by Calculated Risk on 3/20/2012 05:55:00 PM

Update: Here are the slides. Link to lecture series (next is on Thursday)

This is part 1 of 4 of a lecture series on the Federal Reserve. The first lecture (about 1 hour) discusses monetary policy history, the tools and goals of the reserve - and he spent some time on the gold standard.

There should be slides available soon at the Federal Reserve. Joe Weisenthal at Business Insider has some of the slides (and Bernanke's comments on the gold standard).

by Calculated Risk on 3/20/2012 04:18:00 PM

There has been some discussion on when activity would increase for completed foreclosures. Last month, LPS reported that foreclosure sales increased 29% month-over-month in January.

LPS Applied Analytis was kind enough to provide me their estimates of foreclosure sales, by month, since January 2008.

Note: The sequence is 1) a loan goes delinquent, 2) if it doesn't cure, after several months, the foreclosure process begins (this is called the "foreclosure inventory"), 3) then the foreclosure is completed "foreclosure sale" and becomes REO (lender Real Estate Owned), and then 4) the REO is sold. Sometimes during this process, the loan will cure or a short sale approved, and not all loans in the foreclosure inventory reach "foreclosure sales".

Click on graph for larger image.

This graph shows the number of foreclosure sales per month since January 2008 according to LPS Applied Analytics.

There was a significant decline in foreclosure sales in late 2010 due to the foreclosure process issues.

There is plenty of month-to-month variability, but it appears foreclosure sales have picked up again (sales were up 29% compared to December 2011, and up 15% compared to January 2011).

This will be very useful data to track the expected increase in foreclosure activity.

by Calculated Risk on 3/20/2012 12:14:00 PM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for January 2012. In the past month, the indexes increased in 48 states, decreased in one (Alaska), and remained unchanged in one (Wisconsin) for a one-month diffusion index of 94. Over the past three months, the indexes increased in 48 states, decreased in one, and remained unchanged in one for a three-month diffusion index of 94.

Note: These are coincident indexes constructed from state employment data. 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, 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 graph for larger image.

This 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 January, 49 states had increasing activity, up from 47 in December. This is the highest level since January 2007.

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.

Now only Alaska is red, and Wisconsin unchanged. The recovery may be sluggish, but it is widespread geographically.

Earlier:
• Housing Starts decline slightly in February
• Starts and Completions: Multi-family and Single Family

by Calculated Risk on 3/20/2012 10:37:00 AM

For a couple of years I've been posting a 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).

This month (second graph) I've added a graph for 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.

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. And completions (red line) are now 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).

The blue line is for single family starts and the red line is for single family completions.

In February, the rolling 12 month total for starts is above completions for the first time 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 3/20/2012 08:30:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in February were at a seasonally adjusted annual rate of 698,000. This is 1.1 percent (±15.9%)* below the revised January estimate of 706,000 (revised up from 699,000), but is 34.7 percent(±16.7%) above the February 2011 rate of 518,000.

Single-family housing starts in February were at a rate of 457,000; this is 9.9 percent (±11.4%)* below the revised January figure of 507,000. The February rate for units in buildings with five units or more was 233,000.

Building Permits:
Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 717,000. This is 5.1 percent (±1.2%) above the revised January rate of 682,000 and is 34.3 percent (±3.1%) above the February 2011 estimate of 534,000.

Single-family authorizations in February were at a rate of 472,000; this is 4.9 percent (±1.2%) above the revised January figure of 450,000. Authorizations of units in buildings with five units or more were at a rate of 219,000 in February.

Click on graph for larger image.

Total housing starts were at 698 thousand (SAAR) in February, down 1.1% from the revised January rate of 706 thousand (SAAR). Note that January was revised up from 699 thousand.

Single-family starts declined 9.9% to 457 thousand in February. Permits moved higher, so single family starts will probably increase in March.

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 34.7% from a year ago.

This was slightly below expectations of 700 thousand starts in February.

All Housing Investment and Construction Graphs