by Calculated Risk on 12/17/2013 08:57:00 AM

From CoreLogic: CoreLogic reports 791,000 More Residential Properties Return to Positive Equity in Second Quarter

CoreLogic ... today released new analysis showing approximately 791,000 more residential properties returned to a state of positive equity during the third quarter of 2013, and the total number of mortgaged residential properties with equity currently stands at 42.6 million. The analysis indicates that nearly 6.4 million homes, or 13 percent of all residential properties with a mortgage, were still in negative equity at the end of the third quarter of 2013. This figure is down from 7.2 million homes, or 14.7 percent of all residential properties with a mortgage, at the end of the second quarter of 2013.

... Of the 42.6 million residential properties with positive equity, 10 million have less than 20 percent equity. Borrowers with less than 20 percent equity, referred to as “under-equitied,” may have a more difficult time obtaining new financing for their homes due to underwriting constraints. Under-equitied mortgages accounted for 20.4 percent of all residential properties with a mortgage nationwide in the third quarter of 2013, with more than 1.5 million residential properties at less than 5 percent equity, referred to as near-negative equity. Properties that are near negative equity are considered at risk should home prices fall. ...

“Rising home prices continued to help homeowners regain their lost equity in the third quarter of 2013,” said Mark Fleming, chief economist for CoreLogic. “Fewer than 7 million homeowners are underwater, with a total mortgage debt of $1.6 trillion. Negative equity will decline even further in the coming quarters as the housing market continues to improve.”
emphasis added

Click on graph for larger image.

This graph shows the break down of negative equity by state. Note: Data not available for some states. From CoreLogic:

"Nevada had the highest percentage of mortgaged properties in negative equity at 32.2 percent, followed by Florida (28.8 percent), Arizona (22.5 percent), Ohio (18.0 percent) and Georgia (17.8 percent). These top five states combined accounted for 36.4 percent of negative equity in the U.S."

The second graph shows the distribution of home equity in Q3 compared to Q2. Close to 5% of residential properties have 25% or more negative equity, down from around 6% in Q2 and 8% in Q1.

In Q3 2012, there were 10.5 million properties with negative equity - now there are 6.4 million.  A significant change.

by Calculated Risk on 12/17/2013 08:36:00 AM

From the Bureau of Labor Statistics (BLS): Consumer Price Index - November 2013

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in November on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.2 percent before seasonal adjustment.
...
The index for all items less food and energy rose 0.2 percent in November. ... The 12-month increase in the index for all items less food and energy remained at 1.7 percent for the third month in a row.
emphasis added

On a year-over-year basis, CPI is up 1.2 percent, and core CPI is up also up 1.7 percent.  Both are below the Fed's target. This was close to the consensus forecast of no change for CPI, and above the consensus for a 0.1% increase in core CPI.

I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.   This is the last inflation data before the FOMC decision tomorrow.

by Calculated Risk on 12/16/2013 08:10:00 PM

Tuesday:
• 8:30 AM ET, Consumer Price Index for November. The consensus is for no change in CPI in November and for core CPI to increase 0.1%.

• 10:00 AM, the December NAHB homebuilder survey. The consensus is for a reading of 55, up from 54.0 in November. Any number above 50 indicates that more builders view sales conditions as good than poor.

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

From FNC: FNC Index: October Home Prices Up; Pace Slows

The latest FNC Residential Price Index™ (RPI) shows October home prices are up, albeit at a slower pace than previous months. The index, constructed to gauge underlying property value based on non-distressed home sales, showed a 0.3% month-over-month increase from September to October—its weakest acceleration in eight months.

The deceleration in the pace of price increase is expected as the housing market heads into the winter low season after strong growth in the spring and summer. Sustained by moderate economic growth and job creation, housing market fundamentals are expected to improve continually as indicators of distressed mortgages and home foreclosures continue to point to new lows. As of October, completed foreclosure sales nationwide contributed 13.9% to total home sales, up slightly from September’s 13.4% but down from 17.0% a year ago. The uptick in completed foreclosure sales is primarily a seasonal trend as banks tend to dispose of distressed properties more quickly in winter months. In another sign of slower housing activity and weakening price growth, the average asking-price discount has been trending higher in recent months....

Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the FNC 100-MSA composite index shows that October home prices increased from the previous month at a seasonally unadjusted rate of 0.3%. The two narrower RPI indices (30- and 10-MSA composites) also rose at a slower pace than previous months. On a year-over-year basis (YOY), home prices continue to accelerate moderately, up 6.5% from the same period a year ago, the fastest growth in more than seven years. (August 2006 was the last time the YOY growth measured similar magnitude.) The 30-MSA and 10-MSA composites recorded slightly faster YOY price appreciation.
emphasis added

The 100-MSA composite was up 6.5% compared to October 2012. The FNC index turned positive on a year-over-year basis in July, 2012.

Click on graph for larger image.

This graph shows the year-over-year change for the FNC Composite 10, 20, 30 and 100 indexes. 

Even with the recent increase, the FNC composite 100 index is still off 25.2% from the peak.

I expect all of the housing price indexes to show lower year-over-year price gains soon.

by Calculated Risk on 12/16/2013 05:03:00 PM

From housing economist Tom Lawler:

Based on realtor/MLS reports I’ve seen across the country, I estimate that US existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.98 million in November, down 3.7% from October’s SA pace, and up just 0.4% from last November’s SA pace. I estimate that unadjusted existing home sales last month were down about 2.9% from last November’s pace – the first YOY decline since June 2011. This November, however, had one fewer business day than last November, and as such this November’s will be lower than last November’s (meaning that the YOY change in seasonally adjusted sales will exceed that of unadjusted sales).

While difficult to quantify, the 16-day government shutdown in October appears to have negatively impacted November home closings, through three channels: (1) delays in various loan-application verifications associated with the IRS/SSA being closed for the first half of October; (2) adverse impacts on “confidence” related to the government shutdown; and (3) temporary direct adverse impacts on potential buyers (e.g., furloughed government workers). It is worth noting that sales in the DC metro area, which in October showed a YOY increase of 19.1%, were down 13.7% YOY in November.

There also appears to have been a significantly slowdown in investor buying in many parts of the country in November, in large part reflecting lower inventories of homes priced “attractively enough” for rental/investment purchases (as opposed to overall inventories). E.g., in Phoenix and Orlando overall home listings were up both on the month and from year-ago levels, home sales were down sharply YOY. Here is how the Orlando Regional Realtor Association “explained” the significant decline in Orlando home sales last month.

"We’re seeing fewer investor and institutional buyers in the Orlando market due to the dramatic gains in median prices we’ve experienced,” Merchant says. "In addition, we’re experiencing another effect of the governmental shutdown, which understandably dampened buyers’ willingness to commit to a home purchase in October. Since it takes about four weeks to move from contract to closing, the expected result is a drop in completed sales in November.”

The rapid increase in home prices over the last year in several markets, combined with increases in mortgage rates from earlier this year, has also dampened “traditional” home buying, according to several realtor sources.

To be sure, not all areas showed weakness in home sales this November vs. last November. Charlotte and the Triangle area of North Carolina, e.g., both showed double-digit YOY sales gains, and MLS sales in Long Island were up 25.5% from a year ago (though sales last November were adversely impacted by Hurricane Sandy). By the same token, however, there were double-digit YOY declines in sales in several areas of the country, including but not limited to the DC metro area, Phoenix, Vegas, quite a few California areas, and several key Florida area.

On the inventory front, home listings typically drop seasonally by a significant amount in November in most (though not all) parts of the country, and most realtor/MLS reported sizable monthly declines in inventories (exceptions include Phoenix, Arizona, and several Florida markets.) Based on realtor/MLS reports as well as reports from entities that track regional listings, my “best guess” is that the NAR’s estimate of the number of existing homes for sale at the end of November will be down 4.7% from October, and up 2.0% from last November.

Finally, I estimate that the NAR’s estimate of the median existing SF home sales price in November will be about 9.0% higher than last November.

CR Note: The NAR is scheduled to report November existing home sales on Thursday, Dec 19th.

by Calculated Risk on 12/16/2013 03:08:00 PM

From DataQuick: Southland Home Sales Drop; Median Sale Price Edges Sideways - Again

Southern California’s housing market downshifted last month, with sales falling well below a year earlier as investor activity waned again and buyers continued to struggle with higher prices and a thin supply of homes for sale. ... A total of 17,283 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 14.2 percent from 20,150 sales in October, and down 10.4 percent from 19,285 sales in November 2012, according to San Diego-based DataQuick.

Last month’s sales were 19.8 percent below the average number of sales – 21,559 – in the month of November. Southland sales haven’t been above average for any particular month in more than seven years. November sales have ranged from a low of 13,173 in November 2007 to high of 31,987 in November 1988.

Foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 6.3 percent of the Southland resale market in November. That was the same as in October and was down from 15.4 percent a year earlier. The October/November foreclosure resale rate was the lowest since it was 5.5 percent in May 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 12.7 percent of Southland resales last month. That was the lowest since October 2008, when it was also 12.7 percent. Last month’s short sale figure was down from an estimated 12.9 percent the month before and down from 26.6 percent a year earlier.

Absentee buyers – mostly investors and some second-home purchasers – bought 26.1 percent of the Southland homes sold last month. That’s the lowest share for any month since it was 25.1 percent in November 2011. Last month’s absentee level was down from a revised 27.1 percent the month before and down from 28.7 percent a year earlier. The absentee share has trended lower almost every month this year since hitting a record 32.4 percent this January. The monthly average since 2000, when the absentee data begin, is 18.5 percent.
emphasis added

Both distress sales and investor buying is declining - and this is dragging down overall sales (plus inventory is still very low).    However conventional sales are up about 25% year-over-year (a positive sign).