by Calculated Risk on 2/19/2014 08:30:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in January were at a seasonally adjusted annual rate of 880,000. This is 16.0 percent below the revised December estimate of 1,048,000 and is 2.0 percent below the January 2013 rate of 898,000.

Single-family housing starts in January were at a rate of 573,000; this is 15.9 percent below the revised December figure of 681,000. The January rate for units in buildings with five units or more was 300,000.
emphasis added

Building Permits:
Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 937,000. This is 5.4 percent below the revised December rate of 991,000, but is 2.4 percent above the January 2013 estimate of 915,000.

Single-family authorizations in January were at a rate of 602,000; this is 1.3 percent below the revised December figure of 610,000. Authorizations of units in buildings with five units or more were at a rate of 309,000 in January.

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) decreased in January (Multi-family is volatile month-to-month).

Single-family starts (blue) also decreased in January.

The second graph shows total and single unit starts since 1968.

 The second graph shows the huge collapse following the housing bubble, and that housing starts have been increasing after moving sideways for about two years and a half years.

This was below expectations of 950 thousand starts in January.  Note: Starts for December were revised up to 1.048 million from 999 thousand.    I'll have more later.

by Calculated Risk on 2/19/2014 07:01:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 14, 2014. ...

The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier and is at its lowest level since September of 2011. ...

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.50 percent from 4.45 percent, with points decreasing to 0.26 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.45 percent from 4.40 percent, with points decreasing to 0.11 from 0.14 (including the origination fee) for 80 percent LTV loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index.

The refinance index is down 68% from the levels in May 2013.

With the mortgage rate increases, refinance activity will be significantly lower in 2014 than in 2013.


The second graph shows the MBA mortgage purchase index.  

The 4-week average of the purchase index is now down about 15% from a year ago - and the weekly purchase index is at the lowest level since September 2011.

The purchase index is probably understating purchase activity because small lenders tend to focus on purchases, and those small lenders are underrepresented in the purchase index - but this is still very weak.

Note: Interesting that Jumbo rates are still below conforming rates.

by Calculated Risk on 2/18/2014 07:07:00 PM

A reminder of a friendly bet I made with NDD on housing starts in 2014:

If starts or sales are up at least 20% YoY in any month in 2014, [NDD] will make a $100 donation to the charity of Bill's choice, which he has designated as the Memorial Fund in honor of his late co-blogger, Tanta. If housing permits or starts are down 100,000 YoY at least once in 2014, he make a $100 donation to the charity of my choice, which is the Alzheimer's Association.

Of course, with the terms of the bet, we could both "win" at some point during the year.

In January 2013, starts were at a 898 thousand seasonally adjusted annual rate (SAAR). For me to win, starts would have to be up 20% or at 1.078 million SAAR in January (very unlikely due to the weather). For NDD to win, starts would have to fall to 798 thousand SAAR. NDD could also "win" if permits fall to 815 thousand SAAR from 915 thousand SAAR in January 2013.

Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, Housing Starts for January. Total housing starts were at 999 thousand (SAAR) in December. Single family starts were at 667 thousand SAAR in December. The consensus is for total housing starts to decrease to 950 thousand (SAAR) in January.

• Also at 8:30 AM, the Producer Price Index for January. The consensus is for a 0.2% decrease in producer prices (and 0.2% increase in core PPI).

• During the day, the AIA's Architecture Billings Index for January (a leading indicator for commercial real estate).

• At 2:00 PM, the FOMC Minutes for the Meeting of January 28-29, 2014.

by Calculated Risk on 2/18/2014 02:14:00 PM

This morning, the NY Fed released their Q4 Household Debt and Credit Report. The report showed that total household debt is 9.1% below the Q3 2008 peak. Mortgage debt is down 13.4% from the peak, and Home Equity revolving debt is down 25.9%. This is nominal dollars.

If we look at real dollars (inflation adjusted using CPI from the BLS), then total debt is down 16.9% since 2008, mortgage debt down 20.7%, home equity debt down 32.6%, auto debt down 12.2%, and credit card debt down 27.9%. Only student debt is at a new high (up 77% since Q3 2008 in nominal terms).

The following graph (not from the NY Fed) shows household debt in real terms.

Click on graph for larger image.

This household deleveraging was a key reason the recovery was slow, and now it appears the deleveraging is over.

This is a significant decline in total household debt, especially for mortgage, home equity, and credit card debt (student debt has increased).

by Calculated Risk on 2/18/2014 11:00:00 AM

Here is the Q4 report: Household Debt and Credit Report

Aggregate consumer debt increased in the fourth quarter by $241 billion, the largest quarter to quarter increase seen since the third quarter of 2007. As of December 31, 2013, total consumer indebtedness was $11.52 trillion, up by 2.1% from its level in the third quarter of 2013. The four quarters ending on December 31, 2013 were the first since late 2008 to register an increase ($180 billion or 1.6%) in total debt outstanding. Nonetheless, overall consumer debt remains 9.1% below its 2008Q3 peak of $12.68 trillion.

Mortgages, the largest component of household debt, increased 1.9% during the fourth quarter of 2013. Mortgage balances shown on consumer credit reports stand at $8.05 trillion, up by $152 billion from their level in the third quarter. Furthermore, calendar year 2013 saw a net increase of $16 billion in mortgage balances, ending the four year streak of year over year declines. Balances on home equity lines of credit (HELOC) dropped by $6 billion (1.1%) and now stand at $529 billion. Non-housing debt balances increased by 3.3%, with gains of $18 billion in auto loan balances, $53 billion in student loan balances, and $11 billion in credit card balances.
emphasis added

Click on graph for larger image.

Here are two graphs from the report:

The first graph shows aggregate consumer debt increased in Q4.

This suggests households (in the aggregate) may be near the end of deleveraging.  If so, this is a significant change that started mid-2013.

The second graph shows the percent of debt in delinquency. The percent of delinquent debt is steadily declining, although there is still a large percent of debt 90+ days delinquent (Yellow, orange and red). 

From the NY Fed:

Delinquency rates improved for most loan types in 2013Q4. As of December 31, 7.1% of outstanding debt was in some stage of delinquency, compared with 7.4% in 2013Q3. About $820 billion of debt is delinquent, with $580 billion seriously delinquent (at least 90 days late or “severely derogatory”).

Delinquency transition rates for current mortgage accounts are near pre-crisis levels, with 1.48% of current mortgage balances transitioning into delinquency.

Here is the press release from the NY Fed: New York Fed Report Shows Households Adding Debt

There are a number of credit graphs at the NY Fed site.