by Calculated Risk on 8/09/2014 01:01:00 PM

The key report this week is July retail sales on Wednesday.

For manufacturing, the July Industrial Production and Capacity Utilization report, and the August NY Fed (Empire State) survey, will be released this week. 

For prices, PPI will be released on Friday.

Also the NY Fed Q2 Report on Household Debt and Credit will be released on Thursday.

----- Monday, August 11th -----
3:15 AM ET: Speech by Fed Vice Chairman Stanley Fischer, The Great Recession: Moving Ahead, At the Swedish Ministry of Finance Conference: The Great Recession – Moving Ahead, Stockholm, Sweden

----- Tuesday, August 12th -----
7:30 AM ET: NFIB Small Business Optimism Index for July.

10:00 AM: Job Openings and Labor Turnover Survey for June from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

In May, the number of job openings (yellow) were up 19% year-over-year compared to May 2013, and Quits were up 15% year-over-year.

2:00 PM ET: The Monthly Treasury Budget Statement for July. Note: The CBO's estimate is the deficit through July in fiscal 2014 was $462 billion, compared to $607 billion for the same period in fiscal 2013.

----- Wednesday, August 13th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

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

This graph shows retail sales since 1992 through June 2014. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). On a monthly basis, retail sales increased 0.2% from May to June (seasonally adjusted), and sales were up 4.3% from June 2013.

The consensus is for retail sales to increase 0.2% in July, and to increase 0.4% ex-autos.

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

----- Thursday, August 14th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 295 thousand from 289 thousand.

11:00 AM: The Q2 2014 Quarterly Report on Household Debt and Credit will be released by the Federal Reserve Bank of New York.

----- Friday, August 15th -----
8:30 AM: NY Fed Empire Manufacturing Survey for August. The consensus is for a reading of 20.0, down from 25.6 in July (above zero is expansion).

8:30 AM: The Producer Price Index for July from the BLS. The consensus is for a 0.1% increase in prices.

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

This graph shows industrial production since 1967.

The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 79.2%.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (preliminary for August). The consensus is for a reading of 82.3, up from 81.8 in July.

by Calculated Risk on 8/09/2014 08:15:00 AM

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

Here is the unofficial problem bank list for Aug 8, 2014.

Changes and comments from surferdude808:

Two removals lowered the number of institutions on the Unofficial Problem Bank List to 449. Assets declined by $3.0 billion to $142.7 billion. A year earlier, the list held 723 institutions with assets of $255 billion. Enforcement actions were terminated against MetaBank, Storm Lake, IA ($1.9 billion Ticker: CASH) and First American Bank, Fort Dodge, IA ($1.1 billion). Next Friday, we anticipate the OCC to provide an update on its enforcement action activities.

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 449.

by Calculated Risk on 8/08/2014 06:43:00 PM

Several years ago I started following the Sacramento market to look for changes in the mix of houses sold (equity, REOs, and short sales).  For a long time, not much changed. But over the last 2+ years we've seen some significant changes with a dramatic shift from foreclosures (REO: lender Real Estate Owned) to short sales, and the percentage of total distressed sales declining sharply.

This data suggests healing in the Sacramento market and other distressed markets are showing similar improvement.  Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In July 2014, 12.3% of all resales were distressed sales. This was down from 13.3% last month, and down from 23.1% in July 2013. This is the post-bubble low.

The percentage of REOs was at 6.2%, and the percentage of short sales was 6.1%.

Here are the statistics for July.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional sales that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Active Listing Inventory for single family homes increased 68.0% year-over-year in July. 

Cash buyers accounted for 20.9% of all sales, down from 25.5% in July 2013, but up from 19.8% last month (frequently investors).  This has been trending down, and it appears investors are becoming much less of a factor in Sacramento.

Total sales were down 4.5% from July 2013, but conventional equity sales were up 8.9% compared to the same month last year. This is exactly what we expect to see in an improving distressed market - flat or even declining overall sales as distressed sales decline, and conventional sales increasing.

Summary: Distressed sales down sharply (at post bubble low), Cash buyers down significantly, normal equity sales up 8.9% year-over-year, and inventory up significantly.  So price increases should slow, and builders will slow too (with more inventory), and we might see lower land prices in some of these areas. 

As I've noted before, we are seeing a similar pattern in other distressed areas.

by Calculated Risk on 8/08/2014 02:56:00 PM

From housing economist Tom Lawler:

Yesterday Fannie Mae and Freddie Mac both released their quarterly financial results for the second quarter of 2014. On the earnings front Fannie reported that both GAAP net income and comprehensive income last quarter were $3.7 billion, meaning that Fannie expects to pay Treasury $3.7 billion in dividends in September. That payment would bring total dividends paid to Treasury of $130.5 billion, compared to $116.1 billion in cumulative cash draws from Treasury since 2008. Freddie Mac reported GAAP net income of $1.4 billion and comprehensive income of $1.9 billion, meaning that Freddie expects to pay Treasury $1.9 billion in dividends in September. That payment would bring total dividends paid to Treasury of $88.2 billion, compared to $71.3 billion of cumulative cash draws from Treasury since 2008.

Here are some summary delinquency rate stats for the conventional SF mortgage books of both companies.

Payment Status, Fannie Conventional SF Mortgage Book
	6/30/2014	3/31/2014	6/30/2013
30 to 59 days delinquent	1.46%	1.40%	1.85%
60 to 89 days delinquent	0.42%	0.40%	0.51%
seriously delinquent	2.05%	2.19%	2.77%

Payment Status, Freddie Conventional SF Mortgage Book
	6/30/2014	3/31/2014	6/30/2013
One month past due	1.53%	1.40%	1.80%
Two month's past due	0.48%	0.47%	0.55%
Seriously delinquent	2.05%	2.20%	2.79%

Here are some summary stats for SF REO activity at both companies.

	Freddie SF REO Activity			Fannie SF REO Activity
	Acquisitions	Dispositions	Inventory	Acquisitions	Dispositions	Inventory
Q4/10	23,771	26,589	72,079	45,962	50,260	162,489
Q1/11	24,707	31,627	65,159	53,549	62,814	153,224
Q2/11	24,788	29,348	60,599	53,697	71,202	135,719
Q3/11	24,378	25,381	59,596	45,194	58,297	122,616
Q4/11	24,758	23,819	60,535	47,256	51,344	118,528
Q1/12	23,805	25,033	59,307	47,700	52,071	114,157
Q2/12	20,033	26,069	53,271	43,783	48,674	109,266
Q3/12	20,302	22,660	50,913	41,884	43,925	107,225
Q4/12	18,672	20,514	49,071	41,112	42,671	105,666
Q1/13	17,881	18,984	47,968	38,717	42,934	101,449
Q2/13	16,418	19,763	44,623	36,106	40,635	96,920
Q3/13	19,441	16,945	47,119	37,353	33,332	100,941
Q4/13	16,941	16,753	47,307	32,208	29,920	103,229
Q1/14	14,384	18,126	43,565	31,896	32,727	102,398
Q2/14	10,592	18,023	36,134	31,678	37,280	96,796

Fannie Mae reported that for foreclosures completed in the first six months of 2014, the average number of days from the borrowers’ last paid installment on their mortgage to when the related properties were added to Fannie’s REO inventory was 918 – or slightly over 2 ½ years. Average days to foreclosure were especially long in New York (1,371), Florida (1,332), and New Jersey (1,307).

Freddie Mac reported that for foreclosures completed in the first six months of 2014, the average number of days from the borrowers’ last scheduled payment to when the related properties were added to Freddie’s REO inventory was 875 days. Average days to foreclosure ranged from 403 in Missouri to 1,337 in New Jersey.

Fannie Mae’s average charged guaranty fee on SF mortgages acquisitions last quarter was 62.6 bp, little changed from 63.0 bp in the previous quarter but up considerably from 25.7 bp average in 2010. Pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011 (the “TCCA”), on April 1, 2012 Fannie increased Gfees by 10 bp, and the incremental revenue from this 10 bp is remitted to Treasury.

Freddie Mac’s average charged guaranty fee on SF mortgage acquisitions last quarter was 58 bp, up from 56 bp in the previous quarter and well above the 25 bp average in 2010. Pursuant to the TCCA, on April 1, 2012 Freddie increased Gfees by 10 bp, and the incremental revenue from this 10 bp is remitted to Treasury.

Fannie Mae’s “national” home price index, a unit-weighted repeat sales index based on purchase transactions in Fannie-Freddie acquisitions and public deed data, increased by 5.9% from the second quarter of 2013 to the second quarter of 2014. In 2013 this HPI increased by 8.3% (Q4/Q4).

Freddie Mac’s “national” home price index, a value-weighted repeat transactions index (using weights based on each state’s share of Freddie’s SF book) based on repeat transactions on residential properties acquired by Freddie or Fannie (purchase transactions and some refinance transactions), increased by 6.1% from June 2013 to June 2014. In 2013 this HPI increased by 9.3%.

by Calculated Risk on 8/08/2014 11:13:00 AM

From Fannie Mae:

• Fannie Mae reported net income of $3.7 billion and comprehensive income of $3.7 billion for the second quarter of 2014.
• Fannie Mae expects to pay Treasury $3.7 billion in dividends in September 2014. With the expected September dividend payment, Fannie Mae will have paid a total of $130.5 billion in dividends to Treasury in comparison to $116.1 billion in draw requests since 2008. Dividend payments do not offset prior Treasury draws.
...
Foreclosed property income decreased in the second quarter and first half of 2014 compared with the second quarter and first half of 2013 due to a decrease in gains recognized on dispositions of our REO properties. During the second quarter and first half of 2014, we experienced a modest increase in REO prices compared with a significant increase in REO prices in the second quarter and first half of 2013.
emphasis added

From Freddie Mac:

• Net income was $1.4 billion – the company’s eleventh consecutive quarter of positive earnings, compared to $4.0 billion in first quarter of 2014
• Based on June 30, 2014 net worth of $4.3 billion, the company’s September 2014 dividend obligation will be $1.9 billion, bringing total cash dividends paid to Treasury to $88.2 billion.

Click on graph for larger image.

Here is a graph of Fannie and Freddie Real Estate Owned (REO).

REO inventory decreased in Q2 for both Fannie and Freddie.

Delinquencies are falling, but there are still a large number of properties in the foreclosure process with long time lines in judicial foreclosure states.

Fannie noted there was only a "modest increase in REO prices" in Q2.

by Calculated Risk on 8/08/2014 08:21:00 AM

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported GLVAR reports median local home price hits $200,000

According to GLVAR, the total number of existing local homes, condominiums and townhomes sold in July was 3,314, up from 3,274 in June, but down from one year ago. Total sales increased thanks largely to a 12.2 percent monthly increase in condo and townhome sales.

GLVAR said 35.6 percent of all existing local homes sold in July were purchased with cash. That’s up slightly from 34.7 percent in June, but still near a five-year low and well short of the February 2013 peak of 59.5 percent, suggesting that fewer investors are buying homes in Southern Nevada.
...
In July, 11.5 percent of all existing local home sales were short sales. That’s up from 10.8 percent in June. Another 9.1 percent of all July sales were bank-owned properties, down from 10.1 percent in June.
...
The total number of single-family homes listed for sale on GLVAR’s Multiple Listing Service in July was 13,717. That’s down 0.9 percent from 13,838 in June and down 2.9 percent from one year ago.

By the end of July, GLVAR reported 7,266 single-family homes listed without any sort of offer. That’s up 2.0 percent from 7,126 such homes listed in June, and a 55.2 percent jump from one year ago.
emphasis added

There are several key trends that we've been following:

1) Overall sales were down about 9% year-over-year.

2) Conventional (equity, not distressed) sales were up 13% year-over-year.  In July 2013, only 64.0% of all sales were conventional equity.  This year, in July 2014, 79.4% were equity sales. 

3) The percent of cash sales has declined year-over-year from 54.5% in July 2013 to 35.6% in July 2014. (investor buying appears to be declining).

4) Non-contingent inventory is up 55% year-over-year.

More inventory (a major theme for 2014) suggests price increases will slow.

by Calculated Risk on 8/07/2014 07:07:00 PM

Earlier today the MBA released their Q2 National Delinquency Survey: Delinquency and Foreclosure Rates Decrease in Second Quarter

One of the key questions for housing is when will delinquencies and foreclosures be back to normal?

As Joel Kan, MBA’s Director of Economic Forecasting, said this morning:

“Some states hardest hit by the crisis, for example California and Arizona, now have foreclosure inventory rates that are both back to pre-crisis levels and less than half the current national rate. On the other hand, despite declines last quarter, states with slower-moving judicial foreclosure regimes, like New Jersey, Florida and New York, have foreclosure inventory rates two to three times the national average."

So the answer about when delinquencies and foreclosures will be back to normal depends on the state and foreclosure process.  Some states have already recovered and others are lagging behind.

A key point to remember is that most of the problem loans were originated in 2007 or earlier (a long time ago), and the lenders are just working through the backlog.  From the MBA:

... 75 percent of seriously delinquent loans were originated in 2007 and earlier. Loans with vintages started in 2011 and later only accounted for six percent of all seriously delinquent loans.

Click on graph for larger image.

This graph shows the percent of loans delinquent by days past due.

The percent of loans 30 days and 60 days delinquent are back to normal levels.


The 90 day bucket peaked in Q1 2010, and is about two-thirds of the way back to normal.

The percent of loans in the foreclosure process also peaked in 2010 and is close to two-thirds of the way back to normal.

So it has taken about 4 years to reduce the backlog by two-thirds, so a rough guess is that delinquencies and foreclosures will be back to normal in about 2 years.

by Calculated Risk on 8/07/2014 05:27:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 2 August

The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 27 July through 2 August 2014, according to data from STR.

In year-over-year measurements, the industry’s occupancy rate rose 4.5 percent to 76.3 percent. Average daily rate increased 6.2 percent to finish the week at US$118.70. Revenue per available room for the week was up 11.0 percent to finish at US$90.54.
emphasis added

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

The occupancy rate probably peaked for 2014 during the last week in July at 77.9%.  Before this year, the previous weekly high for the occupancy rate was late in July 2000 at 77.0%.

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 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.  Purple is for 2000.

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

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

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

by Calculated Risk on 8/07/2014 03:08:00 PM

This is a quarterly index from the the National Association of Home Builders (NAHB) and is similar to the overall housing market index (HMI). The NAHB started this index in Q4 2008, so the readings have been very low.  Note that this index is Not Seasonally Adjusted (NSA)

From the NAHB: Builder Confidence in the 55+ Housing Market Shows Positive Signs in the Second Quarter

Builder confidence in the single-family 55+ housing market for the second quarter is up year over year, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today. Compared to the second quarter of 2013, the single-family index increased three points to a level of 56, which is the highest second-quarter reading since the inception of the index in 2008 and the 11th consecutive quarter of year over year improvements.
...
Two of the components of the 55+ single-family HMI posted increases from a year ago: present sales climbed seven points to 61 and expected sales for the next six months rose one point to 61. Meanwhile, traffic of prospective buyers dropped six points to 42.
...
“One of the factors contributing to the positive signs in the 55+ housing market is the slow but steady increase in existing home sales in the last three months,” said NAHB Chief Economist David Crowe. “The 55+ market is strongly driven by consumers being able to sell their existing homes at a favorable price in order to buy or rent in a 55+ community.”
emphasis added

Click on graph for larger image.

This graph shows the NAHB 55+ HMI through Q2 2014.  The index increased in Q2 to 56 from 50 in Q1, and up from 53 in Q2 2013.  This indicates that more builders view conditions as good than as  poor.

There are two key drivers: 1) there is a large cohort moving into the 55+ group, and 2) the homeownership rate typically increases for people in the 55 to 70 year old age group. So demographics should be favorable for the 55+ market.

by Calculated Risk on 8/07/2014 01:11:00 PM

Note: Trulia corrected the Year-over-year change in the post from 8.1% to 7.8% for July.

From Trulia chief economist Jed Kolko: Home Price Gains Now Driven More By Jobs Than By Rebound Effect

The month-over-month increase in asking home prices of 0.8% was in line with the average monthly gain over the past year, settling back down after a 1.2% month-over-month in June. ... Although prices aren’t rising as fast as they did in spring 2013, price increases continue to be widespread, with 97 of 100 metros posting year-over-year price gains, and 94 posting quarter-over-quarter gains.

As the rebound effect diminishes, local housing markets need to depend more on job growth, which is a more sustainable driver of housing demand. So are they? We compared year-over-year asking price gains in July 2014 with year-over-year job gains in December 2013, from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW) in the 100 largest U.S. metros. Clearly, housing markets with higher asking-price gains have faster job growth ... A year ago, the pattern was different: in July 2013, home price changes were more highly correlated with the peak-to-trough price decline than with job growth (year-over-year in December 2012). Over the past year, therefore, the rebound effect has weakened, and as prices continue to return to long-term normal levels the rebound effect will continue to fade. Local housing markets will rely more on jobs and wages to support housing demand and home prices – which is another step on the road to recovery.
...
Job Growth Boosts Rents in Largest U.S. Rental Markets
Rents rose more than 10% year-over-year in five large rental markets – San Francisco, Sacramento, Oakland, Denver, and Miami. These five markets all had job growth ranging from solid to stellar.Overall, rents rose 6.1% nationally, with rents increasing more in markets with faster job growth.
emphasis added

Note: These asking prices are SA (Seasonally Adjusted) - and adjusted for the mix of homes - and this suggests further house price increases over the next few months on a seasonally adjusted basis.