by Calculated Risk on 3/25/2014 09:17:00 AM

Note: The S&P website crashed (again), and I'll post graphs and more later today.

From the WSJ: U.S. Home Prices Rise 13.2% in January

According to the S&P/Case-Shiller home price report, the home price index covering 10 major U.S. cities increased 13.5% in the year ended in January. The 20-city price index advanced 13.2% ...

... "From the bottom in 2012, prices are up 23% and the housing market is showing signs of moving forward with more normal price increases." [said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.]
...
"Expectations and recent data point to continued home price gains for 2014. Although most analysts do not expect the same rapid increases we saw last year, the consensus is for moderating gains," the report said.

by Calculated Risk on 3/24/2014 08:59:00 PM

A reminder of a friendly bet I made with NDD on housing starts and new home sales in 2014:

If starts or sales are up at least 20% YoY in any month in 2014, [NDD] will make a $100 donation to the charity of Bill's choice, which he has designated as the Memorial Fund in honor of his late co-blogger, Tanta. If housing permits or starts are down 100,000 YoY at least once in 2014, he make a $100 donation to the charity of my choice, which is the Alzheimer's Association.

NDD has Starts and Permits.  I have Starts and New Home sales.

Of course, with the terms of the bet, we could both "win" at some point during the year. (I expect to "win" in a few months, but not now due to the severe weather and limited starts and sales in many parts of the country).

In February 2013, new home sales were at a 445 thousand seasonally adjusted annual rate (SAAR). For me to win, new home sales would have to be up 20% or at 534 thousand SAAR in February (not likely).

Tuesday:
• At 9:00 AM ET, S&P/Case-Shiller House Price Index for January. Although this is the January report, it is really a 3 month average of November, December and January. The consensus is for a 13.3% year-over-year increase in the Composite 20 index (NSA) for January. The Zillow forecast is for the Composite 20 to increase 13.0% year-over-year, and for prices to increase 0.5% month-to-month seasonally adjusted.

• Also at 9:00 AM, FHFA House Price Index for January 2013. This was original a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.4% increase.

• At 10:00 AM, New Home Sales for February from the Census Bureau. The consensus is for a decrease in sales to 440 thousand Seasonally Adjusted Annual Rate (SAAR) in February from 468 thousand in January.

• Also at 10:00 AM, the Conference Board's consumer confidence index for March. The consensus is for the index to increase to 78.6 from 78.1.

• Also at 10:00 AM, the Richmond Fed Survey of Manufacturing Activity for March.

by Calculated Risk on 3/24/2014 04:27:00 PM

Here is another weekly update on housing inventory ...

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then usually peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data was for February).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years.

Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

In 2013 (Blue), inventory increased for most of the year, and finished up about 2.7% YoY.

Inventory in 2014 (Red) is now 6.2% above the same week in 2013.

Inventory is still very low, but this increase in inventory should slow house price increases. 

Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess is inventory will be up 10% to 15% year-over-year by the end of 2014 (inventory would still be below normal).

by Calculated Risk on 3/24/2014 01:43:00 PM

Notes: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight (formerly LPS), Zillow, FHFA, FNC and more). The timing of different house prices indexes can be a little confusing. Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.

From LPS: U.S. Home Prices Flat for the Month; Up 8.0 Percent Year-Over-Year

Today, the Data and Analytics division of Black Knight Financial Services (formerly the LPS Data & Analytics division) released its latest Home Price Index (HPI) report, based on January 2014 residential real estate transactions. ... The Black Knight HPI represents the price of non-distressed sales by taking into account price discounts for REO and short sales.

The year-over-year increase was less in January (8.0%) than in December (8.4%), November (8.5%) and October (8.8%), so this suggests price increases might be slowing.

The LPS HPI is off 14.0% from the peak in June 2006.

Note: The press release has data for the 20 largest states, and 40 MSAs. Prices increased in 10 of the  20 largest states in January and were unchanged in two. LPS shows prices off 44.3% from the peak in Las Vegas, off 36.8% in Orlando, and 34.9% off from the peak in Riverside-San Bernardino, CA (Inland Empire). "After many months of hitting new peaks, Texas and its major metros backed off trend of consecutive new highs."

Note: Case-Shiller for January will be released tomorrow.

by Calculated Risk on 3/24/2014 09:45:00 AM

According to Black Knight (formerly LPS) First Look report for February, the percent of loans delinquent decreased in February compared to January, and declined by more than 12% year-over-year.

Also the percent of loans in the foreclosure process declined further in January and were down 34% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) decreased to 5.97% from 6.27% in January. The normal rate for delinquencies is around 4.5% to 5%.

The percent of loans in the foreclosure process declined to 2.22% in February from 2.48% in January.  

The number of delinquent properties, but not in foreclosure, is down 419,000 properties year-over-year, and the number of properties in the foreclosure process is down 579,000 properties year-over-year.

Black Knight will release the complete mortgage monitor for February in early April.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	February 2014	January 2014	February 2013
Delinquent	5.97%	6.27%	6.80%
In Foreclosure	2.22%	2.35%	3.38%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	1,749,000	1,851,000	1,927,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,242,000	1,289,000	1,483,000
Number of properties in foreclosure pre-sale inventory:	1,115,000	1,175,000	1,694,000
Total Properties	4,106,000	4,315,000	5,104,000

by Calculated Risk on 3/24/2014 08:42:00 AM

The Chicago Fed released the national activity index (a composite index of other indicators): Index shows economic growth increased in February

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.14 in February from –0.45 in January. ...

The index’s three-month moving average, CFNAI-MA3, decreased to –0.18 in February from +0.02 in January, marking its first reading below zero in six months. February’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
emphasis added

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity was below the historical trend in February (using the three-month average).

According to the Chicago Fed:

What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

by Calculated Risk on 3/23/2014 08:33:00 PM

Jon Hilesenrath at the WSJ points out that even if the Fed starts raising rates a little earlier than expected, rates are expected to be below normal for a long time: Inside Fed Statement Lurks Hint on Rates

The Fed, in its official policy statement, said it planned to keep short-term rates below what it sees as appropriate for a normal economy even after the unemployment rate and inflation revert to typical levels.

In 2016, for example, the Fed projects the jobless rate will reach 5.4%, economic output will be growing at a rate near 3% and inflation will be just below 2%. That level of unemployment would be lower than the average over the past 50 years.

Yet officials see the Fed's target short-term interest rate at just over 2% at the end of 2016, well below the 4% they consider appropriate for an economy running on all cylinders.

Monday:
• At 8:30 AM ET: Chicago Fed National Activity Index for February. This is a composite index of other data.

• Early, Black Knight (formerly LPS) will release their monthly "First Look" at February mortgage performance data.

Weekend:
• Schedule for Week of March 23rd

• The Favorable Demographics for Apartments

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures and DOW futures are mostly unchanged (fair value).

Oil prices are mixed with WTI futures at $99.21 per barrel and Brent at $106.92 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.51 per gallon (up sharply over the last month, but still down from the same week a year ago).  If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 3/23/2014 02:57:00 PM

For several years I've been pointing out that demographics are favorable for apartments. This is because a large cohort has been moving into the 20 to 34 year old age group (a key age group for renters).

Also ... in 2015, based on Census Bureau projections, the two largest 5 year cohorts will be 20 to 24 years old, and 25 to 29 years old (the largest cohorts will no longer be the "boomers").

Here are two graphs showing the population in the 25 to 34 year age group, and the 20 to 34 year old age group from 1985 to 2035 (1990 was the previous peak for 25 to 34, 1985 was the previous peak for 20 to 34).

This is actual data from the Census Bureau for 1985 through 2010, and current projections from the Census Bureau from 2015 through 2035.

Click on graph for larger image.

For the 25 to 34 year old age group, the population is just getting back to the previous peak, and will continue to increase significantly over the next 5 years.

After 2020, the increase in population for this key age group will slow.

The second graph is for the 20 to 34 year old age group.

This favorable demographics is a key reason I've been positive on the apartment sector for the last several years - and I expect new apartment construction to stay strong for several more years.

by Calculated Risk on 3/23/2014 10:36:00 AM

Professor Hamilton discusses several interesting graphs at econbrowser: Graphs of key economic trends.

As an example, Hamilton (via Martin Neil Baily and Barry Bosworth) presents a graph that shows while "U.S. manufacturing output has grown at the same pace as the rest of the economy, U.S. manufacturing employment has not."

And there are couple of interesting graphs on oil. Enjoy!

by Calculated Risk on 3/22/2014 01:11:00 PM

The key reports this week are the third estimate of  Q4 GDP on Thursday, February New Home sales on Tuesday, February Personal Income and Outlays on Friday, and January Case-Shiller house prices, on Tuesday.

For manufacturing, the March Richmond and Kansas City Fed surveys will be released.

----- Monday, March 24th -----
8:30 AM ET: Chicago Fed National Activity Index for February. This is a composite index of other data.

----- Tuesday, March 25th -----
9:00 AM: S&P/Case-Shiller House Price Index for January. Although this is the January report, it is really a 3 month average of November, December and January.

This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indexes through December 2013 (the Composite 20 was started in January 2000).

The consensus is for a 13.3% year-over-year increase in the Composite 20 index (NSA) for January. The Zillow forecast is for the Composite 20 to increase 13.0% year-over-year, and for prices to increase 0.5% month-to-month seasonally adjusted.

9:00 AM: FHFA House Price Index for January 2013. This was original a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.4% increase.

10:00 AM: New Home Sales for February from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the January sales rate.

The consensus is for a decrease in sales to 440 thousand Seasonally Adjusted Annual Rate (SAAR) in February from 468 thousand in January. 

10:00 AM: Conference Board's consumer confidence index for March. The consensus is for the index to increase to 78.6 from 78.1.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for March.

----- Wednesday, March 26th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Durable Goods Orders for February from the Census Bureau. The consensus is for a 1.0% increase in durable goods orders.

----- Thursday, March 27th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 325 thousand from 320 thousand.

8:30 AM: Q4 GDP (third estimate). This is the third estimate of Q4 GDP from the BEA. The consensus is that real GDP increased 2.7% annualized in Q4, revised up from the second estimate of 2.4%.

10:00 AM ET: Pending Home Sales Index for February. The consensus is for a 0.8% decrease in the index.

11:00 AM: the Kansas City Fed manufacturing survey for March. 

----- Friday, March 28th -----
8:30 AM ET: Personal Income and Outlays for February. The consensus is for a 0.2% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.1%.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for March). The consensus is for a reading of 80.5, up from the preliminary reading of 79.9, but down from the February reading of 81.6.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for February 2014.