by Calculated Risk on 8/09/2012 08:30:00 AM

The DOL reports:

In the week ending August 4, the advance figure for seasonally adjusted initial claims was 361,000, a decrease of 6,000 from the previous week's revised figure of 367,000. The 4-week moving average was 368,250, an increase of 2,250 from the previous week's revised average of 366,000.

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 increased to 368,250.

This was below the consensus forecast of 367,000 and is near the lowest level for the four week average this year.

And here is a long term graph of weekly claims:

All current Employment Graphs

by Calculated Risk on 8/08/2012 09:19:00 PM

First, a little rent relief coming? From Brady Dennis and Amrita Jayakumar the WaPo: A renter’s respite: In Washington area, thousands of new units to open soon

Thousands of new rental units under construction are scheduled to open in the coming months, the first such wave of new building in the area since the financial crisis hit in 2008.

The coming surge — which includes a whopping 6,000 new units by the end of this year — will give prospective renters a slew of new options and could even halt the upward march of monthly rental payments ...

The projected number of new units would be more than double the number that went on the market in the Washington area during each of the past two years.

Thursday will be busy ...

• At 8:30 AM ET, the Trade Balance report for June will be released by the Census Bureau. The consensus is for the U.S. trade deficit to decrease to $47.5 billion in June, down from from $48.7 billion in May.

• Also at 8:30 AM, the initial weekly unemployment claims report will be released. The consensus is for claims to increase slightly to 367 thousand from 365 thousand. This report has been showing some improvement recently, although it might have been distorted by the timing of auto plant shutdowns.

• At 10:00 AM, the Mortgage Bankers Association's (MBA) will release their 2nd Quarter 2012 National Delinquency Survey.

• Also at 10:00 AM, the Monthly Wholesale Trade: Sales and Inventories report for June will be released. The consensus is for a 0.3% increase in inventories.

Here are two more questions for the August economic contest (both on Thursday).

More game updates: The red line shows the relative number of picks for each option, and people can now login using twitter.

by Calculated Risk on 8/08/2012 04:53:00 PM

Sometimes it helps to state the obvious in advance ...

The Not Seasonally Adjusted (NSA) house price indexes will show month-to-month declines later this year. This should come as no surprise and will not be a sign of impending doom.

The key is to watch the year-over-year change and to compare to the NSA lows earlier this year. I think house prices have already bottomed, and will be up slightly year-over-year when prices reach the usual seasonal bottom in early 2013.

Click on graph for larger image.

This graph shows the month-to-month change in the CoreLogic and NSA Case-Shiller Composite 20 index over the last several years. There is a clear seasonal pattern. In recent years the seasonal pattern has been exaggerated by the large number of foreclosures - foreclosures tend to be fairly steady all year, but conventional sales are stronger in the spring and early summer, and weaker in the fall and winter. This leads to more downward pressure from foreclosures in the fall and winter.

Note: The CoreLogic index tends to lead Case-Shiller. Both are three month averages, but CoreLogic is weighted to the most recent month.

Right now I'm guessing both indexes will report negative month-to-month price changes for August or September (reported in October or November). Just something to be aware of ...

by Calculated Risk on 8/08/2012 02:23:00 PM

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities.

From the GLVAR: GLVAR reports sixth straight month of increasing local home prices,record number of short sales, housing supply bouncing back a bit

According to GLVAR, the total number of local homes, condominiums and townhomes sold in July was 3,572. That’s down from 3,945 in June and down from 4,037 total sales in July 2011.
...
Reversing a months-long trend, the total number of homes listed for sale on GLVAR’s Multiple Listing Service increased slightly from June to July, with a total of 16,944 single-family homes listed for sale at the end of the month. That’s up 0.1 percent from 16,930 single-family homes listed for sale at the end of June, but still down 24.5 percent from one year ago.

The number of available homes listed for sale without any sort of pending or contingent offer also rebounded compared to the previous month, but was still down considerably from last year. By the end of July, GLVAR reported 4,293 single-family homes listed without any sort of offer. That’s up 16.3 percent from 3,690 such homes listed in June, but down 60.9 percent from one year ago.
...
40 percent of all existing local homes sold during July were short sales, which occur when a lender agrees to sell a home for less than what the borrower owes on the mortgage. That’s up from 34.2 percent in June and the highest short sale percentage GLVAR has ever recorded.

Continuing a trend of declining foreclosure sales in recent months, bank-owned homes accounted for 20.7 percent of all existing home sales in July, down from 27.8 percent in June.

A few key points:
• Even with the slight increase in inventory in July, inventory is still down sharply from a year ago (down 60.9 percent year-over-year for single family homes without contingent offers).

• The decline in sales from the record levels in 2011 (even more sales than during the bubble!) is because of the decline in foreclosures. Some of the recent decline in foreclosures is due to new foreclosure rules in Nevada, but there is also a shift to short sales.

• Short sales are almost double foreclosures now. The GLVAR reported 40 percent of sales were short sales, and only 20.7% foreclosures. We've seen a shift from foreclosures to short sales in most areas (not just in areas with new foreclosure laws).

• The percent distressed sales was extremely high at 60.7% in July (short sales and foreclosures), but that was down from 62% in June.

by Calculated Risk on 8/08/2012 12:02:00 PM

The combined Real Estate Owned (REO) by Fannie, Freddie and the FHA declined to 202,765 at the end of Q2 2012, down from 209,077 in Q1, and down 18% from 249,501 in Q2 2012. The peak for the combined REO of the F's was 295,307 in Q4 2010.

According to Fannie Mae, "foreclosures continue to proceed at a slow pace", even following the mortgage settlement:

Our foreclosure rates remain high; however, foreclosures continue to proceed at a slow pace caused by continuing foreclosure process issues encountered by our servicers and changing legislative, regulatory and judicial requirements. The delay in foreclosures, as well as a net increase in the number of dispositions over acquisitions of REO properties, has resulted in a decrease in the inventory of foreclosed properties since December 31, 2010.

The bulk sales program has had a minimal impact so far:

In February 2012, FHFA announced the pilot of an REO initiative that solicited bids from qualified investors to purchase approximately 2,500 foreclosed properties from us with the requirement to rent the purchased properties for a specified number of years. The pilot involves the sale of pools of foreclosed homes including both vacant properties and occupied rental properties. The first pilot transaction involves the sale of pools of properties located in geographically concentrated locations across the United States. The winning bidders have been chosen and transactions are expected to close in the third quarter of 2012. We do not yet know whether this initiative will have a material impact on our future REO sales and REO inventory levels.

Click on graph for larger image.

This graph shows the REO inventory for Fannie, Freddie and the FHA.

This is only a portion of the total REO. There is also REO for private-label MBS, FDIC-insured institutions, VA and more. REO has been declining for those categories too. Most analysts expect an increase in foreclosures, and the number of REO might increase over the next several quarters.

Although REO was down for Fannie and Freddie in Q2 from Q1, but REO increased for the FHA - this is something to watch.