by Calculated Risk on 5/12/2014 05:11:00 PM

Here is another weekly update on housing inventory ...

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then usually peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data was for March).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years.

Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

In 2013 (Blue), inventory increased for most of the year before declining seasonally during the holidays.  Inventory in 2013 finished up 2.7% YoY compared to 2012.

Inventory in 2014 (Red) is now 9.4% above the same week in 2013.

Inventory is still very low - still below the level in 2012 (yellow) when prices started increasing - but this increase in inventory should slow house price increases. 

Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess is inventory will be up 10% to 15% year-over-year by the end of 2014 (inventory would still be below normal).

by Calculated Risk on 5/12/2014 04:11:00 PM

Economist Tom Lawler sent me the preliminary table below of short sales, foreclosures and cash buyers for several selected cities in April.

Note: From Lawler:

While I don’t yet have enough report/data to produce a “decent” projection for April existing home sales as measured by the National Association of Realtors, the data I’ve seen so far seems to be consistent with a annualized seasonally adjusted sales pace of about 4.67 million.

From CR: The NAR reported sales of 4.59 million SAAR in March, and 4.99 million SAAR in April 2013.

On distressed: Total "distressed" share is down in all of these markets, mostly because of a sharp decline in short sales.

Foreclosures are down in most of these areas too, although foreclosures are up in the mid-Atlantic area and Las Vegas (there was a state law change that slowed foreclosures dramatically in Nevada at the end of 2011 - so it isn't a surprise that foreclosures are up a little year-over-year).

The All Cash Share (last two columns) is mostly declining year-over-year.  As investors pull back, the share of all cash buyers will probably decline.  Omaha's cash share is up.

In general it appears the housing market is slowly moving back to normal.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	Apr-14	Apr-13	Apr-14	Apr-13	Apr-14	Apr-13	Apr-14	Apr-13
Las Vegas	12.4%	32.5%	11.4%	10.0%	23.8%	42.5%	41.4%	59.3%
Reno**	15.0%	33.0%	6.0%	8.0%	21.0%	41.0%
Phoenix	4.0%	12.7%	6.5%	11.3%	10.5%	24.1%	32.2%	42.0%
Minneapolis	5.0%	7.4%	15.9%	24.0%	20.9%	31.4%
Mid-Atlantic	5.9%	9.9%	10.0%	8.6%	15.9%	18.5%	19.5%	19.4%
Memphis*			16.6%	24.7%
Toledo							33.4%	40.8%
Des Moines							17.1%	19.6%
Omaha							22.3%	17.4%
Tucson							30.5%	33.5%
Georgia***							34.3%	N/A
*share of existing home sales, based on property records **Single Family Only ***GAMLS

by Calculated Risk on 5/12/2014 12:13:00 PM

Here is another graph on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs. Then prices started to decline sharply, and prices declined over 25% from the highs by June.

The price increases early last year were due to stronger demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).

Prices didn't increase as much early in 2014 (more supply, smaller "surge" in demand), however prices haven't fallen as sharply either.

Click on graph for larger image in graph gallery.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Right now Random Lengths prices are down about 2% from a year ago, and CME futures are up about 4% year-over-year.

by Calculated Risk on 5/12/2014 09:39:00 AM

From the MBA: Applications for New Home Purchases Increased in April 2014

The Mortgage Bankers Association’s (MBA) Builder Application Survey (BAS) data for March 2014 shows mortgage applications for new home purchases increased by 5 percent relative to the previous month. This change does not include any adjustment for typical seasonal patterns.
...
The MBA estimate of new single-family home sales were running at a seasonally adjusted annual rate of 419,000 units in April 2014, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. The BAS market coverage was rebenchmarked this month to an estimate of over 30 percent of annual sales volume based on data from the Census Bureau.

The seasonally adjusted estimate for April is an increase of five percent from the revised March pace of 400,000 units.

A couple of comments:

1) So far the MBA Builder survey hasn't been helpful in predicting Census Bureau reports. As an example, last month the MBA estimated March new home sales at 479,000 on a seasonally adjusted annual rate basis (SAAR), and the Census Bureau reported sales of 384,000 SAAR. Not close.

2) Now the MBA has increased market coverage, so maybe the survey will be more useful. A 419,000 SAAR would be up from March, but down from 446,000 in April 2013.

by Calculated Risk on 5/11/2014 08:12:00 PM

A somewhat strange story on inflation in the WSJ: Markets Watch, Warily, for a Small Bump in Inflation

Normally, a move of a couple of tenths of a percentage point in the inflation measures wouldn't matter much to anyone. But the stakes are high now as Federal Reserve officials justify their plan to keep short-term interest rates near zero in part because inflation is running so far below their 2% objective.

Fed officials expect inflation to move from near 1% to 1.5% by year-end. If it moves up sooner or more than they expect, officials could consider raising rates sooner than planned.

Uh, the Fed expects inflation to move up towards 2%, and if it doesn't, the Fed might slow or stop the tapering of QE3 asset purchases.  In her testimony last week, Fed Chair Yellen said: "Looking ahead, I expect that economic activity will expand at a somewhat faster pace this year than it did last year, that the unemployment rate will continue to decline gradually, and that inflation will begin to move up toward 2 percent."
emphasis added

The most recent FOMC projections show PCE inflation moving up to 1.5% to 1.6% by Q4, but the Fed wouldn't raise rates sooner just because inflation rate moved closer to 2% this year - unless employment indicators improved significantly too.

And another sentence from the WSJ article:

The persistent low inflation has befuddled economists who thought Fed easy-money policies would spark rampant price gains.

Well, yes, some economists had the wrong model, but most economists realized that easy-money policies wouldn't lead to inflation in a depressed economy (I've been making fun of incorrect inflation forecasts for years). Eventually we will see a little more inflation - and an increase in inflation towards 2% would be good news - not something to watch "warily" for.

Monday:
• At 2:00 PM ET, the Monthly Treasury Budget Statement for April. Note: The CBO's estimate is the deficit through April in fiscal 2014 was $301 billion, compared to $488 billion for the same period in fiscal 2013.

Weekend:
• Schedule for Week of May 11th

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 5 and DOW futures are up 47 (fair value).

Oil prices were mixed over the last week with WTI futures at $100.07 per barrel and Brent at $107.89 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.62 per gallon (might have peaked, and only slightly above the level of a year ago).  If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 5/11/2014 10:26:00 AM

In addition to Case-Shiller, CoreLogic, I'm also watching the FNC, Zillow and several other house price indexes.

FNC released their March index data. FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.6% from February to March (Composite 100 index, not seasonally adjusted). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased between 0.2% and 0.4% in March. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).

The year-over-year change slowed slightly in March, with the 100-MSA composite up 9.1% compared to March 2013.  In February, the year-over-year increase was 9.2%.  The index is still down 22.2% from the peak in 2006.

Click on graph for larger image.

This graph shows the year-over-year change based on the FNC index (four composites) through March 2014. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

There is still no clear evidence in the FNC index of a slowdown in price increases yet.

The March Case-Shiller index will be released on Tuesday, May 27th, and I expect Case-Shiller to show a slowdown in price increases.

by Calculated Risk on 5/10/2014 01:01:00 PM

The key reports this week are April retail sales on Tuesday and April housing starts on Friday.

For manufacturing, the April Industrial Production and Capacity Utilization report, and the May NY Fed (Empire State) and Philly Fed surveys, will be released this week. 

For prices, PPI will be released on Wednesday, and CPI will be released on Thursday.

Fed Chair Janet Yellen speaks on Thursday "Small Businesses and the Economy".

Two key quarterly reports will be released this week: the NY Fed Q1 Report on Household Debt and Credit on Tuesday, and the Mortgage Bankers Association (MBA) Q1 National Delinquency Survey on Thursday.

----- Monday, May 12th -----
2:00 PM ET: The Monthly Treasury Budget Statement for April. Note: The CBO's estimate is the deficit through April in fiscal 2014 was $301 billion, compared to $488 billion for the same period in fiscal 2013.

----- Tuesday, May 13th -----
7:30 AM ET: NFIB Small Business Optimism Index for April.

8:30 AM ET: Retail sales for April will be released.

This graph shows retail sales since 1992 through March 2014. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). On a monthly basis, retail sales increased 1.1% from February to March (seasonally adjusted), and sales were up 3.8% from March 2013.

The consensus is for retail sales to increase 0.4% in April, and to increase 0.6% ex-autos.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for March.  The consensus is for a 0.4% increase in inventories.

11:00 AM: The Q1 2014 Quarterly Report on Household Debt and Credit will be released by the Federal Reserve Bank of New York. Note: "In conjunction with the release of the report, the New York Fed will also post an update to a recent blog discussing the impact of student loan debt on housing and auto markets."

----- Wednesday, May 14th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The Producer Price Index for April from the BLS. The consensus is for a 0.2% increase in prices.

----- Thursday, May 15th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 317 thousand from 319 thousand.

8:30 AM ET: Consumer Price Index for April. The consensus is for a 0.3% increase in CPI in April and for core CPI to increase 0.1%.

8:30 AM: NY Fed Empire Manufacturing Survey for May. The consensus is for a reading of 5.0, up from 1.3 in April (above zero is expansion).

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for April.

This graph shows industrial production since 1967.

The consensus is for no change in Industrial Production, and for Capacity Utilization to decrease to 79.1%.

10:00 AM: the Philly Fed manufacturing survey for May. The consensus is for a reading of 12.5, down from 16.6 last month (above zero indicates expansion).

10:00 AM: The May NAHB homebuilder survey. The consensus is for a reading of 48, up from 47 in April.  Any number below 50 indicates that more builders view sales conditions as poor than good.

10:00 AM: The Mortgage Bankers Association (MBA) Q1 2014 National Delinquency Survey (NDS).

6:10 PM: Speech by Fed Chair Janet Yellen, Small Businesses and the Economy, National Small Business Week 2014, Washington, D.C

----- Friday, May 16th -----
8:30 AM: Housing Starts for April.

Total housing starts were at 946 thousand (SAAR) in March. Single family starts were at 635 thousand SAAR in March.

The consensus is for total housing starts to increase to 980 thousand (SAAR) in April.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (preliminary for May). The consensus is for a reading of 84.5, up from 84.1 in April.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for April 2014.

by Calculated Risk on 5/10/2014 07:09:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for May 9, 2014.

Changes and comments from surferdude808:

Very unusual week for the Unofficial Problem Bank List as there are no changes to report. So the total remains at 509 institutions with assets of $163.3 billion.

While activity slows between the end of the month update of the FDIC and the mid-month update of the OCC, there normally is a news report of an action termination or an exit through merger or failure to report. This is only the fifth week since the publication of the list that no changes have occurred with the last being the week ending November 23, 2012.

Next Friday, the OCC should release an update on its recent actions. By the end of the month, along with a release on its recent enforcement action activity, the FDIC should release Q1 industry results and updated Official Problem Bank figures. It has been ten weeks since the last release of the official figures and the difference between the unofficial (then 566, now 502) and official lists (467) has been reduced from 99 to 42 institutions.

by Calculated Risk on 5/09/2014 03:10:00 PM

Here is something different, but it is important when looking at demographics ...

The following data is from the CDC United States Life Tables, 2009 by Elizabeth Arias released earlier this year.

The most frequently used life table statistic is life expectancy (ex), which is the average number of years of life remaining for persons who have attained a given age (x). ... Another way of assessing the longevity of the period life table cohort is by determining the proportion that survives to specified ages. ... To illustrate, 56,572 persons out of the original 2009 hypothetical life table cohort of 100,000 (or 56.6%) were alive at exact age 80. In other words, the probability that a person will survive from birth to age 80, given 2009 age-specific mortality, is 56.6%.
emphasis added

Instead of look at life expectancy, here is a graph of survivors out of 100,000 born alive, by age for three groups: those born in 1900-1902, born in 1949-1951 (baby boomers), and born in 2009.

Click on graph for larger image.

There was a dramatic change between those born in 1900 (blue) and those born mid-century (orange). The risk of infant and early childhood deaths dropped sharply, and the risk of death in the prime working years also declined significantly.

The CDC is projecting further improvement for childhood and prime working age for those born in 2009, but they are also projecting that people will live longer.

The second graph uses the same data but looks at the number of people who die before a certain age, but after the previous age. As an example, for those born in 1900 (blue), 12,448 of the 100,000 born alive died before age 1, and another 5,748 died between age 1 and age 5.

The peak age for deaths didn't change much for those born in 1900 and 1950 (between 76 and 80, but many more people born in 1950 will make it). 

Now the CDC is projection the peak age for deaths - for those born in 2009 - will increase to 86 to 90!  Using these stats - for those born in 2014 - about half will make it to the next century.

Also the number of deaths for those younger than 20 will be very small (down to mostly accidents, guns, and drugs).  Self-driving cars might reduce the accident components of young deaths.

An amazing statistic: for those born in 1900, about 13 out of 100,000 made it to 100.  For those born in 1950, 199 are projected to make to 100 - an significant increase.   Now the CDC is projecting that 2,056 out of 100,000 born in 2009 will make it to 100.  Stunning!

Some people look at this data and worry about supporting all the old people.  To me, this is all great news - the vast majority of people can look forward to a long life - with fewer people dying in childhood or during their prime working years.  Awesome!

by Calculated Risk on 5/09/2014 12:03:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 3 May

In year-over-year measurements, the industry’s occupancy increased 7.5 percent to 67.4 percent. Average daily rate increased 5.6 percent to finish the week at US$116.41. Revenue per available room for the week was up 13.6 percent to finish at US$78.42.
emphasis added

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and is at the highest level since 2000. 

The following graph shows the seasonal pattern for the hotel occupancy rate for the last 15 years using the four week average.

Click on graph for larger image.

The red line is for 2014 and black is for 2009 - the worst year since the Great Depression for hotels.  Note: 2001 was briefly worse than 2009 in September.

Year 2000 was the best year for hotel occupancy until late in the year when 2005 had the highest occupancy rate (due to hurricane Katrina).

Right now it looks like 2014 will be the best year since 2000 for hotels.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com