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Wednesday, November 02, 2011

HVS: Q3 Homeownership and Vacancy Rates

by Calculated Risk on 11/02/2011 10:31:00 AM

The Census Bureau released the Housing Vacancies and Homeownership report for Q3 this morning.

As Tom Lawler has been discussing (see posts at bottom), this is from a fairly small sample, and the homeownership and vacancy rates are higher than estimated in other reports (like Census 2010). This report is commonly used by analysts to estimate the excess vacant supply for housing, but it doesn't appear to be useful for that purpose.

It might show the trend, but I wouldn't rely on the absolute numbers.

Homeownership Rate Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate increased to 66.3%, up from to 65.9% in Q2 2011.

I'd put more weight on the decennial Census numbers and that suggests the actual homeownership rate is probably in the 64% to 65% range.

Homeowner Vacancy RateThe Census researchers are investigating differences in Census 2010, ACS 2010, and HVS 2010 vacant housing unit estimates, and plan to report the results of this research at the 2012 Federal Committee on Statistical Methodological Research Conference this coming January: “Evaluation of Gross Vacancy Rates from the Decennial Census Versus Current Surveys.”

The HVS homeowner vacancy rate declined to 2.4% from 2.5% in Q2.

The homeowner vacancy rate has probably peaked and is slowly declining. However - once again - this probably shows that the trend is down, but I wouldn't rely on the absolute numbers.

Rental Vacancy RateThe rental vacancy rate increased to 9.8% from 9.2% in Q2.

I think the Reis quarterly survey (large apartment owners only in selected cities) is a much better measure of the overall trend in the rental vacancy rate - and that survey has been showing the trend is down.

Here are some previous posts about some of the HVS issues by economist Tom Lawler:
Lawler to Census on Housing Data: "Splainin" Needed Not Just on Vacancy Rate
Census Bureau on Homeownership Rate: We've got “Some 'Splainin' to Do”
Be careful with the Housing Vacancies and Homeownership report
Lawler: Census 2010 and the US Homeownership Rate
Lawler: Census 2010 Demographic Profile: Highlights, Excess Housing Supply Estimate, and Comparison to HVS
Lawler: The “Excess Supply of Housing” War
Lawler: Census Releases Demographic Profile of 12 States and DC: Confirms Bias of HVS
Lawler: Census 2010 and Excess Vacant Housing Units
Lawler: On Census Housing Stock/Household Data
Lawler: Housing Vacancy Survey appears to massively overstate number of vacant housing units
Lawler: US Households: Why Researchers / Analysts are “Confused”

ADP: Private Employment increased 110,000 in October

by Calculated Risk on 11/02/2011 08:15:00 AM

ADP reports:

Employment in the U.S. nonfarm private business sector increased by 110,000 from September to October on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated advance in employment from August to September was revised up to 116,000 from the initially reported 91,000.

Employment in the private, service-providing sector rose 114,000 in October. Although down a bit from an increase of 122,000 in September, this increase marks more than 20 consecutive months of employment gains. Employment in the private, goods-producing sector declined 4,000 in October, while manufacturing employment declined by 8,000.
This was slightly above the consensus forecast of an increase of 100,000 private sector jobs in October. The BLS reports on Friday, and the consensus is for an increase of 90,000 payroll jobs in September, on a seasonally adjusted (SA) basis.

Government payrolls have been shrinking by about 35,000 on average per month this year. So this suggests around 110,000 private nonfarm payroll jobs added, minus 35,000 government workers - or around 75,000 total jobs added in October. Of course ADP hasn't been very useful in predicting the BLS report.

MBA: Mortgage Purchase Application Index increased slightly

by Calculated Risk on 11/02/2011 07:24:00 AM

From Reuters: Mortgage applications barely up last week: MBA

The MBA's seasonally adjusted gauge of loan requests for home purchases rose 1.8 percent, while the index of refinancing applications was off 0.2 percent.
...
Fixed 30-year mortgage rates averaged 4.31 percent, down 2 basis points from 4.33 percent.
The following graph shows the MBA Purchase Index and four week moving average since 1990.

MBA Purchase Index Click on graph for larger image.

The purchase index is at about the same level as in 1996, and the 4-week average is at the lowest level this year. This does not include cash buyers, but this suggests weaker home sales in November and December.

Tuesday, November 01, 2011

Greece: Who knows?

by Calculated Risk on 11/01/2011 10:32:00 PM

Looks the referendum is back on ... but who knows?

From Reuters: Greece Says Vote on Bailout Is Still On

"The referendum will be a clear mandate and a clear message in and outside Greece on our European course and participation in the euro," [Prime Minister George Papandreou] said, according to a statement released by his office. "No one will be able to doubt Greece's course within the euro."

Papandreou said Greece's partners will support its policies and urged a meeting of G20 leaders this week in Cannes to agree policies that "make sure democracy is above market appetites."
And from the WSJ: Greek Premier Faces Revolt
By Tuesday evening, Mr. Papandreou appeared to lack enough support in Parliament to hold a referendum on the rescue package for Greece that European leaders agreed on last week. But while prospects for his high-risk referendum receded, he was also fighting to hold on to power, leaving Europe fretting about the political instability in the country at the heart of the euro-zone crisis.

Indeed, Mr. Papandreou in a statement issued around 1 a.m. Wednesday in Athens insisted that the referendum would go ahead and would give his economic overhauls a strong mandate.
And from the Financial Times: Leaders race to save eurozone deal
... Angela Merkel, Germany’s chancellor, and Nicolas Sarkozy, France’s president, summoned George Papandreou, Greek prime minister, to emergency talks in Cannes on Wednesday ... In a joint communiqué, the French and German leaders said they were “determined to ensure the implementation without delay of the decisions adopted at the eurozone summit”, saying they were “more necessary than ever today”.
excerpt with permission
Earlier:
ISM Manufacturing index indicates slower expansion in October
Construction Spending increased slightly in September
U.S. Light Vehicle Sales at 13.26 million SAAR in October, Highest since Aug 2009

LPS: Foreclosure timelines increase, Mortgage delinquency rate declines slightly in September

by Calculated Risk on 11/01/2011 05:57:00 PM

From LPS Applied Analytics: LPS' Mortgage Monitor Report Shows Significant Difference in Inventories, Timelines Between Judicial and Non-Judicial States

The September Mortgage Monitor report released by Lender Processing Services, Inc. continues to show significant differences between states that process foreclosures following a judicial vs. non-judicial foreclosure process. ... The time from last payment to foreclosure sale in judicial states is 761 days, which is six months longer than in non-judicial states.
...
Overall, foreclosure starts in September were slightly below the three-year average. Foreclosure timelines continue to increase across the board – almost 40 percent of loans in foreclosure have not made a payment in two years, and 72 percent have not made a payment in a year or more. New problem loan rates increased sharply over the last two months, with 1.6 percent of loans that were current six months ago now 60 or more days delinquent or in foreclosure.
According to LPS, 8.09% of mortgages were delinquent in September, down from 8.13% in August, and down from 9.27% in September 2010.

LPS reports that 4.18% of mortgages were in the foreclosure process, up from 4.11% in August, and up from 3.84% in September 2010. This gives a total of 12.27% delinquent or in foreclosure. It breaks down as:

• 2.36 million loans less than 90 days delinquent.
• 1.84 million loans 90+ days delinquent.
• 2.17 million loans in foreclosure process.

For a total of 6.37 million loans delinquent or in foreclosure in September.

Delinquency Rate Click on graph for larger image.

This graph shows the total delinquent and in-foreclosure rates since 1995.

The total delinquent rate has fallen to 8.09% from the peak in January 2010 of 10.97%. A normal rate is probably in the 4% to 5% range, so there is a long long ways to go.

However the in-foreclosure rate at 4.18% is barely below the peak rate of 4.21% in March 2011. There are still a large number of loans in this category (about 2.17 million) - and, for judicial states, the average loan in foreclosure has been delinquent for 761 days (six months less for non-judicial states).

Days in Foreclosure This graph provided by LPS Applied Analytics shows the number of loans 90 days delinquent by origination channel.

The total number of loans 90+ delinquent is back to 2008 levels. Most people focus on the GSE seriously delinquent loans, but the private and portfolio loans have much high delinquency rates.

Foreclosure SalesThe third graph shows the number of loans in foreclosure by duration of delinquency.

There are 2.17 million loans in the foreclosure process and about 39% have been delinquent for more than 2 years, and another 33% have been delinquent for 1 to 2 years. Many of these loans are still in process review.

Although the delinquency rate is trending down slowly, the percent of loans in the foreclosure process seems stuck at a very high level.

Earlier:
ISM Manufacturing index indicates slower expansion in October
Construction Spending increased slightly in September
U.S. Light Vehicle Sales at 13.26 million SAAR in October, Highest since Aug 2009

U.S. Light Vehicle Sales at 13.26 million SAAR in October, Highest since Aug 2009

by Calculated Risk on 11/01/2011 04:35:00 PM

Based on an estimate from Autodata Corp, light vehicle sales were at a 13.26 million SAAR in October. That is up 9.2% from October 2010, and up 1.7% from the sales rate last month (13.04 million SAAR in Sept 2011).

This was slightly above the consensus forecast of 13.2 million SAAR.

This graph shows the historical light vehicle sales (seasonally adjusted annual rate) from the BEA (blue) and an estimate for October (red, light vehicle sales of 13.26 million SAAR from Autodata Corp).

Vehicle Sales Click on graph for larger image.

This was just above the February sales and the highest sales rate since August 2009 ("Cash-for-clunkers")

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

This shows the huge collapse in sales in the 2007 recession. This also shows the impact of the tsunami and supply chain issues on sales, especially in May and June.

Vehicle SalesNote: dashed line is current estimated sales rate.

Growth in auto sales should make a positive contribution to Q4 GDP. Sales in Q3 averaged 12.45 million SAAR, and if November and December are at the October rate, sales will be up 6.5% in Q4 over Q3.

Preliminary Vehicle Sales for October

by Calculated Risk on 11/01/2011 02:30:00 PM

Note: DJ is quoting an unnamed Greek official saying the referendum is "basically dead".

The early auto sales reports are a little mixed, but it appears sales will be over 13 million SAAR (the consensus is for 13.2 million SAAR). The high for the year was 13.2 million SAAR in February.

I'll post a graph of October auto sales around 4 PM ET.

From the WSJ: October U.S. Auto Sales Hit Yearly Peak

U.S. auto sales surged in October to their fastest pace of year ... GM sales analyst Don Johnson said he expects the sales pace to remain above 13 million vehicles in the final two months of 2011, and to move higher next year.
From Bloomberg: Big Three Auto Sales Rise Less Than Estimates
General Motors Co. (GM) and Ford Motor Co. (F) said U.S. deliveries increased less than analysts’ estimates that called for the best sales month since February.
Earlier:
ISM Manufacturing index indicates slower expansion in October
Construction Spending increased slightly in September

Construction Spending increased slightly in September

by Calculated Risk on 11/01/2011 11:45:00 AM

Catching up ... this morning from the Census Bureau reported that overall construction spending increased in September:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during September 2011 was estimated at a seasonally adjusted annual rate of $787.2 billion, 0.2 percent (±1.8%)* above the revised August estimate of $786.0 billion. The September figure is 1.3 percent (±1.9%)* below the September 2010 estimate of $797.3 billion.
Private construction spending increased in September:
Spending on private construction was at a seasonally adjusted annual rate of $501.8 billion, 0.6 percent (±1.1%)* above the revised August estimate of $499.0 billion. Residential construction was at a seasonally adjusted annual rate of $228.3 billion in September, 0.9 percent (±1.3%)* above the revised August estimate of $226.3 billion.
Private Construction Spending 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 66% below the peak in early 2006, and non-residential spending is 34% below the peak in January 2008.

Public construction spending is now 12% below the peak in March 2009.

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, both private residential and non-residential construction spending have turned positive, but public spending is now falling on a year-over-year basis as the stimulus spending ends. The year-over-year improvements in private non-residential are mostly due to energy spending (power and electric).

Earlier:
ISM Manufacturing index indicates slower expansion in October

ISM Manufacturing index indicates slower expansion in October

by Calculated Risk on 11/01/2011 10:00:00 AM

PMI was at 50.8% in October, down from 51.6% in September. The employment index was at 53.5%, down from 53.8%, and new orders index was at 52.4%, up from 49.6%.

From the Institute for Supply Management: October 2011 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in October for the 27th consecutive month, and the overall economy grew for the 29th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 50.8 percent, a decrease of 0.8 percentage point from September's reading of 51.6 percent, indicating expansion in the manufacturing sector for the 27th consecutive month. The New Orders Index increased 2.8 percentage points from September to 52.4 percent, indicating a return to growth after three months of contraction. The Prices Index, at 41 percent, dropped 15 percentage points, and is below the 50 percent mark for the first time since May 2009 when it registered 43.5 percent. Inventories decreased to 46.7 percent, which is 5.3 percentage points below the September reading of 52 percent. Comments from respondents are mixed, indicating positive relief from raw materials pricing and continuing strength in a few industries, but there is also more concern and caution about growth in this uncertain economy."
ISM PMIClick on graph for larger image.

Here is a long term graph of the ISM manufacturing index.

This was below expectations of 52.0%, and suggests manufacturing expanded at a slightly slower rate in October than in September. It appears manufacturing employment expanded in October with the employment index at 53.5%. New orders were up, and prices fell sharply.

Greece Update

by Calculated Risk on 11/01/2011 08:38:00 AM

Some European bond yields are rising sharply ...

From the Financial Times: Referendum call sparks fears over Greek bail-out

The premier also raised the stakes by announcing a parliamentary vote of confidence ... The debate ... will start on Wednesday with a vote set for midnight on Friday.
excerpt with permission
From the WSJ: Greek Vote Threatens Bailout
A "yes" vote in the referendum could deflate the massive street protests and strikes that threaten to paralyze Greece as it tries to enact a brutal austerity program to earn rescue loans from the euro zone and the International Monetary Fund.

A "no" vote, however, could bring down the government and cut off international funding for Greece, leaving the country facing a financial meltdown. The government expects to hold the referendum in January.
The Greek 2 year yield is up to 84.2% (up from 77.7% yesterday) The Greek 1 year yield is up to 194% (from 158%).

The Portuguese 2 year yield is up to 19.6% (from 18.3% yesterday) and the Irish 2 year yield is up to 9.3% (from 8.8%).

The Spanish 10 year yield is at 5.6% and the Italian 10 year yield is up to 6.3% (from 6.1%).

The Belgian 10 year yield is at 4.4% and the French 10 year yield is down to 3.0%.