by Calculated Risk on 9/29/2014 02:25:00 PM

Note: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight, 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 Black Knight: U.S. Home Prices Up 0.2 Percent for the Month; Up 5.1 Percent Year-Over-Year

Today, the Data and Analytics division of Black Knight Financial Services released its latest Home Price Index (HPI) report, based on July 2014 residential real estate transactions. The Black Knight HPI combines the company’s extensive property and loan-level databases to produce a repeat sales analysis of home prices as of their transaction dates every month for each of more than 18,500 U.S. ZIP codes. The Black Knight HPI represents the price of non-distressed sales by taking into account price discounts for REO and short sales.
...
- U.S. home prices now just 10.2 percent off 2006 peak
- Year-over-year increases in home appreciation continue to slow
- Seven of 20 largest states register monthly declines in home prices

The year-over-year increases have been getting steadily smaller for the last 10 months - as shown in the table below:

Month	YoY House Price Increase
Jan-13	6.7%
Feb-13	7.3%
Mar-13	7.6%
Apr-13	8.1%
May-13	7.9%
Jun-13	8.4%
Jul-13	8.7%
Aug-13	9.0%
Sep-13	9.0%
Oct-13	8.8%
Nov-13	8.5%
Dec-13	8.4%
Jan-14	8.0%
Feb-14	7.6%
Mar-14	7.0%
Apr-14	6.4%
May-14	5.9%
June-14	5.5%
July-14	5.1%

The Black Knight HPI is off 10.2% from the peak in June 2006 (not adjusted for inflation).

The press release has data for the 20 largest states, and 40 MSAs.

Black Knight shows prices off 41.7% from the peak in Las Vegas, off 34.6% in Orlando, and 31.8% off from the peak in Riverside-San Bernardino, CA (Inland Empire). Prices are at new highs in Colorado and Texas (Denver, Austin, Dallas, Houston and San Antonio metros). Prices are also at new highs in San Jose, CA and in Nashville, TN.

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

by Calculated Risk on 9/29/2014 12:31:00 PM

The BEA released the Personal Income and Outlays report for August this morning:

Personal income increased $47.3 billion, or 0.3 percent ... in August, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $57.5 billion, or 0.5 percent.
...
Real PCE -- PCE adjusted to remove price changes -- increased 0.5 percent in August, in contrast to a decrease of 0.1 percent in July. ... The price index for PCE decreased less than 0.1 percent in August, in contrast to an increase of 0.1 percent in July. The PCE price index, excluding food and energy, increased 0.1 percent, the same increase as in July. ... The August price index for PCE increased 1.5 percent from August a year ago. The August PCE price index, excluding food and energy, increased 1.5 percent from August a year ago.

The following graph shows real Personal Consumption Expenditures (PCE) through August 2014 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Using the two-month method to estimate Q3 PCE growth, PCE was increasing at a 2.0% annual rate in Q3 2014 (using the mid-month method, PCE was increasing 2.9%). It looks like another quarter of modest PCE growth.

On inflation: The PCE price index increased 1.5 percent year-over-year, and core PCE price index (excluding food and energy) increased 1.5 percent year-over-year in August.

by Calculated Risk on 9/29/2014 11:41:00 AM

From the Dallas Fed: Texas Manufacturing Strengthens

Texas factory activity increased again in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose markedly from 6.8 to 17.6, indicating output grew at a faster pace than in August.

Other measures of current manufacturing activity also reflected significantly stronger growth in September. The new orders index climbed 5 points to 7.5. The capacity utilization index surged to 20.2 after dipping to 3.6 in August, with nearly a third of manufacturers noting an increase. The shipments index rebounded to 15.9 after falling to 6.4 last month.

Perceptions of broader business conditions were more optimistic this month. The general business activity index moved up to a reading of 10.8, nearly four points above its nonrecession average of 7. The company outlook index rose from 1.5 to 5.8, due to a larger share of firms noting an improved outlook in September than in August.

Labor market indicators reflected continued employment growth and longer workweeks. The September employment index posted a fourth robust reading, holding fairly steady at 10.6.
emphasis added

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (dashed green, through September), and five Fed surveys are averaged (blue, through September) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through August (right axis).

Four of the five regional surveys showed stronger expansion in September than August (the Philly Fed was very strong, but not as strong as August). and it seems likely the ISM index will be solid again this month.  The ISM index for September will be released Wednesday, October 1st and the consensus is for a decrease to 58.0 from 59.0 in August.

by Calculated Risk on 9/29/2014 11:31:00 AM

NOTE: We've had a power outage in my neighborhood. I'll be catching up on some earlier releases.

From the NAR: Pending Home Sales Fall Slightly in August

The Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 1.0 percent to 104.7 in August from 105.8 in July, and is now 2.2 percent below August 2013 (107.1). Despite the slight decline, the index is above 100 – considered an average level of contract activity – for the fourth consecutive month and is at the second-highest level since last August.
...
The PHSI in the Northeast slipped 3.0 percent to 86.5 in August, but is still 1.6 percent above a year ago. In the Midwest the index fell 2.1 percent to 102.4 in August, and is 7.6 percent below August 2013.

Pending home sales in the South decreased 1.4 percent to an index of 117.0 in August, unchanged from a year ago. The index in the West rose for the fourth consecutive month (2.6 percent) in August to 102.1, but still remains 2.6 percent below August 2013.

Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in September and October.

by Calculated Risk on 9/28/2014 08:21:00 PM

From CNBC: Bill Clinton: I know why US incomes are stagnant

"Median income hasn't gone up for three reasons," Clinton said. "One is the labor markets aren't tight enough, and we haven't raised the minimum wage as we should. And the second reason is we haven't changed the job mix enough, to raise the median income and have more poor people working into it. The combination of jobs has to pay, on average, higher wages."

"Gross domestic product growth doesn't lead to growth in median incomes because company after company takes more of its profits and spends it on dividends, stock buybacks, management increases … and less on sharing it with the employees broadly," said Clinton ...

Here is a graph from the Census report: Income and Poverty in the United States:

"In 2013, real median household income was 8.0 percent lower than in 2007, the year before the most recent recession."

My view is slack in the labor market is probably the main cause - and I expect real wages to increase as the unemployment rate falls further.

 Monday:
• At 8:30 AM ET, Personal Income and Outlays for August. The consensus is for a 0.3% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to be unchanged.

• At 10:00 AM, Pending Home Sales Index for August. The consensus is for a 0.3% decrease in the index.

• At 10:30 AM, Dallas Fed Manufacturing Survey for September. This is the last of the regional manufacturing surveys for September, and so far the results have been solid.

Weekend:
• Schedule for Week of September 28th

• Q3 Review: Ten Economic Questions for 2014

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down 3 and DOW futures are also down 15 (fair value).

Oil prices were mixed over the last week with WTI futures at $93.11 per barrel and Brent at $97.00 per barrel.  A year ago, WTI was at $103, and Brent was at $109 - so prices are down 10%+ year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.34 per gallon (down about 10 cents from 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