by Calculated Risk on 7/19/2010 03:10:00 PM

CR Note: Last month, housing economist Tom Lawler's forecast was well below the consensus of 6.2 million (SAAR) for May and close to the actual reported existing home sales (he does a bottom up calculation every month, and he has been very close). Here is his preview for this month:

The pace of existing home sales in June varied dramatically across the country in June, with some of the difference reflecting the pace of closings of contracts signed to beat the federal home buyer tax credit. Long Island was a “standout” to the upside, with home closings in June coming in at 73.8% higher than last June, reflecting the longer-than-national norm time to close signed contracts. Most other markets saw materially slower YOY sales growth in June compared to May, with a number of areas seeing YOY declines. And many markets where a year ago sales were dominated by foreclosure sales saw YOY sales declines, with the drops mainly reflecting significantly lower foreclosure sales.

Based on all the data I have so far, I estimate that existing home sales ran at a seasonally adjusted annual rate of about 5.3 million in June, down about 6.4% from May’s pace. July sales, of course, will see a MUCH bigger drop.

On the inventory front, the local realtor/MLS were on balance consistent with my national tracking, which showed active residential listings up about 1.6% from May. I don’t know if the NAR data will show the same thing however; the NAR apparently doesn’t use available national listings but instead uses reports from the sample of realtor/MLS groups it gets each month, and uses that to “gross up” total inventory in a fashion that clearly produces some “spurious” volatility.

CR Note: this was from housing economist Tom Lawler. The National Association for Realtors (NAR) will release the June existing home sales report on Thursday. The consensus is for a decline to 5.3 million sales in June (SAAR, seasonally adjusted annual rate).

by Calculated Risk on 7/19/2010 01:17:00 PM

Lawrence Summers writes in the Financial Times: America’s sensible stance on recovery

[W]here an economy’s level of output is constrained by demand and the central bank has at best a limited ability to relax that constraint because it cannot reduce interest rates to below zero, fiscal policy can have a significant impact on output and employment.

...[and] there is a very strong presumption that there are likely to be beneficial effects from the expectation that budget deficits will be reduced after an economy has recovered and is no longer demand-constrained.
...
In most of the industrialised world, given that economies are in or near liquidity trap conditions, it is [these] propositions that should control policy. Together they make a case for fiscal actions that maintain or increase demand in the short run while reassuring markets on sustainability over the medium term.

It looks like the only additional stimulus will be an extension of the emergency unemployment benefits - and even that isn't clear.

by Calculated Risk on 7/19/2010 10:00:00 AM

Note: any number under 50 indicates that more builders view sales conditions as poor than good.

Click on graph for larger image in new window.

This graph shows the builder confidence index from the National Association of Home Builders (NAHB).

The housing market index (HMI) was at 14 in June. This is the lowest level since April 2009.

The record low was 8 set in January 2009, but 14 is very low ...

This second graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the July release for the HMI and the May data for starts (June starts will be released tomorrow).

This shows that the HMI and single family starts mostly move generally in the same direction - although there is plenty of noise month-to-month.

Press release from the NAHB: Builder Confidence Declines in July

Builder confidence in the market for newly built, single-family homes declined for a second consecutive month in July to its lowest level since April of 2009, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. The HMI fell two points from a downwardly revised number in the previous month to 14 for July.
...
Each of the HMI's component indexes recorded declines in July. The component gauging current sales conditions fell two points to 15, while the component gauging sales expectations in the next six months edged down one point to 21 and the component gauging traffic of prospective buyers fell three points to 10.

This suggests futher declines in housing starts. The consensus is for a decrease to 580K (SAAR) in June from 593K in May. I'll take the under.

by Calculated Risk on 7/19/2010 08:33:00 AM

From Matthew Saltmarsh at the NY Times: Moody’s Cuts Ireland’s Credit Rating

Moody’s Investors Service downgraded Ireland one notch, to Aa2 from Aa1 ... Moody’s also changed the outlook on the ratings to stable from negative.

“Today’s downgrade is primarily driven by the Irish government’s gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability,” said Dietmar Hornung, a senior credit officer at Moody’s.

And from the WSJ: Spanish Bad Bank Debt Rises

Bad debt held by Spanish banks topped €100 billion ($129 billion) for the first time in May, as more companies filed for bankruptcy and unemployment continued to rise amid the economic downturn.

On Friday, the Committee of European Banking Supervisors (CEBS) will release the stress test results for 91 European Banks.

This ties in with the Sovereign debt series too!

by Calculated Risk on 7/18/2010 09:18:00 PM

First, some earlier posts:

Weekly Summary and a Look Ahead (Housing, Bernanke testimony, Euro stress tests all coming up).

Sovereign Debt Part 5A. What Happens If Things Go Really Badly?

And some more stories:

From Chris Bryant at the Financial Times: IMF and EU defer talks with Hungary

Hungarian assets could come under selling pressure on Monday after the International Monetary Fund and European Union postponed the conclusion of a budgetary review in Budapest, insisting that the government must rethink its proposals.
excerpt with permission

CountryWide goes Kafka - a First Person Narrative. A story of a foreclosure on the wrong house ...

From Lisa Mascaro at the LA Times: Jobless aid hits stronger headwinds in Congress. More delays ...

From Kenneth Harney at the LA Times: Fannie Mae to prohibit lenders from changing home appraisals

Goldman Sachs lowered their Q2 real annualized GDP growth estimate to 2%, and put the odds of a technical double-dip recession at 25%-30%.