by Calculated Risk on 8/26/2014 08:01:00 AM

According to Black Knight's First Look report for July, the percent of loans delinquent decreased in July compared to June, and declined by 12% year-over-year.

Also the percent of loans in the foreclosure process declined further in July and were down 34% over the last year.  Foreclosure inventory was at the lowest level since March 2008.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 5.64% in July, down from 5.70% in June. The normal rate for delinquencies is around 4.5% to 5%.

The percent of loans in the foreclosure process declined to 1.85% in July from 1.88% in June.  

The number of delinquent properties, but not in foreclosure, is down 344,000 properties year-over-year, and the number of properties in the foreclosure process is down 471,000 properties year-over-year.

Black Knight will release the complete mortgage monitor for July in early September.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	July 2014	June 2014	July 2013	July 2012
Delinquent	5.64%	5.70%	6.41%	7.03%
In Foreclosure	1.85%	1.88%	2.82%	4.08%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	1,713,000	1,728,000	1,846,000	1,960,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,136,000	1,155,000	1,347,000	1,650,000
Number of properties in foreclosure pre-sale inventory:	935,000	951,000	1,406,000	2,042,000
Total Properties	3,785,000	3,834,000	4,599,000	5,562,000

by Calculated Risk on 8/25/2014 09:22:00 PM

From Gavyn Davies at the Financial Times: Draghi steals the show at Jackson Hole

The markets may read this as an empty threat, but they should note the importance of what [ECB President Mario Draghi] said about inflation expectations, which was added to the written text by the President himself on the day of the speech:

"Over the month of August, financial markets have indicated that inflation expectations exhibited significant declines at all horizons. The 5 year/5 year swap rate declined by 15 basis points to just below 2% … But if we go to shorter and medium-term horizons the revisions have been even more significant. The real [interest] rates on the short and medium term have gone up … The Governing Council will acknowledge these developments and within its mandate will use all the available instruments needed to ensure price stability over the medium term."

This is much more explicit language about declining inflation expectations than anything the ECB has used in the past.

Tuesday:
• At 8:30 AM ET, Durable Goods Orders for July from the Census Bureau. The consensus is for a 5.1% increase in durable goods orders. NOTE: The headline number could be huge because of a large number of aircraft orders in July.

• At 9:00 AM, S&P/Case-Shiller House Price Index for June. Although this is the June report, it is really a 3 month average of April, May and June. The consensus is for a 8.4% year-over-year increase in the Composite 20 index (NSA) for June. The Zillow forecast is for the Composite 20 to increase 8.1% year-over-year, and for prices to be unchanged month-to-month seasonally adjusted.

• Also at 9:00 AM, the FHFA House Price Index for June. This was original a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.3% increase.

• At 10:00 AM, the Conference Board's consumer confidence index for August. The consensus is for the index to decrease to 89.7 from 90.9.

• At 10:00 AM, the Richmond Fed Survey of Manufacturing Activity for August.

by Calculated Risk on 8/25/2014 04:54:00 PM

Here are two graphs I haven't posted for some time ...

As part of the new home sales report, the Census Bureau reported the number of homes sold by price and the average and median prices.

From the Census Bureau: "The median sales price of new houses sold in July 2014 was $269,800; the average sales price was $339,100. "

The following graph shows the median and average new home prices.

Click on graph for larger image.

During the bust, the builders had to build smaller and less expensive homes to compete with all the distressed sales. With fewer distressed sales now, it appears the builders have moved to higher price points.

The average price in July 2014 was $339,100, and the median price was $269,800.  Both are above the bubble high (this is due to both a change in mix and rising prices).  The average is at an all time high.

The second graph shows the percent of new homes sold by price. At the peak of the housing bubble, almost 40% of new homes were sold for more than $300K - and over 20% were sold for over $400K.

The percent of home over $300K declined to about 20% in January 2009. Now it has rebounded to 43% of homes over $300K.

And only 8% of homes sold were under $150K in July 2014.  This is down from 30% in 2002 - and down from 20% as recently as August 2011.  Quite a change.

Earlier on New Home Sales:
• New Home Sales at 412,000 Annual Rate in July
• Comments on New Home Sales

by Calculated Risk on 8/25/2014 12:31:00 PM

The new home sales report for July was weak with sales at a 412,000 seasonally adjusted annual rate (SAAR), however combined with the upward revisions for the previous three months, total sales were somewhat above expectations.  Sales for April, May and June were revised up a combined 33,000 sales SAAR.

The Census Bureau reported that new home sales this year, through July, were 266,000, Not seasonally adjusted (NSA). That is down 0.8% from 268,000 during the same period of 2013 (NSA).  Basically flat compared to 2013.

Sales were up 12.3% year-over-year in July - but remember sales declined sharply in July 2013 as mortgage rates increased - so this was an easy comparison (I expect sales for July will be revised up too).

Click on graph for larger image.

This graph shows new home sales for 2013 and 2014 by month (Seasonally Adjusted Annual Rate).

The comparisons to last year will be easy for the next couple of months, and I still expect to see year-over-year growth later this year.

And here is another update to the "distressing gap" graph that I first started posting several years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next few years.

The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through June 2014. This graph starts in 1994, but the relationship has been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.

I expect existing home sales to decline or move sideways (distressed sales will continue to decline and be partially offset by more conventional / equity sales).  And I expect this gap to slowly close, mostly from an increase in new home sales.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

by Calculated Risk on 8/25/2014 10:00:00 AM

The Census Bureau reports New Home Sales in July were at a seasonally adjusted annual rate (SAAR) of 412 thousand.

June sales were revised up from 406 thousand to 422 thousand, and May sales were revised up from 442 thousand to 454 thousand.

"Sales of new single-family houses in July 2014 were at a seasonally adjusted annual rate of 412,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.4 percent below the revised June rate of 422,000, but is 12.3 percent above the July 2013 estimate of 367,000."

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Even with the increase in sales over the previous two years, new home sales are still close to the bottom for previous recessions.

The second graph shows New Home Months of Supply.

The months of supply increased in July to 6.0 months from 5.6 months in June.

The all time record was 12.1 months of supply in January 2009.

This is now at the top of the normal range (less than 6 months supply is normal).

"The seasonally adjusted estimate of new houses for sale at the end of July was 205,000. This represents a supply of 6.0 months at the current sales rate."

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In July 2014 (red column), 37 thousand new homes were sold (NSA). Last year 33 thousand homes were also sold in July. The high for July was 117 thousand in 2005, and the low for July was 26 thousand in 2010.

This was below expectations of 425,000 sales in July, and sales were up 12.3% year-over-year.

I'll have more later today .