by Calculated Risk on 4/17/2012 07:58:00 PM

This might speed up the short sale approval process, from Freddie Mac: Communication Time Lines for Short Sales

The new requirements introduce specific response time frames for certain activities in the short sale process ... Effective for new evaluations conducted on or after June 15, 2012, Servicers must comply with the following minimum communication time frames for all short sales. If feasible, Servicers are encouraged to implement these changes prior to the effective date of June 15, 2012.

Here is a key section:

Within five days of an evaluation decision, but no later than 30 days following receipt of a complete BRP [Borrower Response Package], the Servicer must provide to the Borrower an evaluation decision and send the appropriate Borrower Evaluation Notice in accordance with Section 64.6(d)(5).
...
There may be some situations in which a Servicer will be unable to provide a decision within 30 days following receipt of a complete BRP (e.g., extended negotiations with the MI). In such cases, the Servicer must notify the Borrower within the 30 day time limit that the BRP is still under review and each week thereafter provide the Borrower a status update indicating the reason(s) why a decision is pending. The weekly status updates may be communicated verbally or in writing. However, the Servicer must provide the Borrower with a decision and send the appropriate Borrower Evaluation Notice no later than 60 days after receipt of a complete BRP.

Fannie Mae is also implementing new timelines.

And on HARP from Mary Ellen Podmolik at the Chicago Tribune: Freddie Mac to ease refinancing program's guidelines for borrowers

Freddie Mac early this week will ease its mortgage underwriting formulas to boost the number of homeowners who qualify for the government's home loan refinancing program.
...
In response to complaints from lenders, Freddie Mac this week will undertake a "fine-tuning" of its underwriting process, according to Freddie Mac spokesman Brad German. Specifics of how the automated underwriting models will be altered aren't being disclosed, even to lenders, but some homeowners who have been turned down for the program may now qualify, he said.

"It will be a noticeable, positive change for the homeowner," German said. "It will help increase the number of borrowers who can refinance under HARP and take advantage of today's rates."

Mortgage broker Soylent Green is People writes: "So many HARP eligible loans diagnosed as EA-I to EA-3 (EA = Expanded Approval, code for “unacceptable risk” to many lenders) the Agencies are feeling the heat from borrowers turned away and changing how their AU systems score loans."

by Calculated Risk on 4/17/2012 04:38:00 PM

From DataQuick: Southland Home Sales Up; Median Price Almost Back to Year-Ago Level

Southern California home sales shot up last month from February amid the usual surge in late-winter shopping, but the gain over a year earlier was modest.
...
A total of 19,953 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 28.1 percent from 15,573 in February, and up 2.8 percent from 19,412 in March 2011, according to San Diego-based DataQuick.

... On a year-over-year basis, Southland sales have increased for three consecutive months, and for seven out of the last eight months. However, last month’s Southland sales total was still 18.6 percent below the average for all the months of March since 1988.
...
“The year is young and lots could still change, but the results from the first big sales month of 2012 suggest the market is stuck in low gear. This remains a very gradual – not to mention fragile – recovery. Last month's big gain in sales from February was seasonal. A lot more people get out and shop after the holidays and as spring approaches. More telling was the relatively small gain in sales activity compared with a year ago. It's a reminder that, for many potential buyers, lower prices and amazingly low mortgage rates still aren’t enough to get them over their hurdles: tight credit, home values below what they owe on their mortgages, and uncertainties over the economy and home prices,” said John Walsh, DataQuick president.

And on distressed sales:

Distressed sales – the combination of foreclosure resales and “short” sales – made up about half of last month’s resale market.

Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 31.1 percent of the resale market last month, down from 32.1 percent in February and down from 36.0 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were 28.6 percent of the resale market in January 2008. In the current cycle, the figure hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.9 percent of Southland resales last month. That compares with 20.4 percent the month before and 18.5 percent a year earlier.

Distressed sales are very high at about 50% of the market, but the percentage is down from 54.5% a year ago. Cash purchasers accounted for 31.7% of all purchases (frequently investor buying).

The NAR will report March existing home sales on Thursday.

Note: I usually ignore the median prices because it is impacted by changes in the mix of homes sold.

by Calculated Risk on 4/17/2012 02:24:00 PM

There are usually two bottoms for housing, the first for new home sales, housing starts and residential investment. The second bottom is for house prices.

For the economy and jobs, the bottom for housing starts and new home sales is more important than the bottom for prices. However individual homeowners and potential home buyers are naturally more interested in prices. So when we discuss a “bottom” for housing, we need to be clear what we mean.

There is no question that housing starts and residential investment have bottomed. And it appears new home sales have also bottomed. For the housing industry, the recovery has started. The debate is about the strength of the recovery, not whether there is a recovery (I think housing will remain sluggish for some time, and I expect 2012 to be another weak year, but better than 2011).

The question about house prices is not as clear. In February I argued NSA prices for the national repeat sales indexes would probably bottom with the March reports. I still think that is correct. There is a long lag between when contracts are signed and when the repeat sales indexes are released.

There are some more timely indicators, but they are not perfect. Examples are the Trulia House Asking Price Monitor, and the John Burns Consulting Home Value Index (not public) that uses contract prices for existing homes and builder reports for new homes. Both the Trulia index and the Burns HVI are suggesting that house prices have bottomed.

Over the next few months I'll focus on house prices, but I just wanted to point out the housing industry recovery has started, and it will probably be sluggish. And for prices, if they have bottomed, they will probably mostly move sidways for some time.

Here is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

Click on graph for larger image.

The blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) has been increasing since mid-2010. Although the 12 month total for completions (red line) turned down in March, completions are generally following starts up.

It is important to emphasize that even with a strong increase in multi-family construction, it is 1) from a very low level, and 2) multi-family is a small part of residential investment (RI).

This second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

In both February and March, the rolling 12 month total for starts and completions are at about the same level. This is the first this has happened since May 2006. This usually only happens at a bottom, although the recovery for single family starts will probably remain sluggish.

by Calculated Risk on 4/17/2012 12:19:00 PM

From John Gittelsohn at Bloomberg: Short Sales Surpass Foreclosures as Banks Agree to Deals (ht Mike in Long Island)

Short sales accounted for 23.9 percent of home purchases in January, the most recent month available, compared with 19.7 percent for sales of foreclosed homes, data compiled by LPS show. A year earlier, 16.3 percent of transactions were short sales and 24.9 percent involved foreclosures.

Only a few Realtor associations break out short sales, but the ones Tom Lawler has been tracking have shown a steady increase in short sales - and decrease in bank-owned sales.

From Nick Timiraos at the WSJ: Report: Sellers’ Asking Prices Rose in March

Here’s a sign that sellers are feeling more optimistic about their prospects this spring: median asking prices in March jumped by 5.6% from a year ago, and were up 1% from February, according to a report released Tuesday [by Realtor.com].

The jump in median asking prices comes amid a sharp drop in the number of homes listed for sale from one year ago. While listing inventories in March rose by 1.5% from February, they were still 21.5% below last year’s levels.

Here is the data for each city from Realtor.com: March 2012 Real Estate Data

On the national level, inventory of for-sale single family homes, condominiums, townhouses and co-ops declined by -21.48% in March 2012 compared to a year ago, and declined in one month in all but two of the 146 markets covered by Realtor.com.

The median age of the inventory fell 19.82% on a year-over-year basis last month and the median national list price was up by 5.56% last month compared to March 2011.

A 21.5% year-over-year decline in inventory would mean the NAR would report inventory at about 2.38 million for March (Lawler estimated a 20.5% decline or about 2.41 million). The NAR's inventory is always a little difficult to forecast, but this suggests around 6.2 to 6.3 months-of-supply.

The NAR is scheduled to report March existing home sales and inventory on Thursday.

by Calculated Risk on 4/17/2012 09:30:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production was unchanged in March for a second month but rose at an annual rate of 5.4 percent in the first quarter of 2012. Manufacturing output declined 0.2 percent in March but jumped 10.4 percent at an annual rate in the first quarter. The gain in manufacturing output in the first quarter was broadly based: Even excluding motor vehicles and parts, which jumped at an annual rate of nearly 40 percent, manufacturing output moved up at an annual rate of 8.3 percent and output for all but a few major industries increased 5 percent or more. In March, production at mines rose 0.2 percent and the output of utilities gained 1.5 percent. For the quarter, however, the output of utilities dropped at an annual rate of 13.8 percent, largely as a result of unseasonably warm temperatures over the past several months, while the output of mining fell 5.4 percent. At 96.6 percent of its 2007 average, total industrial production for March was 3.8 percent above its year-earlier level. The rate of capacity utilization for total industry edged down to 78.6 percent, a rate 2.1 percentage points above its level from a year earlier but 1.7 percentage points below its long-run (1972--2011) average.

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.8 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.6% is still 1.7 percentage points below its average from 1972 to 2010 and below the pre-recession levels of 81.3% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production was unchanged in March at 96.6; however February was revised up from 96.2.

The consensus was for a 0.3% increase in Industrial Production in March, and for a decrease to 78.6% (from 78.7%) for Capacity Utilization. Although below consensus, with the February revisions, this was close to expectations.

All current manufacturing graphs

by Calculated Risk on 4/17/2012 08:30:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 654,000. This is 5.8 percent (±15.6%)* below the revised February estimate of 694,000, but is 10.3 percent (±14.6%)* above the March 2011 rate of 593,000.

Single-family housing starts in March were at a rate of 462,000; this is 0.2 percent (±12.6%)* below the revised February figure of 463,000. The March rate for units in buildings with five units or more was 178,000.

Building Permits:
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 747,000. This is 4.5 percent (±1.1%) above the revised February rate of 715,000 and is 30.1 percent (±1.6%) above the March 2011 estimate of 574,000.

Single-family authorizations in March were at a rate of 462,000; this is 3.5 percent (±1.1%) below the revised February figure of 479,000. Authorizations of units in buildings with five units or more were at a rate of 262,000 in March.

Click on graph for larger image.

Total housing starts were at 654 thousand (SAAR) in March, down 5.8% from the revised February rate of 694 thousand (SAAR). Note that February was revised down from 698 thousand.

Single-family starts declined 0.2% to 462 thousand in March. February was revised up to 463 thousand from 457 thousand.

The second graph shows total and single unit starts since 1968.

This shows the huge collapse following the housing bubble, and that total housing starts have been increasing lately after sideways for about two years and a half years.

Total starts are up 37% from the bottom, and single family starts are up 31% from the low.

This was well below expectations of 700 thousand starts in March, but mostly because of multi-family starts.

All Housing Investment and Construction Graphs

by Calculated Risk on 4/16/2012 07:49:00 PM

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

Container traffic gives us an idea about the volume of goods being exported and imported - and possibly some hints about the trade report for March. LA area ports handle about 40% of the nation's container port traffic.

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic is up 0.9% from February, and outbound traffic is up 0.2%.

The rolling 12 months of imports started declining last year - and exports seemed to stall. But it now appears both imports and exports are increasing again (slightly).

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

For the month of March, loaded outbound traffic was up 2.6% compared to March 2011, and loaded inbound traffic was up 12.8% compared to March 2011.

This is a new record for exports (just above the pre-recession peak).

Note: Every year imports decline in February mostly because of the Chinese New Year and rebounds in March. February 2012 was an especially steep decline, and some of the February traffic was probably pushed into March.

All current trade graphs

by Calculated Risk on 4/16/2012 04:59:00 PM

CR Note: Some interesting comments from Tom Lawler ...

From economist Tom Lawler: Early Read on Existing Home Sales in March: Not Much Change (SAAR) from February, but Aggregate Numbers Miss Strengthening Market

While I’m missing reports from several key markets, my current estimate based on regional tracking is that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.59 million in March, unchanged from February’s pace, and up 7.7% from last March’s seasonally adjusted pace. While the “flattish” sales in March relative to February (on a SAAR basis) might seem surprising to some given various anecdotal stories of strengthening markets, the “flat” reading does NOT negate the validity of many of these reports. Rather, a major reason for the “disappointing” sales readings for March (and February) relative to a year ago is the substantial decline in REO/foreclosure sales, which to a large extent is the result of sharply lower REO properties for sale.

Consider, e.g., sales reports from the Vegas, Phoenix, Sacramento, Minneapolis, Mid-Atlantic, and Orlando markets broken out by short sales, foreclosure sales, and “non-distressed” sales, shown on the table below.

MLS-Reported Home Sales
		Mar-12	Mar-11	% chg
Phoenix	Total	8869	9933	-10.7%
	Short Sales	2275	1899	19.8%
	Bank-Owned Sales	1872	4576	-59.1%
	Non-Distressed Sales	4722	3458	36.6%
Las Vegas	Total	4386	4316	1.6%
	Short Sales	1167	1019	14.5%
	Bank-Owned Sales	1786	2054	-13.0%
	Non-Distressed Sales	1433	1243	15.3%
Sacramento	Total	1858	1914	-2.9%
	Short Sales	638	427	49.4%
	Bank-Owned Sales	570	927	-38.5%
	Non-Distressed Sales	750	560	33.9%
Mid-Atlantic	Total	7902	8059	-1.9%
	Short Sales	1040	1057	-1.6%
	Bank-Owned Sales	1162	2123	-45.3%
	Non-Distressed Sales	5700	4879	16.8%
Minneapolis	Total	3523	3253	8.3%
	Short Sales	438	417	5.0%
	Bank-Owned Sales	1296	1497	-13.4%
	Non-Distressed Sales	1789	1343	33.2%
Orlando	Total	2327	2613	-10.9%
	Short Sales	768	762	0.8%
	Bank-Owned Sales	593	1215	-51.2%
	Non-Distressed Sales	966	636	51.9%

Note that all of the above markets, save for Vegas, saw this March’s home sales come in below last March’s (and by more than the one-fewer-business day would have implied for a “flat” seasonally adjusted reading), and Vegas’ YOY gain was only 1.6%. Yet ALL of these markets saw double-digit YOY gains in non-distressed sales. For all of these markets combined, total home sales were down (YOY) by 4.1%; short sales were up 13.3%; foreclosure sales were down 41.3%; and non-distressed sales were up 26.7%.

Of course, the surge in “non-distressed” sales overstates the overall strength of many of these markets – folks, especially looking for a home to live in, who last year might have purchased a “distressed” home found the available inventory smaller and unattractive, and instead purchased a “non-distressed” home.

Still, the increase in “non-distressed” sales is an encouraging sign.

Below are a few other reports from associations/MLS that either only report “distressed” vs. “non-distressed,” or in Memphis’ case only report bank-owned vs. non-bank-owned sales (the Memphis report is based on property records, not MLS sales).

		Mar-12	Mar-11	% Chg
Northeast Florida	Total	1419	1529	-7.2%
	Distressed Sales	567	857	-33.8%
	Non-Distressed Sales	852	672	26.8%
Hampton Roads	Total	1547	1605	-3.6%
	Distressed Sales	519	695	-25.3%
	Non-Distressed Sales	1028	910	13.0%
Memphis (Existing)	Total	1229	1014	21.2%
	Bank-Owned Sales	393	377	4.2%
	Non-Bank Sales	836	637	31.2%

Flipping back to estimates for the NAR EHS release, a decent number of associations/MLS (though by no means all) reported a monthly increase in listings for March, and “seasonally” listings typically increase significantly. Translating local data into NAR inventory estimates, however, is “tricky;” e.g., the NAR’s existing home inventory estimate in February was up 4.3% from January, WAY above what any inventory tracker would have “guessed” (NAR showed a monthly jump in the inventory of existing condos for sale in February of 27.3%!) I can’t tell ya why, but rather than trying to foot to the monthly changes regardless of past monthly “discrepancies,” I’m going with a YOY estimate based on tracking, which would suggest a YOY inventory drop of about 20.5%, and would imply a very slight monthly decline relative to February (though I expect February to be revised down).

Finally, on the median sales price side a much higher % of realtor associations/MLS reported YOY increases in median sales prices in March relative to any period since 2010, in many (but not all) cases likely because of the significant drop in the foreclosure share of home sales. Net, I expect that the NAR median existing SF home sales price in March will be 3.0 to 3.5% above last March’s MSP.

As always, of course, median sales prices are heavily influenced by the mix of sales – and by that I don’t mean just “distressed” vs. “non-distressed” – and one can’t really “translate” median sales price changes to changes in repeat-transactions home price indexes. By the same token, however, repeat-transactions HPIs that include all distressed sales do appear to be affected by the distressed sales share of home sales, and as such these HPIs should show a CONSIDERABLE YOY improvement using March transactions. In addition, in some markets there does appear to be overall home price improvement gains. As such, there is a pretty decent chance that many widely followed HPIs may show YOY gains. Of course, the most widely watched monthly HPIs – S&P/Case-Shiller – is really a 3-month moving average HPI, and as such one wouldn’t expect to see a YOY gain in the March report. But the April or May report just might!

by Calculated Risk on 4/16/2012 04:03:00 PM

Catching up: This was released earlier from the NY Fed: April's Empire State Manufacturing Survey indicates manufacturing activity in New York State improved modestly

April’s Empire State Manufacturing Survey indicates that manufacturing activity in New York State improved modestly. Although the general business conditions index fell fourteen points, it remained positive at 6.6. The new orders and shipments indexes also remained positive, but showed only a small increase in orders and shipments. The prices paid index inched downward but remained high, and the prices received index climbed six points to 19.3. The index for number of employees rose to its highest level in nearly a year, indicating a significant increase in employment levels, while the average workweek index fell to a level that indicated only a small increase in hours worked. Future indexes remained quite positive, suggesting a strong and persistent degree of optimism about the six month outlook.

The general business index was down sharply to 6.56 from 20.21 in March, and was significantly below the consensus forecast of 18.

The employment index was up to 19.28 from 13.58 in March.

by Calculated Risk on 4/16/2012 12:24:00 PM

From BuildFax:

Residential remodels authorized by building permits in the United States in February were at a seasonally-adjusted annual rate of 2,894,000. This is 3 percent above the revised January rate of 2,811,000 and is 23 percent above the February 2011 estimate of 2,362,000.

"February 2012 is the first month over the past twelve to show significant increases in residential remodeling activity across all U.S. regions," said Joe Emison, Vice President of Research and Development at BuildFax.

The BuildFax Remodeling Index (BFRI) is based on construction permits for residential remodeling projects filed with local building departments across the country. The index estimates the number of properties permitted. The national and regional indexes are based upon a subset of representative building departments in the U.S. and population estimates from the U.S. Census. The BFRI is seasonally-adjusted using the X12 procedure.

Click on graph for larger image.

This graph shows the Remodeling Index since January 2000 on a seasonally adjusted basis.

Remodeling is below the peak levels of the housing boom - with all the equity extraction - but up 25% from the bottom in May 2009.

Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

The second graph shows the regional indexes. From BuildFax:

Seasonally-adjusted annual rates of remodeling across the country in February 2012 are estimated as follows: Northeast, 627,000 (up 24% from January and up 33% from February 2011); South, 1,194,000 (up 3% from January and up 25% from February 2011); Midwest, 516,000 (up 4% from January and up 22% from February 2011); West, 830,000 (up 9% from January and up 21% from February 2011).

Some of the increase in February could be weather related (the index is seasonally adjusted, and the weather in February was warmer than normal). This might especially be true in the Northeast.

For overall residential investment, multi-family construction and home improvement have already picked up, and it appears single family construction will increase in 2012.