by Calculated Risk on 1/26/2015 02:24:00 PM

From housing economist Tom Lawler:

D.R. Horton, the nation’s largest home builder, reported that net home orders in the quarter ended December 31, 2014 totaled 7,370, up 35.1% from the comparable quarter of 2013. Net orders per active community were up about 27% YOY. Horton’s average net order price last quarter was $286,000, up 3.8% from a year earlier. Home deliveries last quarter totaled 7,973, up 28.8% from the comparable quarter of 2013, at an average sales price of $281,000, up 6.6% from a year earlier. A company official said that the YOY increase in its average sales price reflected a 4% increase in the average size of a home closed and a “small” increase in the average price per square foot. Company officials said that they expect the company’s average sales price in 2015 to be “flat” relative to 2014. The company’s order backlog at the end of December was 9,285, up 20.8% from last December, at an average order price of $293,600, up 6.8% from a year ago.

“Express” Homes, Horton’s “lower priced/fewer amenities” brand targeted at “entry-level” buyers, accounted for about 13% of last quarter’s net home orders (in units), up from 7% in the previous quarter and 3% in the comparable quarter of 2013, and about 10% of home deliveries, up from 5% in the previous quarter and 4% a year ago.

The company’s gross margin last quarter was down both from the previous quarter and a year ago, but was in line with guidance given by officials in the previous two quarters.

Horton “surprised” many analysts and competitors last spring by saying that it had increased its sales incentives from “unusually” low to “more normal” levels in order to drive its unit sales pace. As a result, Horton’s market share increased significantly since last spring. More recently a number of other builders have “warned” that they have had to increase incentives.

by Calculated Risk on 1/26/2015 12:57:00 PM

The automakers will report January vehicle sales on February 3rd. Sales in December were at 16.8 million on a seasonally adjusted annual rate basis (SAAR), and it appears sales in January will be lower - but will probably be the best January in eight years.

Note:  There were 26 selling days in January this year compared to 25 last year.

Here are two forecasts:

From WardsAuto: Forecast: U.S. Automakers to Record Best January in Eight Years

A WardsAuto forecast calls for U.S. automakers to deliver 1.13 million light vehicles in January, marking the industry’s best kickoff since January 2006. ... the report puts the seasonally adjusted annual rate of sales for the month at 16.4 million units, compared with a year-ago SAAR of 15.2 million and December’s 16.8 million mark.

And from TrueCar: TrueCar forecasts strong start for 2015 auto sales with 13.2% volume gain and 16.6 Million SAAR in January

TrueCar, Inc. ... forecasts the pace of auto sales in January expanded to a seasonally adjusted annualized rate (SAAR) of 16.6 million new units on continued consumer demand.

New light vehicle sales, including fleet, should reach 1,446,600 units for the month, up 13.2 percent over a year ago. On a daily selling rate (DSR) basis, adjusting for one additional selling day this January versus a year ago, deliveries will likely rise 8.9 percent.

Another strong month for auto sales.

by Calculated Risk on 1/26/2015 10:37:00 AM

From the Dallas Fed: Texas Manufacturing Activity Stalls and Outlook Worsens

Texas factory activity was flat in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 0.7, indicating output was essentially unchanged from December.

Other survey measures also reflected sluggish activity during the month. The capacity utilization index fell to 5.1, its lowest reading in five months. The shipments index plunged from 20.8 to 6, due to a much higher share of respondents noting a decline in shipments in January than in December. The new orders index moved down from 2.7 to -7.7, registering its first negative reading since April 2013.

Perceptions of broader business conditions worsened this month, with both the general business activity index and the company outlook index dropping below zero for the first time in 20 months. The general business activity index dropped to -4.4, and the company outlook index fell 13 points, coming in at -3.8.

Labor market indicators reflected unchanged workweeks but continued employment increases. The employment index was 9.0 in January, slightly below last month’s level but close to its average reading over the past two years.
emphasis added

With lower oil prices, a slowdown in Texas should be expected.

by Calculated Risk on 1/26/2015 08:37:00 AM

Note: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight, Zillow, FHFA, FNC and more). Note: 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 0.1 Percent for the Month; Up 4.5 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 November 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.

The Black Knight HPI increased 0.1% percent in November, and is off 10.1% from the peak in June 2006 (not adjusted for inflation).

The year-over-year increases had been getting steadily smaller since peaking in 2013 - as shown in the table below - but the YoY increase has been about the same for the last three months:

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%
Aug-14	4.9%
Sep-14	4.6%
Oct-14	4.5%
Nov-14	4.5%

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

Black Knight shows prices off 40.9% from the peak in Las Vegas, off 34.1% in Orlando, and 31.6% 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 Honolulu, HI, Nashville, TN, and San Jose, CA.

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

by Calculated Risk on 1/25/2015 09:09:00 PM

From the WSJ: Leftists Sweep to Power in Greece

Greek voters were set to hand power to a radical leftist party in national elections on Sunday, a popular rebellion against the bitter economic medicine Greece has swallowed for five years and a rebuke of the fellow European countries that prescribed it.

With nearly all votes counted, opposition party Syriza was on track to win about half the seats in Parliament. In the wee hours of the morning, it clinched a coalition deal with a small right-wing party also opposed to Europe’s economic policy to give the two a clear majority.

We discussed this several years ago - in a democracy, austerity will eventually fail at the ballot box. The people will not tolerate 25% unemployment forever - with no hope in sight.

Monday:
• At 10:30 AM ET: the Dallas Fed Manufacturing Survey for January.

Weekend:
• Schedule for Week of January 25, 2015

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 12 and DOW futures are down 120 (fair value).

Oil prices were down over the last week with WTI futures at $44.99 per barrel and Brent at $48.45 per barrel.  A year ago, WTI was at $96, and Brent was at $109 - so prices are down 54% and 56% year-over-year respectively.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $2.02 per gallon (down about $1.25 per gallon 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