by Calculated Risk on 5/26/2011 12:40:00 PM

LPS Applied Analytics released their April Mortgage Performance data. From LPS:

•Delinquencies increased slightly in April. Delinquencies are down almost 10% on the year and over 25% from the peak in January 2010.
•The inventory of late stage delinquencies continues to age, with 40% of borrowers who are in 90+ delinquency status having not made a payment in over a year.
•Improvement continues in the early stages of the pipeline as new seriously delinquent loan rates have dropped to three year lows.
•Both foreclosure starts and sales declined in April -foreclosure sales are still well below the pre-moratoria levels of late 2010.
•The foreclosure pipeline remains bloated with overhang at every level and limited foreclosure sale activity

According to LPS, 7.97% of mortgages were delinquent in April, up from 7.78% in March, but down from 8.80% in February and down from 9.52% in April 2010. Some of this increase is the normal seasonal pattern.

LPS reports that 4.14% of mortgages were in the foreclosure process, down from the record 4.21% in March. This gives a total of 12.11% delinquent or in foreclosure. It breaks down as:

• 2.24 million loans less than 90 days delinquent.
• 1.96 million loans 90+ days delinquent.
• 2.18 million loans in foreclosure process.

For a total of 6.39 million loans delinquent or in foreclosure in April.

Click on graph for larger image in graph gallery.

This graph provided by LPS Applied Analytics shows the aging for the 90+ days delinquent bucket.

What is surprising is the large percentage in the 90+ days delinquent bucket that are more than 12 months delinquent and haven't moved to the "in foreclosure process" bucket. About 40% of loans in the 90+ days bucket - or about 800,000 loans - have been delinquent over a year.

The second graph - from the March report - shows the aging of loans in the foreclosure process.

"31% of loans in foreclosure have not made a payment in over 2 years." So about one third of the 2.2 million loans in the foreclosure process haven't made a payment in over 2 years.

These two graphs show the "bloated" backlog of seriously delinquent loans (90+ days and in foreclosure).

The good news is the improvement in the early stages, however there is still an enormous number of seriously delinquent loans.

Note: Earlier today, RealtyTrac put out their monthly foreclosure report. The report included the statement: "[T]he current inventory of 1.9 million properties already on the banks’ books, or in foreclosure." I think that number is incorrect. RealtyTrac estimates about 872,000 REOs (Real Estate Owned) and another 1 million in foreclosure.

However, as LPS reported (the MBA has reported similar numbers), there about 2.2 million loans in the foreclosure process, and economist Tom Lawler has estimated the number of REO on lenders' books at about 600,000. Plus there are an additional 2 million loans 90+ days delinquent (about 800,000 are over 1 year delinquent). Some of these loans will cure because of modifications or other reasons. And some of these homes will be sold as short sales. But it appears the number of homes in the pipeline is well over 1.9 million. Just trying to get the numbers correct!

Final note: Recently I've seen seen some very high estimates of the percentage of distressed U.S. homes. So here are some numbers to use:
• There are just under 75 million owner occupied homes in the U.S.
• Just over 50 million homes have a mortgage (LPS estimated 54 million in 2010). The remaining are owned free and clear.
• There are 6.4 million loans delinquent, with about 4.1 million seriously delinquent (90+ days or in foreclosure).

by Calculated Risk on 5/26/2011 11:19:00 AM

From the Kansas City Fed: May Survey Results are Flat Following Rapid Growth the Past Two Months

The Federal Reserve Bank of Kansas City released the May Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity was largely unchanged in May, although new orders for exports continued to grow.

“Factory activity in our region was essentially flat in May following rapid growth in recent months,” said Wilkerson. “But, survey contacts remain generally optimistic about the future and reported plans to continue expanding their workforces.”

Wilkerson said price indexes eased in May with fewer firms planning to raise selling prices and some slowdown in price increases for materials.
...
The month-over-month composite index was 1 in May, down from 14 in April and 27 in March. ... By contrast, the employment index eased but remained well above zero.

There was almost no growth in May, but the good news was price pressures eased a little and employment continued to expand.

The last regional survey (Dallas) will be released on Tuesday May 31st. All of the regional surveys have indicated a sharp slowdown in activity in May, and combined, suggest the ISM manufacturing survey for May will be in the mid-50s (to be released June 1st).

by Calculated Risk on 5/26/2011 09:00:00 AM

From the BEA: Gross Domestic Product, First Quarter 2011 (second estimate)

This was below the consensus forecast of an upward revision to 2.1%, and the details were weaker. Overall GDP growth was unrevised in the second estimate, although Personal Consumption Expenditures (PCE) growth was revised down, mostly offset by an increase in the "Change in private inventories". (see table at bottom for changes in contribution to GDP).

The following graph shows the quarterly GDP growth (at an annual rate) for the last 30 years. The current quarter is in blue.

Click on graph for larger image in graph gallery.

The dashed line is the current growth rate. Growth in Q1 at 1.8% annualized was below trend growth (around 3.1%) - and very weak for a recovery, especially with all the slack in the system.

The following table shows the changes from the advance release (this is the Contributions to Percent Change in Real Gross Domestic Product).

Contributions to Percent Change in Q1 Real Gross Domestic Product
	2nd Estimate	Advance	Change
Percent change at annual rate:
Gross domestic product	1.8	1.8	0.0
Percentage points at annual rates:
Personal consumption expenditures..	1.53	1.91	-0.4
Goods	0.83	1.12	-0.3
Durable goods	0.66	0.78	-0.1
Nondurable goods	0.17	0.34	-0.2
Services	0.69	0.80	-0.1
Gross private domestic investment	1.45	1.01	0.4
Fixed investment	0.26	0.09	0.2
Nonresidential	0.33	0.18	0.2
Structures	-0.48	-0.63	0.2
Equipment and software	0.81	0.80	0.0
Residential	-0.07	-0.09	0.0
Change in private inventories	1.19	0.93	0.3
Net exports of goods and services	-0.06	-0.08	0.0
Exports	1.16	0.64	0.5
Imports	-1.22	-0.72	-0.5
Government consumption expenditures	-1.07	-1.09	0.0
Federal	-0.68	-0.68	0.0
National defense	-0.68	-0.69	0.0
Nondefense	0.00	0.00	0.0
State and local	-0.39	-0.41	0.0

by Calculated Risk on 5/26/2011 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending May 21, the advance figure for seasonally adjusted initial claims was 424,000, an increase of 10,000 from the previous week's revised figure of 414,000. The 4-week moving average was 438,500, a decrease of 1,750 from the previous week's revised average of 440,250.

The following graph shows the 4-week moving average of weekly claims for the last 40 years.
Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 438,500.

The 4-week average is back to the level of last November when there were fewer payroll jobs being added each month - and that is very concerning.

by Calculated Risk on 5/25/2011 10:19:00 PM

• From the Rockefeller Institute of Government: States Report Strong Growth in Tax Revenues in the First Quarter of 2011

The Rockefeller Institute's compilation of data from 47 early reporting states shows collections from major tax sources increased by 9.1 percent in nominal terms in the first quarter of 2011 compared to the same quarter of 2010. That represented the third consecutive quarter of increasing strength in revenues. Tax collections now have been rising for five straight quarters, following five quarters of declines, but were still 3.1 percent lower in early 2011 than in the same period three years ago
...
In terms of dollars, California reported the largest increase in overall tax collections in the first quarter of 2011, where revenue collections rose by $1.4 billion or 5.6 percent. Illinois and New York also reported large increases in overall tax collections in terms of dollars.

The press release has a state by state breakdown. Revenue is still 3.1% lower than at the beginning of the recession.

• According to gasbuddy.com, gasoline prices are down about 15 cents per gallon nationally from the peak. Oil prices moved up today to almost $102 per barrel (WTI futures), but we should still further gasoline price declines after the Memorial Day weekend.

• At 8:30 AM tomorrow, the Department of Labor will release the initial weekly unemployment claims report. This is being watched closely now because of the sharp increase in initial claims at the end of April. The consensus is for a decrease to 404,000 from 409,000 last week.

Also at 8:30 AM, the BEA will release the second estimate of Q1 GDP. The consensus is for an upward revision to 2.1% annualized real GDP growth (from 1.8%). Goldman Sachs put out a note this afternoon:

[W]e now expect an upward revision to 2.1% (one tenth higher than before). [However the] soft April results ... imply about two tenths of additional downside risk to our Q2 GDP growth forecast, on top of our downward revision to 3.0% yesterday.

Best to all

by Calculated Risk on 5/25/2011 05:52:00 PM

The Department of Transportation (DOT) reported that vehicle miles driven in March were down 1.4% compared to March 2010:

Travel on all roads and streets changed by -1.4% (-3.5 billion vehicle miles) for March 2011 as compared with March 2010. Travel for the month is estimated to be 250.4 billion vehicle miles.

Cumulative Travel for 2011 changed by -0.1% (-0.8 billion vehicle miles).

Click on graph for larger image in graph gallery.

This graph shows the rolling 12 month total vehicle miles driven.

Note: in the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months. Currently miles driven has been below the previous peak for 40 months - so this is a new record for longest period below the previous peak - and still counting!

The second graph shows the year-over-year change from the same month in the previous year. So far the current decline is not as a severe as in 2008.

U.S. oil prices in March averaged $103 per barrel, and although prices have declined in May from the April highs, prices have only fallen to just below the prices in March. Also other sources have reported demand for gasoline is down in April and May, so I expect the data for April to show a sharp year-over-year decline in miles driven.