by Calculated Risk on 2/18/2014 10:00:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 46 in February, down from 56 in January. Any number below 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Poor Weather Puts a Damper on Builder Confidence in February

Unusually severe weather conditions across much of the nation along with continued concerns over the cost and availability of labor and lots resulted in builder confidence in the market for newly-built, single-family homes to post a 10-point drop to 46 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

“Significant weather conditions across most of the country led to a decline in buyer traffic last month,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “Builders also have additional concerns about meeting ongoing and future demand due to a shortage of lots and labor.”

“Clearly, constraints on the supply chain for building materials, developed lots and skilled workers are making builders worry,” said NAHB Chief Economist David Crowe. “The weather also hurt retail and auto sales and this had a contributing effect on demand for new homes.”
...
All three of the major HMI components declined in February. The component gauging current sales conditions fell 11 points to 51, the component gauging sales expectations in the next six months declined six points to 54 and the component measuring buyer traffic dropped nine points to 31.

Looking at three-month moving averages for regional HMI scores, the West was unchanged at 63 in February while the Midwest registered a one-point decline to 57, the South registered a three-point decline to 53 and the Northeast posted a four-point decline to 38.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was the first reading below 50 since May 2013.

by Calculated Risk on 2/18/2014 08:45:00 AM

From the NY Fed: Empire State Manufacturing Survey

The February 2014 Empire State Manufacturing Survey indicates that business conditions improved marginally for New York manufacturers. The general business conditions index fell eight points, but remained positive at 4.5. The new orders index fell to about zero, indicating that orders were flat, and the shipments index declined thirteen points to 2.1. ...

Employment indexes were little changed from last month and pointed to a modest improvement in labor market conditions. The number of employees index was 11.3, indicating a modest increase in employment levels, and the average workweek index inched up to 3.8, suggesting slightly longer workweeks.
...
Indexes for the six-month outlook continued to convey fairly strong optimism about future business conditions. The index for expected general business conditions rose to 39.0, and the index for future new orders climbed six points to 45.3, its highest level in two years.
emphasis added

This is the first of the regional surveys for February.  The general business conditions index was below the consensus forecast of a reading of 9.0, and indicates slower expansion in February.  The internals were mixed, with new orders flat after hitting a two year high in January, and the employment index indicated modest improvement.

by Calculated Risk on 2/17/2014 09:08:00 PM

First, Don Lee of the LA Times interviewed San Francisco Fed President John Williams: Fed district chief expects central bank's stimulus cuts to continue

Would another jobs report next month like January's payroll growth of 113,000 be enough for you or the committee to put a hold on the so-called tapering of the Fed's bond-buying stimulus?

If there was another employment report similar to what we saw in January, I personally would not see that as being inconsistent with my view of the economic recovery. I wouldn't call for a change in tapering.

The Fed may not be on a "preset course" to taper QE3, but it sounds like it would take a significant change in the data for the Fed to slow down.  There is much more in the interview.

Tuesday:
• At 8:30 AM ET, the NY Fed Empire Manufacturing Survey for February. The consensus is for a reading of 9.8, down from 12.5 in January (above zero is expansion).

• At 10:00 AM, the February NAHB homebuilder survey. The consensus is for a reading of 56, unchanged from January. Any number above 50 indicates that more builders view sales conditions as good than poor.

• At 11:00 AM, the Q4 2013 Quarterly Report on Household Debt and Credit will be released by the Federal Reserve Bank of New York.

by Calculated Risk on 2/17/2014 06:44:00 PM

Here is another weekly update on housing inventory ...

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then usually peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data was for December).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years.

Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

Inventory in 2014 is now 6.6% above the same week in 2013 (red is 2014, blue is 2013).

Inventory is still very low, but this increase in inventory should slow house price increases. 

Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess is inventory will be up 10% to 15% year-over-year by the end of 2014 (inventory would still be below normal).

by Calculated Risk on 2/17/2014 05:44:00 PM

Just an update ... during the recession, I wrote about the troubles in Las Vegas and included a chart of visitor and convention attendance: Lost Vegas.

Since then Las Vegas visitor traffic recovered to a new record high in 2012.  However visitor traffic was down slightly in 2013.

Convention attendance is still about 18% below the peak level in 2006.  Here is the data from the Las Vegas Convention and Visitors Authority.  

Click on graph for larger image.

The blue bars are annual visitor traffic (left scale), and the red line is convention attendance (right scale). 

There were 39,668,221 visitors to Las Vegas in 2013, just below the record 39,727,022 visitors  in 2012.  The pre-recession high was 39,196,761 in 2007.

Convention attendance was at 5,107,416 in 2013, still well below the record of 6,307,961 in 2006.

In general, the gamblers are back ... but the conventions are still lagging behind.