 2012 and will be breaking ground this year. So we should see a pickup in multi-family starts in 2011.

However, since it takes over a year on average to complete multi-family projects - and multi-family starts were at a record low last year - there will be a record low number of multi-family completions this year.

The following graph shows the lag between multi-family starts and completions using a 12 month rolling average.

Click on graph for larger image in graph gallery.

The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010.

For 2011, we should expect multi-family completions to be at or near a record low, and an increase in multi-family starts. It appears that the rolling 12 month starts (blue line) will be above completions (red line) next month.

Also today, the Census Bureau released the "Quarterly Starts and Completions by Purpose and Design" report for Q1 2011. Although this data is Not Seasonally Adjusted (NSA), it shows the trends for several key housing categories.

This graph shows the NSA quarterly intent for four start categories since 1975: single family built for sale, owner built (includes contractor built for owner), starts built for rent, and condos built for sale.

Single family starts built for sale were up slightly from Q4, but still near a record low. Owner built starts were at a record low, and condos built for sale are scrapping along the bottom.

Only the 'units built for rent' is showing any significant pickup.

The largest category - starts of single family units, built for sale - is moving sideways, and will remain weak until more of the excess vacant housing units are absorbed.

by Calculated Risk on 5/17/2011 09:30:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production was unchanged in April after having increased 0.7 percent in March. Output in February is now estimated to have declined 0.3 percent; previously it was reported to have edged up 0.1 percent. In April, manufacturing production fell 0.4 percent after rising for nine consecutive months. Total motor vehicle assemblies dropped from an annual rate of 9.0 million units in March to 7.9 million units in April, mainly because of parts shortages that resulted from the earthquake in Japan. Excluding motor vehicles and parts, factory production rose 0.2 percent in April. The output of mines advanced 0.8 percent, while the output of utilities increased 1.7 percent. At 93.1 percent of its 2007 average, total industrial production was 5.0 percent above its year-earlier level. The rate of capacity utilization for total industry edged down 0.1 percentage point to 76.9 percent, a rate 3.5 percentage points below its average from 1972 to 2010.

Click on graph for larger image in graph gallery.

This graph shows Capacity Utilization. This series is up 9.6 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 76.9% is still "3.5 percentage points below its average from 1972 to 2010" - and below the pre-recession levels of 81.2% in November 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Edit: typo on graph, it should read 2007 = 100.

Industrial production was unchanged in April at 93.1; previous months were revised down, so this is a decline from the previously reported level in March.

Production is still 7.6% below the pre-recession levels at the end of 2007.

The consensus was for a 0.4% increase in Industrial Production in April, and an increase to 77.6% for Capacity Utilization. So this was well below expectations - partly because of the earthquake in Japan.

by Calculated Risk on 5/17/2011 08:30:00 AM

Click on graph for larger image in graph gallery.

Total housing starts were at 523 thousand (SAAR) in April, down 10.6% from the revised March rate of 585 thousand.

Single-family starts decreased 5.1% to 394 thousand in April.

The second graph shows total and single unit starts since 1968. This shows the huge collapse following the housing bubble, and that housing starts have mostly been moving sideways for over two years - with slight ups and downs due to the home buyer tax credit.

Here is the Census Bureau report on housing Permits, Starts and Completions.

Housing Starts:
Privately-owned housing starts in April were at a seasonally adjusted annual rate of 523,000. This is 10.6 percent (±13.0%)* below the revised March estimate of 585 000 and is 23 9 percent (±7 0%) below the revised April 2010 rate of 687 000.

Single-family housing starts in April were at a rate of 394,000; this is 5.1 percent (±10.2%)* below the revised March figure of 415,000. The April rate for units in buildings with five units or more was 114,000.

Building Permits:
Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 551,000. This is 4.0 percent (±1.1%) below the revised March rate of 574,000 and is 12.8 percent (±1.2%)below the revised April 2010 estimate of 632,000.

Single-family authorizations in April were at a rate of 385,000; this is 1.8 percent (±1.0%) below the revised March figure of 392,000. Authorizations of units in buildings with five units or more were at a rate of 143,000 in April.

This was well below expectations of 570 thousand starts in April. I'll have more on starts later ... I expect starts to stay low until more of the excess inventory of existing homes is absorbed.

by Calculated Risk on 5/16/2011 11:22:00 PM

Just an update from Reuters: Gasoline price falls first time in 8 weeks: Energy Department

Regular unleaded gasoline declined half a penny over the last week to a national price of $3.96 a gallon, which is still up $1.10 from a year ago.

Not much of a decline yet nationally, but GasBuddy.com is showing a 6 cent decline in my area from the peak.

I think high oil and gasoline prices the biggest downside risk to the U.S. economy - and a decline in prices would definitely be helpful.

Bloomberg is showing WTI futures at $96.86 per barrel tonight (down from $114 at the end of April), and Brent at $110.

Earlier:
• NAHB Builder Confidence index unchanged at low level in May
• And this weekend post has generated a lot of feedback: The upward slope of Real House Prices.

by Calculated Risk on 5/16/2011 07:05:00 PM

The housing bubble and bust exposed the poor quality of publicly available U.S. housing data. One area of improvement is the various house price indexes now available that didn't exist in January 2005 when I started this blog. But that data isn't always timely, and the details aren't always public.

There is a long long ways to go. The NAR data for existing home sales and inventory is still suspect, the Census Bureau could change their methodology so new home sales matched up better with builder reports (change the timing of sales and handling of cancellations), there is no good data available for housing demolitions, the total housing stock numbers are almost useless for analyzing the excess supply, and there is no timely data for household formation. But maybe we will have better publicly available data for foreclosures and delinquencies soon:

From Alex Ulam at National Mortgage News: Should Mortgage Servicing Data Be a Public Utility

[T]hanks to a little-discussed provision of the Dodd-Frank Act, legislators, regulators and even nonprofit housing activists may eventually get a more comprehensive picture of the mortgage servicing industry.

Section 1447 of the law calls for the Department of Housing and Urban Development to establish and maintain a comprehensive national database on foreclosures and defaults on mortgages and to make the information publicly available. The data is supposed to drill down to the census tract level and include the number and percentage of loans that are delinquent by more than 30 days; those that are in the foreclosure process; and those that are underwater.

Hopefully the database will include the number of REOs, the number of mortgages in the foreclosure process, and all the deliquency data by census tract. That would help.

by Calculated Risk on 5/16/2011 03:52:00 PM

• From economist Tom Lawler:

Based on my regional tracking – with a caveat that some local MLS are late in issuing statistical reports – I estimate that existing home sales ran at a seasonally adjusted annual rate of 5.15 million in April, up 1% from March’s pace, but down 11.2% from last April’s tax-credit-goosed pace. Unadjusted sales should show a larger YOY decline of about 13.9%, reflecting one fewer business day this April than last April. Seasonal adjustment is a bit tricky this April, given the exceptionally late Easter. Sales in areas that last April saw the largest YOY gains generally saw the largest YOY declines, while sales in many “distressed” areas show much less “tax-credit-related” swings.

My tracking of homes listing for sale suggests a modest 1.5-2.0% increase from March to April. However, in each of the last two years the NAR has “shown” a MASSIVELY higher monthly increase in listings from March to April. Looking at year-ago numbers, I’d “guesstimate” that homes listing for sale were down about 8% nationwide at the end of this April vs. last April. If NAR numbers show comparable YOY declines, then NAR would report a 4.4% monthly increase. Listings in Florida compared to a year ago are down especially sharply.

These aggregate forecasts aren’t much different from “consensus,” and as such are not very interesting.

CR Note: they are interesting to me! The NAR reports on Thursday and the consensus is for sales of 5.2 million (SAAR).

• An addition to the weekly schedule (updated every Sunday in the menu bar above). On Thursday at 10:00 AM ET: Mortgage Bankers Association (MBA) 1st Quarter 2011 National Delinquency Survey (NDS). This is expected to show a significant decline in overall delinquencies. I'll be on the conference call at 10:30 AM.

• From the LA Times: Unexpected state revenue leaps to $6.6 billion. The state is now forecasting $6.6 billion more in revenue of the next year (probably thanks to the tech boom).

• And this weekend post has generated a lot of feedback: The upward slope of Real House Prices.

Best to all