by Calculated Risk on 6/30/2019 08:30:00 PM

Weekend:
• Schedule for Week of June 30, 2019

Monday:
• At 10:00 AM: ISM Manufacturing Index for June. The consensus is for the ISM to be at 51.2, down from 52.1 in May.

• At 10:00 AM: Construction Spending for May. The consensus is for a 0.1% increase in construction spending.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 23 and DOW futures are up 206 (fair value).

Oil prices were up over the last week with WTI futures at $59.74 per barrel and Brent at $66.01 barrel.  A year ago, WTI was at $74, and Brent was at $77 - so oil prices are down about 20% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.70 per gallon. A year ago prices were at $2.85 per gallon, so gasoline prices are down about 6% year-over-year.

by Calculated Risk on 6/30/2019 08:11:00 AM

Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources. DISCLAIMER: This is an unofficial list, the information is from public sources and while deemed to be reliable is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein and same is subject to errors and omissions. This is not intended as investment advice. Please contact CR with any errors.

Here is the unofficial problem bank list for June 2019.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List for June 2019. During the month, the list increased by three to 76 institutions after a removal and three additions. Assets changed by a nominal $322 million to $55 billion. A year ago, the list held 92 institutions with assets of $60 billion.

This month, the action against First Southern Bank (f/k/a The Patterson Bank), Patterson, GA ($123 million) was terminated. Additions this month included The Farmers Bank, Carnegie, OK ($121 million); Home Bank of Arkansas, Portland, AR ($76 million); and State Bank, Green River, WY ($29 million). Also, thanks to a reader that identified an institution not included within the list – CornerstoneBank, Atlanta, GA ($219 million), that has been operating under a Consent Order since 2012.

With the conclusion of the second quarter, we bring an updated transition matrix to detail how banks are transitioning off the Unofficial Problem Bank List. Since the Unofficial Problem Bank List was first published on August 7, 2009 with 389 institutions, 1,747 institutions have appeared on a weekly or monthly list since the start of publication. Only 4.2 percent of the banks that have appeared on a list remain today as 1,671 institutions have transitioned through the list. Departure methods include 984 action terminations, 406 failures, 262 mergers, and 19 voluntary liquidations. Of the 389 institutions on the first published list, only 6 or 1.5 percent, are still designated as being in a troubled status more than nine years later. The 406 failures represent 23.3 percent of the 1,747 institutions that have made an appearance on the list. This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC's official list.

Unofficial Problem Bank List
Change Summary
		Number of Institutions	Assets ($Thousands)
Start (8/7/2009)		389	276,313,429
Subtractions
	Action Terminated	179	(68,279,301)
	Unassisted Merger	41	(10,072,112)
	Voluntary Liquidation	5	(10,672,586)
	Failures	158	(186,397,337)
	Asset Change		345,554
Still on List at 6/30/2019		6	1,237,647
Additions after 8/7/2009		70	53,790,865
End (6/30/2019)		76	55,028,512
Intraperiod Removals1
	Action Terminated	805	325,312,142
	Unassisted Merger	221	82,691,403
	Voluntary Liquidation	14	2,558,186
	Failures	248	125,152,210
	Total	1,288	535,731,941
1Institution not on 8/7/2009 or 6/30/2019 list but appeared on a weekly list.

by Calculated Risk on 6/29/2019 08:11:00 AM

The key report scheduled for this week is the June employment report.

Other key reports include the June ISM Manufacturing and non-manufacturing surveys, June Vehicle Sales and the Trade Deficit for May.

----- Monday, July 1st -----
10:00 AM: ISM Manufacturing Index for June. The consensus is for the ISM to be at 51.2, down from 52.1 in May.

Here is a long term graph of the ISM manufacturing index.

The employment index was at 53.7% in May, and the new orders index was at 52.7%.

10:00 AM: Construction Spending for May. The consensus is for a 0.1% increase in construction spending.

----- Tuesday, July 2nd -----
All day: Light vehicle sales for June from the BEA. The consensus is for light vehicle sales to be 17.0 million SAAR in June, down from 17.3 million in May (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the sales rate for last month.

----- Wednesday, July 3rd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for June. This report is for private payrolls only (no government). The consensus is for 150,000 payroll jobs added in June, up from 27,000 added in May.

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 220 thousand initial claims, down from 227 thousand last week.

8:30 AM: Trade Balance report for May from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. 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.

The consensus is the trade deficit to be $53.2 billion.  The U.S. trade deficit was at $50.8 Billion the previous month.

10:00 AM: the ISM non-Manufacturing Index for June.   The consensus is for a reading of 55.9, down from 56.9.

----- Thursday, July 4th -----
All US markets will be closed in observance of Independence Day.

----- Friday, July 5th -----
8:30 AM: Employment Report for June.   The consensus is for 165,000 jobs added, and for the unemployment rate to be unchanged at 3.6%.

There were 75,000 jobs added in May, and the unemployment rate was at 3.6%.

This graph shows the year-over-year change in total non-farm employment since 1968.

In May, the year-over-year change was 2.350 million jobs.

by Calculated Risk on 6/28/2019 04:13:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate decreased to 0.70% in May, from 0.72% in April. The serious delinquency rate is down from 1.03% in May 2018.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

This is the lowest serious delinquency rate for Fannie Mae since July 2007.

Click on graph for larger image

By vintage, for loans made in 2004 or earlier (3% of portfolio), 2.57% are seriously delinquent. For loans made in 2005 through 2008 (4% of portfolio), 4.36% are seriously delinquent, For recent loans, originated in 2009 through 2018 (93% of portfolio), only 0.32% are seriously delinquent. So Fannie is still working through a few poor performing loans from the bubble years.

The increase late last year in the delinquency rate was due to the hurricanes - there were no worries about the overall market.

I expect the serious delinquency rate will probably decline to 0.4 to 0.6 percent or so to a cycle bottom.

Note: Freddie Mac reported earlier.

by Calculated Risk on 6/28/2019 01:39:00 PM

From the Chicago PMI: Chicago Business Barometer – Declines to 49.7 in June

The MNI Chicago Business Barometer decreased by 4.5 points to 49.7 in June from 54.2 in May, marking the first sub-50 reading since January 2017.

Business confidence dipped significantly in Q2, with the Barometer averaging 52.2, down 13% on the previous quarter and almost 16% lower than Q2 2018.
...
“The Barometer entered contraction territory, having remained above 50 for over two years. With customers rethinking their purchases, demand tumbled, and consequently firms pulled back production, weakening overall business sentiment,” said Shaily Mittal, Senior Economist at MNI.

"In coming months, our survey will provide further evidence as to whether the diminished business confidence is temporary amid tariffs woes or more structural calling for some counter measures,” she added.
emphasis added

This was below the consensus forecast of 53.6.

by Calculated Risk on 6/28/2019 11:32:00 AM

From Goldman Sachs:

The May core PCE price index increased 0.19% month-over-month, close to expectations, but the year-over-year exceeded consensus by a tenth reflecting the price revisions in yesterday’s GDP report. Personal spending increased by 0.4% and was revised higher in April, and the personal saving rate remained flat at 6.1%. We left our Q2 GDP tracking estimate unchanged at +1.5% (qoq ar). [June 28 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 1.3% for 2019:Q2 and 1.2% for 2019:Q3. [June 28 estimate].

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2019 is 1.5 percent on June 28, down from 1.9 percent on June 26. After this morning’s personal income and outlays release from the U.S. Bureau of Economic Analysis (BEA), the nowcast of second-quarter real personal consumption expenditures growth decreased from 3.9 percent to 3.7 percent. [June 28 estimate]

CR Note: These estimates suggest real GDP growth will be around 1.5% annualized in Q2.

by Calculated Risk on 6/28/2019 11:09:00 AM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for May 2019. Over the past three months, the indexes increased in 45 states, decreased in four states, and remained stable in one, for a three-month diffusion index of 82. In the past month, the indexes increased in 41 states, decreased in five states, and remained stable in four, for a one-month diffusion index of 72.
emphasis added

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on map for larger image.

Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and all or mostly green during most of the recent expansion.

The map is mostly green on a three month basis, but there are some red states.

Source: Philly Fed.

Note: For complaints about red / green issues, please contact the Philly Fed.

And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In May, 43 states had increasing activity (including minor increases).

by Calculated Risk on 6/28/2019 08:39:00 AM

The BEA released the Personal Income and Outlays report for May:

Personal income increased $88.6 billion (0.5 percent) in May according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $72.6 billion (0.5 percent) and personal consumption expenditures (PCE) increased $59.7 billion (0.4 percent).

Real DPI increased 0.3 percent in May, and real PCE increased 0.2 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The May PCE price index increased 1.5 percent year-over-year and the May PCE price index, excluding food and energy, increased 1.6 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through May 2019 (2012 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.

The increase in personal income was above expectations,  and the increase in PCE was at expectations.

Note that core PCE inflation was slightly above expectations.

Using the two-month method to estimate Q2 PCE growth, PCE was increasing at a 5.4% annual rate in Q2 2019. (using the mid-month method, PCE was increasing at 4.3%). This suggests strong PCE growth in Q2.

by Calculated Risk on 6/27/2019 06:25:00 PM

Friday:
• At 8:30 AM ET, Personal Income and Outlays, May 2019. 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 increase 0.1%.

• At 9:45 AM, Chicago Purchasing Managers Index for June.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Final for June). The consensus is for a reading of 97.9.

by Calculated Risk on 6/27/2019 01:18:00 PM

Reis reported that the apartment vacancy rate was at 4.7% in Q2 2019, unchanged from 4.7% in Q1, and unchanged from 4.7% in Q2 2018. The vacancy rate peaked at 8.0% at the end of 2009, and bottomed at 4.1% in 2016.

From chief economist Victor Calanog at Reis:

The apartment vacancy rate was flat in the quarter at 4.7% - a zero net change from a year ago. After climbing 60 basis points from a low of 4.1% in Q3 2016, the vacancy rate has remained near 4.7% since the first quarter of 2018.

The national average asking rent increased 1.2% in the second quarter while effective rent, which nets out landlord concessions, increased 1.3%. At $1,471 per unit (asking) and $1,400 per unit (effective), the average rents both increased 4.3%, from the second quarter of 2018.
...
Apartment occupancy growth had accelerated in 2018 after slowing a bit in 2017. At the same time, the housing market slumped in the latter half of 2018 after gaining some heat in 2017. Thus far, in 2019, existing home sales have fluctuated a bit, yet at higher levels than year-end 2018; apartment occupancy growth has once again been subdued. We had attributed the acceleration in the apartment market in 2018 to the tax cut at the end of 2017 that reduced the incentive to buy a home. Many have cited falling mortgage rates to the housing market spikes that occurred in February and again in May.

Despite having vacancies rise from 4.1% in the middle of 2016 to its current 4.7%, the apartment market has weathered the relatively strong influx of new supply very well. Performance has not been as brisk as recent peak years of 2014 (for lease-up velocity, when new buildings were achieving stabilization to market occupancy in 3 to 6 months - today it is closer to 9 to 15 months) and 2015 (for rent growth, which peaked at 5.8% for asking rents and 5.7% for effective rents). However, with construction slowing as soon as later this year and throughout 2020 for many major markets, continuing robust demand for rentals will likely manifest in vacancy rates that stay well in the 4s, or at most, rise to the low 5s. What may complicate this story is if the economy runs into any kind of contraction in the next 18 months.
emphasis added

Click on graph for larger image.

This graph shows the apartment vacancy rate starting in 1980. (Annual rate before 1999, quarterly starting in 1999). Note: Reis is just for large cities.

The vacancy rate had mostly moved sideways for the last year and half - after increasing from the low in 2016..

Apartment vacancy data courtesy of Reis.

by Calculated Risk on 6/27/2019 11:00:00 AM

From the Kansas City Fed: Tenth District Manufacturing Activity Flat

The Federal Reserve Bank of Kansas City released the June Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity was flat in June, while expectations for future activity remained solid.

“Regional factory growth was relatively flat,” said Wilkerson. “However, nearly 70 percent of manufacturing contacts reported confidence in the U.S. economy, and a majority have not changed their 2019 plans for employment and capital spending.”
...
The month-over-month composite index was 0 in June, slightly lower than 4 in May and 5 in April. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The change in manufacturing activity was mostly driven by a decline at durable production plants, especially for computers, electronic products, and transportation equipment. Most month-over-month indexes edged lower in June, with a number of indexes decreasing, including the materials inventory index. However, the new orders index inched higher. Nearly all of the year-over-year factory indexes decreased to their lowest levels since late 2016, and the composite index fell from 23 to 4.
emphasis added

This was the last of the regional Fed surveys for June.

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 (yellow, through June), and five Fed surveys are averaged (blue, through June) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through May (right axis).

The regional surveys were mostly weak in June, and based on these regional surveys, it seems likely the ISM manufacturing index will be lower in June than in May - perhaps close to 50.

by Calculated Risk on 6/27/2019 10:03:00 AM

From the NAR: Pending Home Sales Bounce Back 1.1% in May

Pending home sales increased in May, a positive variation from the minor sales dip seen in the previous month, according to the National Association of Realtors®. Three of the four major regions saw growth in contract activity, with the West experiencing a slight sales decline.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.1% to 105.4 in May, up from 104.3 in April. Year-over-year contract signings declined 0.7%, marking the 17th straight month of annual decreases.
...
The PHSI in the Northeast rose 3.5% to 92.0 in May and is now 0.5% below a year ago. In the Midwest, the index grew 3.6% to 100.3 in May, 1.2% lower than May 2018.

Pending home sales in the South inched up 0.1% to an index of 124.1 in May, which is 0.7% higher than last May. The index in the West dropped 1.8% in May to 91.8 and decreased 3.1% below a year ago.
emphasis added

This was above expectations of a 0.6% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in June and July.

by Calculated Risk on 6/27/2019 08:35:00 AM

The DOL reported:

In the week ending June 22, the advance figure for seasonally adjusted initial claims was 227,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 216,000 to 217,000. The 4-week moving average was 221,250, an increase of 2,250 from the previous week's revised average. The previous week's average was revised up by 250 from 218,750 to 219,000.
emphasis added

The previous week was revised up.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 221,250.

This was higher than the consensus forecast.

by Calculated Risk on 6/26/2019 07:19:00 PM

Thursday:
• At 8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 218 thousand initial claims, up from 216 thousand last week.

• At 8:30 AM: Gross Domestic Product, 1st quarter 2019 (Third estimate). The consensus is that real GDP increased 3.1% annualized in Q1, unchanged from the second estimate of 3.1%.

• At 10:00 AM: Pending Home Sales Index for May. The consensus is for a 0.6% increase in the index.

• At 11:00 AM: the Kansas City Fed manufacturing survey for June. This is the last of regional manufacturing surveys for June.

by Calculated Risk on 6/26/2019 04:31:00 PM

The Case-Shiller house price indexes for April were released yesterday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Matthew Speakman at Zillow: April Case-Shiller Results and May Forecast: Getting Back to Normal

The housing market has continued to normalize throughout the spring, finding more balance between buyers and sellers and slowing to a pace of growth much more in line with historic norms.

The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be at 3.5% in May, the same as in April.

The Zillow forecast is for the 20-City index to decline to 2.4% YoY in May from 2.5% in April, and for the 10-City index to decline to 2.2% YoY compared to 2.3% YoY in April.

by Calculated Risk on 6/26/2019 02:00:00 PM

Note: This appears to be a leading indicator for industrial production.

From the American Chemistry Council: Chemical Activity Barometer Is Flat In June

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), was flat (0.0 percent change) in June on a three-month moving average (3MMA) basis, following three monthly gains. On a year-over-year (Y/Y) basis, the barometer is up 0.3 percent (3MMA).
...
“The slowing economy and rising trade tensions have weighed on business confidence and investment, resulting in mixed manufacturing activity,” said Kevin Swift, chief economist at ACC. “In summary, the CAB reading continues to signal gains in U.S. commercial and industrial activity through late 2019, but at a moderated pace.”
...
Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.
emphasis added

Click on graph for larger image.

This graph shows the year-over-year change in the 3-month moving average for the Chemical Activity Barometer compared to Industrial Production.  It does appear that CAB (red) generally leads Industrial Production (blue).

The year-over-year increase in the CAB suggests that the YoY increase in industrial production will probably slow further.

by Calculated Risk on 6/26/2019 10:56:00 AM

Here is the post yesterday on Case-Shiller: Case-Shiller: National House Price Index increased 3.5% year-over-year in April

It has been over eleven years since the bubble peak. In the Case-Shiller release yesterday, the seasonally adjusted National Index (SA), was reported as being 12.9% above the previous bubble peak. However, in real terms, the National index (SA) is still about 7.9% below the bubble peak (and historically there has been an upward slope to real house prices).  The composite 20, in real terms, is still 14.7% below the bubble peak.

The year-over-year increase in prices has slowed to 3.5% nationally, and I expect price growth will slow a little more, but not turn negative this year.

Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $287,000 today adjusted for inflation (43%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).

Nominal House Prices

The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through March) in nominal terms as reported.

In nominal terms, the Case-Shiller National index (SA)and the Case-Shiller Composite 20 Index (SA) are both at new all times highs (above the bubble peak).



Real House Prices

The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to January 2005 levels, and the Composite 20 index is back to June 2004.

In real terms, house prices are at 2004/2005 levels.

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

Here is a similar graph using the Case-Shiller National and Composite 20 House Price Indexes.

This graph shows the price to rent ratio (January 2000 = 1.0).

On a price-to-rent basis, the Case-Shiller National index is back to February 2004 levels, and the Composite 20 index is back to October 2003 levels.

In real terms, prices are back to late 2004 levels, and the price-to-rent ratio is back to late 2003, early 2004.

by Calculated Risk on 6/26/2019 07:00:00 AM

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

Mortgage applications increased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 21, 2019.

... The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 9 percent higher than the same week one year ago.
...
“Markets last week reacted to a more dovish FOMC statement and forecast, with Treasury yields falling after the meeting. Mortgage rates dropped again for most loan types, which led to an increase in refinance activity, partly driven by a 9 percent jump in VA applications,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The 30-year fixed rate has now dropped in three of the last four weeks, and at 4.06 percent, reached its lowest level since September 2017. Despite these lower rates, purchase applications decreased 2 percent, but were still considerably higher (9 percent) than a year ago.”

Added Kan, “Now at almost the half-way mark of 2019, we have generally seen a stronger purchase market than last year, despite still-tight existing inventory and insufficient new construction.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.06 percent from 4.14 percent, with points decreasing to 0.35 from 0.38 (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.

Mortgage rates have declined from close to 5% late last year to around 4% now.

Just about anyone who bought or refinanced over the last year or so can refinance now.   But it would take another significant decline in rates for a further large increase in refinance activity.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 9% year-over-year.

by Calculated Risk on 6/25/2019 05:41:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate in May was 0.63%, down from 0.65% in April. Freddie's rate is down from 0.87% in May 2018.

Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

This is the lowest serious delinquency rate for Freddie Mac since November 2007.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

Click on graph for larger image

I expect the delinquency rate to decline to a cycle bottom in the 0.4% to 0.6% range - so this is close to a bottom.

Note: Fannie Mae will report for May soon.

by Calculated Risk on 6/25/2019 02:53:00 PM

CR Note: This is a repeat of earlier posts with updated graphs.

A few key points:
1) There is a clear seasonal pattern for house prices.
2) The surge in distressed sales during the housing bust distorted the seasonal pattern.
3) Even though distressed sales are down significantly, the seasonal factor is based on several years of data - and the factor is now overstating the seasonal change (second graph below).
4) Still the seasonal index is probably a better indicator of actual price movements than the Not Seasonally Adjusted (NSA) index.

For in depth description of these issues, see former Trulia chief economist Jed Kolko's article "Let’s Improve, Not Ignore, Seasonal Adjustment of Housing Data"

Note: I was one of several people to question the change in the seasonal factor (here is a post in 2009) - and this led to S&P Case-Shiller questioning the seasonal factor too (from April 2010).  I still use the seasonal factor (I think it is better than using the NSA data).

Click on graph for larger image.

This graph shows the month-to-month change in the NSA Case-Shiller National index since 1987 (through April 2019).   The seasonal pattern was smaller back in the '90s and early '00s, and increased once the bubble burst.

The seasonal swings have declined since the bubble.

The second graph shows the seasonal factors for the Case-Shiller National index since 1987. The factors started to change near the peak of the bubble, and really increased during the bust.

The swings in the seasonal factors has started to decrease, and I expect that over the next several years - as recent history is included in the factors - the seasonal factors will move back towards more normal levels.

However, as Kolko noted, there will be a lag with the seasonal factor since it is based on several years of recent data.

by Calculated Risk on 6/25/2019 01:03:00 PM

Live video for A Conversation with Jerome H. Powell

Speech by Chair Powell on the economic outlook and monetary policy review

The Fed is insulated from short-term political pressures—what is often referred to as our "independence." Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests. Central banks in major democracies around the world have similar independence.

And on policy:

Let me turn now from the longer-term issues that are the focus of the review to the nearer-term outlook for the economy and for monetary policy. So far this year, the economy has performed reasonably well. Solid fundamentals are supporting continued growth and strong job creation, keeping the unemployment rate near historic lows. Although inflation has been running somewhat below our symmetric 2 percent objective, we have expected it to pick up, supported by solid growth and a strong job market. Along with this favorable picture, we have been mindful of some ongoing crosscurrents, including trade developments and concerns about global growth. When the FOMC met at the start of May, tentative evidence suggested these crosscurrents were moderating, and we saw no strong case for adjusting our policy rate.

Since then, the picture has changed. The crosscurrents have reemerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy. Our contacts in business and agriculture report heightened concerns over trade developments. These concerns may have contributed to the drop in business confidence in some recent surveys and may be starting to show through to incoming data. For example, the limited available evidence we have suggests that investment by businesses has slowed from the pace earlier in the year.

Against the backdrop of heightened uncertainties, the baseline outlook of my FOMC colleagues, like that of many other forecasters, remains favorable, with unemployment remaining near historic lows. Inflation is expected to return to 2 percent over time, but at a somewhat slower pace than we foresaw earlier in the year. However, the risks to this favorable baseline outlook appear to have grown.

by Calculated Risk on 6/25/2019 11:29:00 AM

New home sales for May were reported at 626,000 on a seasonally adjusted annual rate basis (SAAR). Sales for April were revised up slightly, and sales for March were revised down.

Earlier: New Home Sales decreased to 626,000 Annual Rate in May.

Click on graph for larger image.

This graph shows new home sales for 2018 and 2019 by month (Seasonally Adjusted Annual Rate).

Sales in May were down 3.7% year-over-year compared to May 2018.

Year-to-date (just through May), sales are up 4.0% compared to the same period in 2018.

This comparison was the most difficult in the first half of 2018, so even with the disappointing sales in May, this is a solid start for 2019.

And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.

The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through May 2019. This graph starts in 1994, but the relationship had been fairly steady back to the '60s.

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

Even though distressed sales are down significantly, following the bust, new home builders focused on more expensive homes - so the gap has only closed slowly.

I still expect this gap to close.   However, this assumes that the builders will offer some smaller, less expensive homes.

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 6/25/2019 10:14:00 AM

The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 626 thousand.

The previous three months were revised down slightly, combined.

"Sales of new single‐family houses in May 2019 were at a seasonally adjusted annual rate of 626,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.8 percent below the revised April rate of 679,000 and is 3.7 percent below the May 2018 estimate of 650,000."
emphasis added

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 last several years, new home sales are still somewhat low historically.

The second graph shows New Home Months of Supply.

The months of supply increased in May to 6.4 months from 5.9 months in April.

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

This is 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 May was 333,000. This represents a supply of 6.4 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 somewhat low, and the combined total of completed and under construction is close to normal.

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

In May 2019 (red column), 60 thousand new homes were sold (NSA). Last year, 62 thousand homes were sold in May.

The all time high for May was 120 thousand in 2005, and the all time low for May was 30 thousand in 2011.

This was below expectations of 680 thousand sales SAAR, and sales in the three previous months were revised down slightly combined.  I'll have more later today.

by Calculated Risk on 6/25/2019 09:10:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for March ("April" is a 3 month average of February, March and April prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

Note: Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs.

From S&P: Annual Home Price Gains Continue to Fall According to the S&P CoreLogic Case-Shiller Index

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.5% annual gain in April, down from 3.7% in the previous month. The 10-City Composite annual increase came in at 2.3%, up from 2.2% in the previous month. The 20-City Composite posted a 2.5% year-over-year gain, down from 2.6% in the previous month.

Las Vegas, Phoenix and Tampa reported the highest year-over-year gains among the 20 cities. In April, Las Vegas led the way with a 7.1% year-over-year price increase, followed by Phoenix with a 6.0% increase, and Tampa with a 5.6% increase. Nine of the 20 cities reported greater price increases in the year ending April 2019 versus the year ending March 2019.
...
Before seasonal adjustment, the National Index posted a month-over-month increase of 0.9% in April. The 10-City and 20-City Composites both reported 0.8% increases for the month. After seasonal adjustment, the National Index recorded a 0.3% month-over-month increase in April. The 10-City Composite posted a 0.2% month-over-month increases and the 20-City Composite did not report an increase. In April, 19 of 20 cities reported increases before seasonal adjustment, while 14 of 20 cities reported increases after seasonal adjustment.

“Home price gains continued in a trend of broad-based moderation,” says Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices. “Year-over-year price gains remain positive in most cities, though at diminishing rates of change. Seattle is a notable exception, where the YOY change has decreased from 13.1% in April 2018 to 0.0% in April 2019.“
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is up slightly from the bubble peak, and up 0.2% in April (SA).

The Composite 20 index is 4.4% above the bubble peak, and unchanged (SA) in April.

The National index is 12.9% above the bubble peak (SA), and up 0.3% (SA) in April.  The National index is up 52.6% from the post-bubble low set in December 2011 (SA).

The second graph shows the Year over year change in all three indices.

The Composite 10 SA is up 2.3% compared to April 2018.  The Composite 20 SA is up 2.5% year-over-year.

The National index SA is up 3.5% year-over-year.

Note: According to the data, prices increased in 16 of 20 cities month-over-month seasonally adjusted.

I'll have more later.

by Calculated Risk on 6/24/2019 05:10:00 PM

From Matthew Graham at Mortgage News Daily: Rates Catch a Break to Remain Near Long-Term Lows

Mortgage rates were generally flat today, depending on the lender. Some were noticeably better while others were a hair worse. In both cases, rates are very close to the lowest levels since late 2016. Changes from Friday would most likely be measured in terms of upfront costs as opposed to differences in the quoted "note rate" itself (the rate most people are talking about when they talk about mortgage rates). [Most Prevalent Rates 30YR FIXED - 3.625% OR 3.875%]
emphasis added

Tuesday:
• At 9:00 AM: S&P/Case-Shiller House Price Index for April. The consensus is for a 2.5% year-over-year increase in the Comp 20 index for April.

• At 9:00 AM: FHFA House Price Index for April 2019. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 10:00 AM: New Home Sales for May from the Census Bureau. The consensus is for 680 thousand SAAR, up from 673 thousand in April.

• At 10:00 AM: Richmond Fed Survey of Manufacturing Activity for June.

• At 1:00 PM: Speech by Fed Chair Jerome H. Powell, Economic Outlook and Monetary Policy Review, At C. Peter McColough Series on International Economics: A Conversation with Jerome H. Powell, New York, N.Y.

by Calculated Risk on 6/24/2019 12:14:00 PM

Update: Watching existing home "for sale" inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing.

And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here.

And in 2015, it appeared the inventory build in several markets was ending, and that boosted price increases. 

I don't have a crystal ball, but watching inventory helps understand the housing market.

Inventory, on a national basis, was up 2.7% year-over-year (YoY) in May this was the tenth consecutive month with a YoY increase, following over three years of YoY declines.

The graph below shows the YoY change for non-contingent inventory in Houston, Las Vegas, and Sacramento and Phoenix, and total existing home inventory as reported by the NAR (through May).

Click on graph for larger image.

The black line is the year-over-year change in inventory as reported by the NAR.

Note that inventory was up 98% YoY in Las Vegas in May (red), the tenth consecutive month with a YoY increase.

Houston is a special case, and inventory was up for several years due to lower oil prices, but declined YoY last year as oil prices increased.  Inventory was up 10.5% year-over-year in Houston in May.

Inventory is a key for the housing market.  Right now it appears the inventory build that started last year is slowing.

Also note that inventory in Seattle was up 124% year-over-year in May (not graphed)!

by Calculated Risk on 6/24/2019 10:34:00 AM

From the Dallas Fed: Texas Manufacturing Expansion Continues but Pace Slows

Texas factory activity continued to expand in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 6.3 to 8.9, indicating output growth accelerated slightly from May.

Other measures of manufacturing activity exhibited mixed movements in June. The new orders index edged up to 3.7, a reading still below average. The growth rate of orders index fell eight points to -6.7, reaching its lowest reading in nearly three years. The capacity utilization index inched up to 9.6, while the shipments index retreated six points to 1.7, a two-year low. The capital expenditures index posted a double-digit decline, falling 11 points to 6.9, also a two-year low.

Perceptions of broader business conditions shifted down again in June. The general business activity index pushed further into negative territory as more firms noted worsened activity this month than last. The index declined from -5.3 to -12.1, hitting a three-year low. Similarly, the company outlook index fell from -1.7 to -5.5, also a three-year low. The index measuring uncertainty regarding companies’ outlooks pushed up to 21.6, its highest reading since the question was added to the survey in January 2018.

Labor market measures suggested solid, but somewhat slower, growth in employment and work hours in June. The employment index slipped from 11.6 to 8.8 but remained slightly above average.
emphasis added

Another weak regional report. This was the worst reading for the general activity index since 2016.

by Calculated Risk on 6/24/2019 08:41:00 AM

From the Chicago Fed: Index points to a pickup in economic growth in May

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to –0.05 in May from –0.48 in April. Three of the four broad categories of indicators that make up the index increased from April, but only one of the four categories made a positive contribution to the index in May. The index’s three-month moving average, CFNAI-MA3, moved up to –0.17 in May from –0.37 in April.
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 May (using the three-month average).

According to the Chicago Fed:

The index is a weighted average of 85 indicators of growth in 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 monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

by Calculated Risk on 6/23/2019 08:48:00 PM

Weekend:
• Schedule for Week of June 23, 2019

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

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for June.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 1 and DOW futures are up 13 (fair value).

Oil prices were up over the last week with WTI futures at $57.87 per barrel and Brent at $65.56 barrel.  A year ago, WTI was at $69, and Brent was at $73 - so oil prices are down about 10% to 20% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.65 per gallon. A year ago prices were at $2.84 per gallon, so gasoline prices are down about 7% year-over-year.

by Calculated Risk on 6/23/2019 11:04:00 AM

By request, here is an update to the chart showing market performance under Presidents Trump and Obama.

Note: I don't think the stock market is a great measure of policy performance, but some people do - and I'm having a little fun with them.

There are some observers who think the stock market is the key barometer of policy success.  My view is there are many measures of success - and that the economy needs to work well for a majority of the people - not just stock investors.

However, for example, Treasury Secretary Steven Mnuchin was on CNBC on Feb 22, 2017, and was asked if the stock market rally was a vote of confidence in the new administration, he replied: "Absolutely, this is a mark-to-market business, and you see what the market thinks."

And Larry Kudlow wrote in 2007: A Stock Market Vote of Confidence for Bush: "I have long believed that stock markets are the best barometer of the health, wealth and security of a nation. And today's stock market message is an unmistakable vote of confidence for the president."

Note: Kudlow's comments were made a few months before the market started selling off in the Great Recession. For more on Kudlow, see: Larry Kudlow is usually wrong

And from White House chief economic advisor Gary Cohn on December 20, 2017:

"I think there is a lot more momentum in the stock market. ... "The stock market is reflecting the reality of what's going in the business environment today," said Cohn, director of the National Economic Council. "There is going to be a continuation [of the] rally in the equity markets based on real underlying fundamentals of the U.S. economy ... as well as companies having more earnings power because of lower tax rates."

For fun, here is a graph comparing S&P500 returns (ex-dividends) under Presidents Trump and Obama:

Click on graph for larger image.

Blue is for Mr. Obama, Orange is for Mr. Trump.

At this point, the S&P500 is up 30% under Mr. Trump - compared to up 58% under Mr. Obama for the same number of market days.

by Calculated Risk on 6/22/2019 08:11:00 AM

The key reports this week are the third estimate of Q1 GDP, May New Home Sales, Case-Shiller house prices, and Personal Income and Outlays for May.

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

On Tuesday, Fed Chair Jerome Powell speaks on the Economic Outlook and Monetary Policy.

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

10:30 AM: Dallas Fed Survey of Manufacturing Activity for June.

----- Tuesday, June 25th -----
9:00 AM: S&P/Case-Shiller House Price Index for April.

This graph shows the year-over-year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The consensus is for a 2.5% year-over-year increase in the Comp 20 index for April.

9:00 AM: FHFA House Price Index for April 2019. This was originally a GSE only repeat sales, however there is also an expanded index.

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

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

The consensus is for 680 thousand SAAR, up from 673 thousand in April.

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

1:00 PM: Speech by Fed Chair Jerome H. Powell, Economic Outlook and Monetary Policy Review, At C. Peter McColough Series on International Economics: A Conversation with Jerome H. Powell, New York, N.Y.

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

8:30 AM: Durable Goods Orders for May from the Census Bureau. The consensus is for no change in durable goods orders.

----- Thursday, June 27th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 218 thousand initial claims, up from 216 thousand last week.

8:30 AM: Gross Domestic Product, 1st quarter 2019 (Third estimate). The consensus is that real GDP increased 3.1% annualized in Q1, unchanged from the second estimate of 3.1%.

10:00 AM: Pending Home Sales Index for May. The consensus is for a 0.6% increase in the index.

11:00 AM: the Kansas City Fed manufacturing survey for June. This is the last of regional manufacturing surveys for June.

----- Friday, June 28th -----
8:30 AM ET: Personal Income and Outlays, May 2019. 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 increase 0.1%.

9:45 AM: Chicago Purchasing Managers Index for June.

10:00 AM: University of Michigan's Consumer sentiment index (Final for June). The consensus is for a reading of 97.9.

by Calculated Risk on 6/21/2019 07:50:00 PM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in May in 6 states, higher in 2 states, and stable in 42 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today.
...
Vermont had the lowest unemployment rate in May, 2.1 percent. The rates in Texas (3.5 percent) and Vermont (2.1 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 6.4 percent.
emphasis added

Click on graph for larger image.

This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 1976.

At the worst of the great recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently only one state, Alaska, has an unemployment rate at or above 6% (dark blue).  Note that the series low for Alaska is above 6%.  Three states and the D.C. have unemployment rates above 5%; Alaska, Mississippi and New Mexico.

A total of nine states are at the series low.

by Calculated Risk on 6/21/2019 03:22:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 15 June

The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 9-15 June 2019, according to data from STR.

In comparison with the week of 10-16 June 2018, the industry recorded the following:

• Occupancy: -0.6% to 73.7%
• Average daily rate (ADR): +1.9% to US$134.59
• Revenue per available room (RevPAR): +1.3% to US$99.22
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2019, dash light blue is 2018 (record year), blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

Occupancy has been solid in 2019, close - to-date - compared to the previous 4 years.

Seasonally, the occupancy rate will now increase during the Summer travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 6/21/2019 12:26:00 PM

From Merrill Lynch:

1Q GDP is likely to be revised slightly higher to 3.2% in the final release next week, up from the second estimate of 3.1%. We continue to track 2.5% for 2Q GDP. [June 21 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 1.4% for 2019:Q2 and 1.3% for 2019:Q3. [June 21 estimate].

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2019 is 2.0 percent on June 18, down from 2.1 percent on June 14. [June 18 estimate]

CR Note: These estimates suggest real GDP growth will be around 2% annualized in Q2.

by Calculated Risk on 6/21/2019 11:15:00 AM

Earlier: NAR: Existing-Home Sales Increased to 5.34 million in May

A few key points:

1) The key for housing - and the overall economy - is new home sales, single family housing starts and overall residential investment.

Overall, this is still a somewhat reasonable level for existing home sales.  No worries.

2) Inventory is still low, but was up 2.7% year-over-year (YoY) in May. This was the tenth consecutive month with a year-over-year increase in inventory, although the YoY increase was fairly small in May.

Click on graph for larger image.

3) Year-to-date sales are down about 3.3% compared to the same period in 2018.   On an annual basis, that would put sales around 5.15 million in 2019.  Sales slumped at the end of 2018 and in January 2019 due to higher mortgage rates, the stock market selloff, and fears of an economic slowdown.

The comparisons will be easier towards the end of the year.

The second graph shows existing home sales Not Seasonally Adjusted (NSA).

Sales NSA in May (540,000, red column) were above sales in May 2018 (535,000, NSA), but sales were lower than in May 2017.

by Calculated Risk on 6/21/2019 10:09:00 AM

From the NAR: Existing-Home Sales Ascend 2.5% in May

Existing-home sales rebounded in May, recording an increase in sales for the first time in two months, according to the National Association of Realtors®. Each of the four major U.S. regions saw a growth in sales, with the Northeast experiencing the biggest surge last month.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 2.5% from April to a seasonally adjusted annual rate of 5.34 million in May. Total sales, however, are down 1.1% from a year ago (5.40 million in May 2018).
...
Total housing inventory3 at the end of May increased to 1.92 million, up from 1.83 million existing homes available for sale in April and a 2.7% increase from 1.87 million a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace, up from both the 4.2 month supply in April and from 4.2 months in May 2018.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in May (5.34 million SAAR) were up 2.5% from last month, and were 1.1% below the May 2018 sales rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.92 million in May from 1.83 million in April.   Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 2.7% year-over-year in May compared to May 2018.

Months of supply increased to 4.3 months in May.

This was above the consensus forecast.  For existing home sales, a key number is inventory - and inventory is still low. I'll have more later …

by Calculated Risk on 6/20/2019 05:27:00 PM

Friday:
• At 10:00 AM, Existing Home Sales for May from the National Association of Realtors (NAR). The consensus is for 5.29 million SAAR, up from 5.19 million.

Housing economist Tom Lawler expects the NAR to report sales of 5.40 million SAAR for May.

by Calculated Risk on 6/20/2019 12:47:00 PM

The next Federal Open Market Committee (FOMC) meeting is scheduled for July 30th and 31st. Depending on the data - and other events - the committee might cut the Fed Funds rate at the July meeting.

Here are some key economic releases to watch:

• June Employment report scheduled for July 5th at 8:30 AM.

• Gross Domestic Product, 2nd quarter 2019 (advance estimate), and annual update, July 26th at 8:30 AM.

And on inflation:
• May Personal Income and Outlays, June 28th at 8:30 AM

• June Personal Income and Outlays, July 30th at 8:30 AM

• June Consumer Price Index, July 11th at 8:30 AM

And on housing:
• May New Home Sales, June 25th at 10:00 AM

• June Housing Starts, July 17th at 8:30 AM

• June New Home Sales, July 24th at 10:00 AM

Other key event:
• Trade Talks at G20 Meeting, on June 28th and 29th

by Calculated Risk on 6/20/2019 09:52:00 AM

From Black Knight: Black Knight’s First Look: Continued Improvement Pushes Mortgage Delinquencies to New Record Low in May; Prepayment Activity Doubles Over Past Four Months

• The national delinquency rate has fallen for the third consecutive month, hitting 3.36% in May, its lowest level since Black Knight began reporting the metric in January 2000

• Both early-stage and serious delinquencies fell from April, as did loans in active foreclosure, bringing total non-current inventory – all loans past due, including foreclosures – to its lowest point since early 2005

• Foreclosure starts also fell month-over-month to 39,000, the fewest of any month in more than 18 years

• Prepayment activity jumped another 24% in May, more than doubling over the past four months to reach its highest level in more than two years

According to Black Knight's First Look report for May, the percent of loans delinquent decreased 3.0% in May compared to April, and decreased 7.5% year-over-year.

The percent of loans in the foreclosure process decreased 1.6% in May and were down 17.4% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.36% in May, down from 3.47% in April.

The percent of loans in the foreclosure process decreased in May to 0.49% from 0.50% in April.

The number of delinquent properties, but not in foreclosure, is down 107,000 properties year-over-year, and the number of properties in the foreclosure process is down 48,000 properties year-over-year.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	May 2019	Apr 2019	May 2018	May 2017
Delinquent	3.36%	3.47%	3.64%	3.79%
In Foreclosure	0.49%	0.50%	0.59%	0.83%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	1,760,000	1,812,000	1,867,000	1,972,000
Number of properties in foreclosure pre-sale inventory:	255,000	259,000	303,000	421,000
Total Properties	2,015,000	2,072,000	2,171,000	2,348,000