by Calculated Risk on 4/15/2015 12:58:00 PM

During the recession, I started following the Sacramento market to look for changes in the mix of houses sold (equity, REOs, and short sales). For some time, not much changed. But over the last 2+ years we've seen some significant changes with a dramatic shift from foreclosures (REO: lender Real Estate Owned) to short sales, and the percentage of total distressed sales declining sharply.

This data suggests healing in the Sacramento market and other distressed markets are showing similar improvement.  Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In March, 12.4% of all resales were distressed sales. This was down from 14.8% last month, and down from 16.3% in March 2014. Since distressed sales happen year round, but conventional sales decline in December and January, the percent of distressed sales bumps up in the winter (seasonal).

The percentage of REOs was at 6.8%, and the percentage of short sales was 5.7%.

Here are the statistics for February.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional (equity) sales that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Active Listing Inventory for single family homes increased 25.1% year-over-year (YoY) in March.  In general the YoY increases have been trending down after peaking at close to 100%, however the YoY increase was larger in March than in February.

Cash buyers accounted for 16.5% of all sales (frequently investors).

Total sales were up 10.6% from March 2014, and conventional equity sales were up 15.8% compared to the same month last year.

Summary: This data suggests a healing market with fewer distressed sales, more equity sales, and less investor buying.

by Calculated Risk on 4/15/2015 10:05:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 56 in April, up from 52 in March. Any number above 50 indicates that more builders view sales conditions as good than poor.

From Reuters: Builder Confidence Rises Four Points in April

Builder confidence in the market for newly built, single-family homes in April rose four points to a level of 56 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.
...
“The HMI component index measuring future sales expectations rose five points in April to its highest level of the year,” said NAHB Chief Economist David Crowe. “This uptick shows builders are feeling optimistic that the housing market will continue to strengthen throughout 2015.”
...
All three HMI components registered gains in April. The component charting sales expectations in the next six months jumped five points to 64, the index measuring buyer traffic increased four points to 41, and the component gauging current sales conditions rose three points to 61.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was above the consensus forecast of 55.

by Calculated Risk on 4/15/2015 09:24:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production decreased 0.6 percent in March after increasing 0.1 percent in February. For the first quarter of 2015 as a whole, industrial production declined at an annual rate of 1.0 percent, the first quarterly decrease since the second quarter of 2009. The decline last quarter resulted from a drop in oil and gas well drilling and servicing of more than 60 percent at an annual rate and from a decrease in manufacturing production of 1.2 percent. In March, manufacturing output moved up 0.1 percent for its first monthly gain since November; however, factory output in January is now estimated to have fallen 0.6 percent, about twice the size of the previously reported decline. The index for mining decreased 0.7 percent in March. The output of utilities fell 5.9 percent to largely reverse a similarly sized increase in February, which was related to unseasonably cold temperatures. At 105.2 percent of its 2007 average, total industrial production in March was 2.0 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.1 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.4% is 1.7% below the 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 decreased 0.6% in March to 105.2. This is 25.6% above the recession low, and 4.4% above the pre-recession peak.

This was below expectations, although much of the decline was due to the "drop in oil and gas well drilling and servicing".

by Calculated Risk on 4/15/2015 07:01:00 AM

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

Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 10, 2015. ...

The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. ... The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 7 percent higher than the same week one year ago.
...
“Purchase mortgage application volume last week increased to its highest level since July 2013, spurred on by still low mortgage rates and strengthening housing markets,” said Mike Fratantoni, MBA’s Chief Economist. “Purchase volume has increased for three straight weeks now on a seasonally adjusted basis.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.87 percent from 3.86 percent, with points increasing to 0.38 from 0.27 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index.

2014 was the lowest year for refinance activity since year 2000.

2015 will probably see a little more refinance activity than in 2014, but not a large refinance boom.

The second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is 7% higher than a year ago.

by Calculated Risk on 4/14/2015 07:17:00 PM

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, NY Fed Empire State Manufacturing Survey for April. The consensus is for a reading of 7.0, up from 6.9 last month (above zero is expansion).

• At 9:15 AM, the Fed will release Industrial Production and Capacity Utilization for March. The consensus is for a 0.3% decrease in Industrial Production, and for Capacity Utilization to decrease to 78.7%.

• At 10:00 AM, the April NAHB homebuilder survey. The consensus is for a reading of 55, up from 53 last month. Any number above 50 indicates that more builders view sales conditions as good than poor.

• At 2:00 PM, the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

Economist Tom Lawler sent me the preliminary table below of short sales, foreclosures and cash buyers for a few selected cities in March.

On distressed: Total "distressed" share is down in most of these markets mostly due to a decline in short sales (Mid-Atlantic is up year-over-year because of an increase foreclosure as lenders work through the backlog).

Short sales are down in these areas.

The All Cash Share (last two columns) is declining 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
	Mar-15	Mar-14	Mar-15	Mar-14	Mar-15	Mar-14	Mar-15	Mar-14
Las Vegas	8.3%	12.9%	9.3%	11.7%	17.6%	24.6%	32.4%	43.1%
Reno**	5.0%	14.0%	8.0%	7.0%	13.0%	21.0%
Phoenix							27.5%	33.1%
Minneapolis	2.9%	4.9%	12.2%	21.9%	15.1%	26.8%
Mid-Atlantic	4.7%	7.7%	14.0%	10.9%	18.8%	18.5%	18.2%	19.9%
Tucson							32.0%	33.5%
Chicago (city)					21.9%	28.8%
Northeast Florida					31.0%	39.1%
Hampton Roads					22.7%	24.5%
Toledo							32.7%	40.7%
Des Moines							16.3%	20.8%
Toledo							32.7%	40.7%
Georgia***							23.2%	33.8%
Tucson							32.0%	33.5%
Richmond VA MSA			11.9%	18.1%			18.0%	21.1%
Memphis*			15.0%	17.6%
*share of existing home sales, based on property records **Single Family Only ***GAMLS