by Calculated Risk on 3/17/2014 05:56:00 PM

Economist Tom Lawler sent me the updated table below of short sales, foreclosures and cash buyers for several selected cities in February.

From CR: Total "distressed" share is down in all of these markets, mostly because of a sharp decline in short sales.

Foreclosures are down in most of these areas too, although foreclosures are up a little in Las Vegas (there was a state law change that slowed foreclosures dramatically in Nevada at the end of 2011 - so it isn't a surprise that foreclosures are up a little year-over-year).  Orlando also saw a slight increase in foreclosures.

The All Cash Share (last two columns) is declining in most areas year-over-year.  As investors pull back, the share of all cash buyers will probably continue to decline.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	Feb-14	Feb-13	Feb-14	Feb-13	Feb-14	Feb-13	Feb-14	Feb-13
Las Vegas	14.0%	37.9%	12.0%	10.2%	26.0%	48.1%	46.8%	59.5%
Reno**	13.0%	37.0%	7.0%	13.0%	20.0%	50.0%
Phoenix	5.3%	15.0%	8.3%	13.8%	13.7%	28.8%	33.6%	46.1%
Sacramento	12.3%	30.3%	7.0%	13.5%	19.3%	43.8%	26.5%	39.5%
Minneapolis	5.0%	11.3%	25.3%	32.7%	30.3%	43.9%
Mid-Atlantic	7.7%	13.6%	10.9%	12.1%	18.6%	25.6%	21.4%	22.8%
Orlando	9.7%	22.0%	24.6%	24.0%	34.3%	46.0%	48.2%	56.3%
California *	9.6%	22.4%	8.2%	17.9%	17.8%	40.3%
Bay Area CA*	7.0%	20.2%	5.4%	13.9%	12.4%	34.1%	26.8%	32.4%
So. California*	9.4%	22.4%	6.8%	16.2%	16.2%	38.6%	30.9%	36.9%
Chicago	12.0%	NA	33.0%	NA	45.0%	49.0%
Hampton Roads					30.7%	34.2%
Charlotte					10.5%	15.9%
Naples					12.2%	22.1%
Georgia***							35.3%	NA
Toledo							41.8%	46.7%
Des Moines							22.4%	21.9%
Peoria							30.9%	26.8%
Tucson							37.0%	39.5%
Pensacola							41.0%	36.1%
Memphis*			22.1%	29.0%
Springfield IL**			17.9%	26.4%
*share of existing home sales, based on property records **Single Family Only ***GAMLS

by Calculated Risk on 3/17/2014 04:29:00 PM

The researchers compared currently lending to lending standards in 2001. They found that if lending standards were similar to 2001 (prior to the loose bubble lending), then there would have been up to 1.2 million more purchase mortgage in 2012.

From Laurie Goodman, Jun Zhu, and Taz George: Where Have All the Loans Gone? The Impact of Credit Availability on Mortgage Volume

Credit availability for mortgage purchases has been very tight over the post-crisis period. In fact, over the past decade, the number of mortgages originated to purchase a home declined dramatically. In this commentary, we examine this decline and explain how limited access to credit has contributed to the drop. We estimate the number of “missing loans” that would have been made if credit availability were at normal levels—we find this number could be as high as 1.2 million units annually....

Based on the upper bound calculation, 1.22 million fewer purchase mortgages were made in 2012 than would have been the case had credit availability remained at 2001 levels. ... This is, however, likely to overstate the impact of tighter credit. We calculate a lower bound estimate, using a similar methodology, to be 273,000 missing 2012 first lien purchase loans. ... The truth is somewhere between these estimates, but likely closer to the upper bound because many prospective borrowers with FICO scores well above 660 are affected by the tight credit box and credit overlays.

by Calculated Risk on 3/17/2014 12:44:00 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 January - February data will be released this week).  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 5.5% 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 3/17/2014 10:00:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 47 in March, up from 46 in February. Any number below 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Treads Water in March

Builder confidence in the market for newly-built, single-family homes rose one point to 47 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.
...
“A number of factors are raising builder concerns over meeting demand for the spring buying season,” said NAHB Chief Economist David Crowe. “These include a shortage of buildable lots and skilled workers, rising materials prices and an extremely low inventory of new homes for sale.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The index’s components were mixed in March. The component gauging current sales conditions rose one point to 52 and the component measuring buyer traffic increased two points to 33. The component gauging sales expectations in the next six months fell one point to 53.

The three-month moving averages for regional HMI scores all fell in March. The Northeast dropped three points to 35, the Midwest fell three points to 53, the South posted a four-point decline to 49 and the West registered a two-point drop to 61.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was the second  consecutive reading below 50.

by Calculated Risk on 3/17/2014 09:15:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production increased 0.6 percent in February after having declined 0.2 percent in January. In February, manufacturing output rose 0.8 percent and nearly reversed its decline of 0.9 percent in January, which resulted, in part, from extreme weather. The gain in factory production in February was the largest since last August. The output of utilities edged down 0.2 percent following a jump of 3.8 percent in January, and the production at mines moved up 0.3 percent. At 101.6 percent of its 2007 average, total industrial production in February was 2.8 percent above its level of a year earlier. The capacity utilization rate for total industry increased in February to 78.8 percent, a rate that is 1.3 percentage points below its long-run (1972–2013) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.6 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.8% is still 1.3 percentage points below its average from 1972 to 2012 and below the pre-recession level of 80.8% 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 increased 0.6% in February to 101.6. This is 21% above the recession low, and slightly above the pre-recession peak.

The monthly change for both Industrial Production and Capacity Utilization were above expectations.