by Calculated Risk on 9/06/2017 02:19:00 PM

This is a key distressed market to follow since Las Vegas saw the largest price decline, following the housing bubble, of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported Local Home Sales Keep Increasing While Prices Level Off in August, GLVAR Housing Statistics for August 2017

The Greater Las Vegas Association of REALTORS® (GLVAR) reported today that local home sales continued to rise while home prices started to level off in August.
...
By the end of August, GLVAR reported 5,157 single-family homes listed for sale without any sort of offer. That’s down 32.1 percent from one year ago. For condos and townhomes, the 683 properties listed without offers in August represented a 45.1 percent drop from one year ago. If there’s a bright spot in the housing supply, Tina explained, it’s that “at least we had more homes available for sale in August than we did the previous month.”

Meanwhile, more homes are selling each month. The total number of existing local homes, condos and townhomes sold during August was 4,012, up from 3,789 in August 2016. Compared to one year ago, sales were up 5.9 percent for homes and up 6.0 percent for condos and townhomes.

According to GLVAR, total sales so far in 2017 continue to outpace 2016, when 41,720 total properties were sold in Southern Nevada. At this rate, GLVAR statistics show that 2017 is on pace to be the best year for local home sales since at least 2012.
...
In recent years, GLVAR has been reporting fewer distressed sales and more traditional home sales, where lenders are not controlling the transaction. That trend continued in August, when 3.7 percent of all local sales were short sales – which occur when lenders allow borrowers to sell a home for less than what they owe on the mortgage. That’s down from 4.1 percent of all sales in August 2016. Another 2.4 percent of all August sales were bank-owned, down from 5.5 percent one year ago.
emphasis added

1) Overall sales were up 6% year-over-year.

2) Active inventory (single-family and condos) is down sharply from a year ago.

3) Fewer distressed sales.

by Calculated Risk on 9/06/2017 10:13:00 AM

The BLS released the preliminary annual benchmark revision showing 95,000 additional payroll jobs as of March 2017. The final revision will be published when the January 2018 employment report is released in February 2018. Usually the preliminary estimate is pretty close to the final benchmark estimate.

The annual revision is benchmarked to state tax records. From the BLS:

In accordance with usual practice, the Bureau of Labor Statistics (BLS) is announcing the preliminary estimate of the upcoming annual benchmark revision to the establishment survey employment series. The final benchmark revision will be issued in February 2018 with the publication of the January 2018 Employment Situation news release.

Each year, the Current Employment Statistics (CES) survey employment estimates are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. For National CES employment series, the annual benchmark revisions over the last 10 years have averaged plus or minus two-tenths of one percent of total nonfarm employment. The preliminary estimate of the benchmark revision indicates an upward adjustment to March 2017 total nonfarm employment of 95,000 (0.1 percent).
emphasis added

Using the preliminary benchmark estimate, this means that payroll employment in March 2017 was 95,000 higher than originally estimated. In February 2018, the payroll numbers will be revised up to reflect the final estimate. The number is then "wedged back" to the previous revision (March 2016).

Construction was revised up by 50,000 jobs, and manufacturing revised up by 23,000 jobs.

This preliminary estimate showed 98,000 more private sector jobs, and 3,000 fewer government jobs (as of March 2017).

by Calculated Risk on 9/06/2017 10:05:00 AM

The August ISM Non-manufacturing index was at 55.3%, up from 53.9% in July. The employment index increased in August to 56.2%, from 53.6%. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: August 2017 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in August for the 92nd consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee: "The NMI® registered 55.3 percent, which is 1.4 percentage points higher than the July reading of 53.9 percent. This represents continued growth in the non-manufacturing sector at a faster rate. The Non-Manufacturing Business Activity Index increased to 57.5 percent, 1.6 percentage points higher than the July reading of 55.9 percent, reflecting growth for the 97th consecutive month, at a faster rate in August. The New Orders Index registered 57.1 percent, 2 percentage points higher than the reading of 55.1 percent in July. The Employment Index increased 2.6 percentage points in August to 56.2 percent from the July reading of 53.6 percent. The Prices Index increased 2.2 percentage points from the July reading of 55.7 percent to 57.9 percent, indicating prices increased in August for the third consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth. The non-manufacturing sector has rebounded from the prior month’s cooling-off period. The majority of respondents are optimistic about business conditions going forward."
emphasis added

Click on graph for larger image.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This suggests faster expansion in August than in July.

by Calculated Risk on 9/06/2017 08:43:00 AM

From the Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.7 billion in July, up $0.1 billion from $43.5 billion in June, revised. July exports were $194.4 billion, $0.6 billion less than June exports. July imports were $238.1 billion, $0.4 billion less than June imports.

Click on graph for larger image.

Imports and exports decreased in June.

Exports are 18% above the pre-recession peak and up 5% compared to July 2016; imports are 3% above the pre-recession peak, and up 5% compared to June 2016.

In general, trade has been picking up.

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil imports averaged $43.20 in July, down from $44.68 in June, and up from $41.02 in July 2016.  The petroleum deficit had been declining for years - and is the major reason the overall deficit has mostly moved sideways since early 2012. 

The trade deficit with China increased to $35.6 billion in July, from $30.3 billion in July 2016.

by Calculated Risk on 9/06/2017 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 3.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 1, 2017.

... The Refinance Index increased 5 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 5 percent higher than the same week one year ago. ...

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.11 percent, from 4.12 percent, with points increasing to 0.43 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

Refinance activity will not pick up significantly unless mortgage rates fall well below 4%.


The second graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 5% year-over-year.

by Calculated Risk on 9/05/2017 06:40:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Back in Line With 2017 Lows

Mortgage rates moved lower today on a combination of factors.  Chief among these were headlines over the weekend concerning more North Korean weapons testing--specifically, a detonation of its largest bomb ever on Sunday followed by reports from South Korea of another ballistic missile test by the end of the week. ...

Indeed most mortgages are being quoted at the same rates seen on Friday with the only improvement being seen in the form of modestly lower upfront costs. [3.875% fixed on top tier scenarios].
emphasis added

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, Trade Balance report for July from the Census Bureau. The consensus is for the U.S. trade deficit to be at $44.6 billion in July from $43.6 billion in June.

• At 10:00 AM, the ISM non-Manufacturing Index for August. The consensus is for index to increase to 55.4 from 53.9 in July.

• At 10:00 AM, 2017 Current Employment Statistics (CES) Preliminary Benchmark Revision. From the BLS:

"Each year, the Current Employment Statistics (CES) survey estimates are benchmarked to comprehensive counts of employment from the Quarterly Census of Employment and Wages (QCEW) for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. On September 6, 2017 at 10:00 a.m. the Bureau of Labor Statistics (BLS) will release the preliminary estimate of the upcoming annual benchmark revision to the establishment survey employment series. ... The final benchmark revision will be issued with the publication of the January 2018 Employment Situation news release in February. "

by Calculated Risk on 9/05/2017 02:51:00 PM

The prime working age population peaked in 2007, and bottomed at the end of 2012. As of August 2017, according to the BLS, there were still fewer people in the 25 to 54 age group than in 2007.

At the beginning of this year - based on demographics - it looked like the prime working age (25 to 54) would probably hit a new peak in 2017. 

However, since the end of last year, the prime working age population has declined slightly.

Changes in demographics are an important determinant of economic growth, and although most people focus on the aging of the "baby boomer" generation, the movement of younger cohorts into the prime working age is another key story. Here is a graph of the prime working age population (25 to 54 years old) from 1948 through August 2017.

Note: This is population, not work force.

Click on graph for larger image.

There was a huge surge in the prime working age population in the '70s, '80s and '90s.

The prime working age labor force grew even quicker than the population in the '70s and '80s due to the increase in participation of women. In fact, the prime working age labor force was increasing 3%+ per year in the '80s!

So when we compare economic growth to the '70s, '80, or 90's we have to remember this difference in demographics (the '60s saw solid economic growth as near-prime age groups increased sharply).

The good news is the prime working age group should start growing at 0.5% per year - and this should boost economic activity.

by Calculated Risk on 9/05/2017 11:49:00 AM

Here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, or any other marker.

NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I'll just stick to the beginning of each term.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter and George H.W. Bush only served one term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Click on graph for larger image.

The first graph is for private employment only.

Mr. Trump is in Orange (just seven months).

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 811,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 396,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.

Private sector employment increased by 20,966,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green). There were only 1,937,000 more private sector jobs at the end of Mr. Obama's first term.  At the end of his second term, there were 11,756,000 more private sector jobs than when Mr. Obama initially took office.

During the first seven months of Mr. Trump's term, the economy has added 1,202,000 private sector jobs.

 A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).  However the public sector declined significantly while Mr. Obama was in office (down 268,000 jobs).

During the first seven months of Mr. Trump's term, the economy has lost 13,000 public sector jobs.

The third graph shows the progress towards the Trump goal of adding 10 million jobs over the next 4 years.

After seven months of Mr. Trump's presidency, the economy has added 1,189,000 jobs, about 269,000 behind the projection.

by Calculated Risk on 9/05/2017 09:16:00 AM

Notes: This CoreLogic House Price Index report is for July. The recent Case-Shiller index release was for June. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 6.7 Percent in July 2017

Home prices nationally increased year over year by 6.7 percent from July 2016 to July 2017, and on a month-over-month basis, home prices increased by 0.9 percent in July 2017 compared with June 2017, according to the CoreLogic HPI.
...
“In July, home price growth in the Pacific Northwest and mountain states led the nation with the highest appreciation rates,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The sharp increase in prices in Washington and Utah has been especially striking, with home price growth in both states accelerating by 3 percentage points since the beginning of this year.”
emphasis added

Click on graph for larger image.

This graph from Corelogic shows the YoY change in the national CoreLogic HPI data since 2002.

The YoY increase had been moving sideways over the last two years, but might have picked up recently (the recent pickup could be revised away).

The year-over-year comparison has been positive for over five consecutive years since turning positive year-over-year in February 2012.

by Calculated Risk on 9/04/2017 08:15:00 PM

Tuesday:
• At 10:00 AM ET, The CoreLogic House Price index for July.

Note: On Wednesday, the BLS will release the Preliminary Benchmark Revision for the 2017 Current Employment Statistics (CES). From the BLS:

"Each year, the Current Employment Statistics (CES) survey estimates are benchmarked to comprehensive counts of employment from the Quarterly Census of Employment and Wages (QCEW) for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. On September 6, 2017 at 10:00 a.m. the Bureau of Labor Statistics (BLS) will release the preliminary estimate of the upcoming annual benchmark revision to the establishment survey employment series. ... The final benchmark revision will be issued with the publication of the January 2018 Employment Situation news release in February. "

The preliminary estimate is usually pretty close to the annual revision. The following table shows the benchmark revisions since 2006.

Employment Benchmark Revisions (000s)
Year	Revision
2006	752
2007	-293
2008	-89
2009	-902
2010	-378
2011	162
2012	424
2013	-119
2014	67
2015	-172
2016	-81