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