by Calculated Risk on 5/04/2015 11:09:00 AM

This is a quarterly index that was released last week by the the National Association of Home Builders (NAHB). This index is similar to the overall housing market index (HMI). The NAHB started this index in Q4 2008 (during the housing bust), so the readings were initially very low

From the NAHB: Builder Confidence in the 55+ Housing Market Remains Positive in the First Quarter

Builder confidence in the single-family 55+ housing market remains in positive territory for the first quarter of 2015, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today. Compared to the previous quarter, the single-family index edged down slightly by one point to 58, which is the fourth consecutive quarter above 50.

Two of the three components of the 55+ single-family HMI posted increases from the previous quarter: present sales increased one point to 64 and expected sales for the next six months rose three points to 67, while traffic of prospective buyers dropped eight points to 40.
...
“The strong eight-point surge in the 55+ HMI survey’s index for multifamily rental production is a positive sign, and a contrast to the relatively low attitudes builders are currently expressing towards 55+ multifamily condos,” said NAHB Chief Economist David Crowe. “This suggests that there is a significant number of 55+ households who desire to live in dense multifamily settings but not to own, at least not right away.”
emphasis added

Click on graph for larger image.

This graph shows the NAHB 55+ Single Family HMI through Q1 2015.  And reading above 50 indicates that more builders view conditions as good than as  poor.  The index declined slightly in Q1, and increased in Q1 2015 to 58 from 47 in Q1 2014. 

There are two key drivers in addition to the improved economy: 1) there is a large cohort moving into the 55+ group, and 2) the homeownership rate typically increases for people in the 55 to 70 year old age group. So demographics should be favorable for the 55+ market.

by Calculated Risk on 5/04/2015 08:06:00 AM

Black Knight Financial Services (BKFS) released their Mortgage Monitor report for March today. According to BKFS, 4.70% of mortgages were delinquent in March, down from 5.36% in February. BKFS reported that 1.55% of mortgages were in the foreclosure process, down from 2.13% in March 2014.

This gives a total of 6.25% delinquent or in foreclosure. It breaks down as:

• 1,409,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 971,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 782,000 loans in foreclosure process.

For a total of ​​3,162,000 loans delinquent or in foreclosure in March. This is down from 3,840,000 in March 2014.

Typically there is a large decline in the March delinquency rate, but the decline this year was especially large.

Click on graph for larger image.

From Black Knight:

March’s 12.2 percent drop in delinquency rates was the largest monthly decline in 9 years

Delinquencies were down approximately 15 percent year-over-year

While seasonal decreases in March are typical (they’ve been seen in each of the past 10 years), this year’s drop was the largest since the 16.2 percent decline seen in March of 2006

Also from Black Knight on negative equity:

Black Knight analyzed the latest available data on the nation’s negative equity situation. As explained by Ben Graboske, senior vice president, Black Knight Data and Analytics, the trend remains one of overall improvement – though negative equity distribution varies considerably depending upon geographical location and home values within a given market.
...
“Our most recent data shows that just over 8 percent of borrowers are currently underwater on their mortgages, representing a nearly 30 percent reduction in the negative equity rate since last year. We also observed that 29 percent of underwater borrowers are seriously delinquent on their mortgages and that borrowers in negative equity positions make up 77 percent of all active foreclosures. In fact, one of every three borrowers in active foreclosure has a current loan-to-value ratio of 150 or more, meaning they owe 50 percent more than their homes are worth." [said Graboske.]

Just over 4 million borrowers (8.08 percent of active mortgage universe) are in a negative equity position as of January 2015

Last year this population stood at 5.7 million borrowers (11.4 percent), marking a reduction of nearly 29 percent, or 1.6 million fewer underwater borrowers in 2015

The current population of underwater borrowers is just a quarter of the negative equity population at its peak in early 2011 (when 30 percent of borrowers were in negative equity positions)

There is much more in the mortgage monitor.

by Calculated Risk on 5/03/2015 08:53:00 PM

Looking for wages ... from Greg Ip at the WSJ: In Labor vs. Capital, Workers Gain a Slight Edge

Hopefully there will be some small sign of a pickup in wages in the April employment report (to be released Friday).

Monday:
• Early, the Black Knight March Mortgage Monitor report. This is a monthly report of mortgage delinquencies and other mortgage data.

• At 10:00 AM ET, Manufacturers' Shipments, Inventories and Orders (Factory Orders) for March. The consensus is a 2.1% increase in orders.

• At 2:00 PM: the April 2015 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve.

Weekend:
• Schedule for Week of May 3, 2015

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures and DOW futures are down slightly (fair value).

Oil prices were up over the last week with WTI futures at $59.09 per barrel and Brent at $66.48 per barrel.  A year ago, WTI was at $100, and Brent was at $109 - so, even with the recent increases, prices are down 40%+ year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are up to $2.63 per gallon (down just over $1.00 per gallon from a year ago).

If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 5/03/2015 10:15:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 25 April

The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 19-25 April 2015, according to data from STR, Inc.

In year-over-year measurements, the industry’s occupancy increased 4.3 percent to 69.8 percent. Average daily rate increased 6.5 percent to finish the week at US$120.07. Revenue per available room for the week was up 11.0 percent to finish at US$83.86.
emphasis added

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotels are now in the Spring travel period and business travel is solid.

Click on graph for larger image.

The red line is for 2015, dashed orange is 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.  Purple is for 2000.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and solidly above last year.

Right now 2015 is even above 2000 (best year for hotels) - and 2015 will probably be the best year on record for hotels.  Note the strong gains in RevPAR too.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 5/02/2015 03:06:00 PM

A technical note from housing economist Tom Lawler:

Earlier this week the Census Bureau released its “Residential Vacancies and Homeownership” Report (commonly referred to as the Housing Vacancy Survey, or HVS) for the first quarter of 2015, and while the results were not as “eye-popping” as those in the previous quarter, they were nevertheless – if reflective of actual housing trends – stunning.

The HVS estimate of the US homeownership rate continued its recent rapid descent last quarter, and the 1.2 percentage point decline over the last four quarters is the largest four-quarter decline since the HVS began. The YOY declines in the HVS HOR’s were especially steep for householders 44 years old or younger.

On the housing inventory front, the HVS estimate of the number of occupied homes (or households) declined by 407,000 in the first quarter following the all-time record 1.337 million jump in the fourth quarter of last year. After adjusting for normal seasonal patterns, the HVS household estimate fell by about 60,000 last quarter after jumping by a record 1.17 million in the previous quarter.

Here are some summary stats from the latest report.

Selected Statisitcs, Census Housing Vacancy Survey
	Q1/2014	Q2/2014	Q3/2014	Q4/2014	Q1/2015	YOY Change
Rental Vacancy Rate	8.3%	7.5%	7.4%	7.0%	7.1%	-1.2%
Homeowner Vacancy Rate	2.0%	1.9%	1.8%	2.0%	1.9%	-0.1%
Gross Vacancy Rate	13.8%	13.6%	13.5%	12.6%	13.0%	-0.8%
Homeownership Rate	64.8%	64.7%	64.4%	64.0%	63.7%	-1.1%
Homeownership Rate SA	65.0%	64.7%	64.3%	64.0%	63.8%	-1.2%
Housing Stock (000')	133,087	133,209	133,331	133,453	133,575	488
Occupied Housing Stock	114,762	115,127	115,310	116,647	116,240	1,478
Owner	74,404	74,458	74,240	74,606	74,018	-386
Renter	40,357	40,669	41,070	42,041	42,222	1,865
Homeownership Rate by Age of Householder
< 35	36.2%	35.9%	36.0%	35.3%	34.6%	-1.6%
35-44	60.7%	60.2%	59.1%	58.8%	58.4%	-2.3%
45-54	71.4%	70.7%	70.1%	70.5%	70.1%	-1.3%
55-64	76.4%	76.4%	76.6%	75.8%	75.8%	-0.6%
65+	79.9%	80.1%	80.0%	79.5%	79.0%	-0.9%

The fourth quarter jump in the HVS estimate of total households was eye-popping, but there are several reasons to question the magnitude of the jump. First, in the fourth quarter of 2014 the HVS estimate of the number of “seasonal” housing units fell by a record 453,000 from the previous quarter, only to jump back up by 385,000 in the subsequent quarter. Since the HVS “controls” it housing units by category to independent estimates of the overall housing stock, this “strange” swing in the number of “seasonal” housing units may have artificially boosted the occupied unit category in the fourth quarter.

Second, beginning in April 2014 the HVS began “phasing in” in new sample which may have “artificially” increased household estimate gains since the early part of 2014. Here is an excerpt from the HVS “Sources and Accuracy” document.

“Beginning in April 2014, a new sample is being phased in over a 16-month period. The methods used to select the sample households for the survey are evaluated after each decennial census. Based on these evaluations, the design of the survey is modified and systems are put in place to provide the sample for the following decade. The previous decennial revision incorporated new information from Census 2000 and was complete as of July 2005. The design for the entire decade was selected from the 2000 based sample. The current revision incorporates new information from Census 2010 and will be complete in July 2015. The new sample is based on the Master Address File (MAF) compiled during the 2010 Census and will use annual selections from the MAF instead of the once a decade sample selection used previously.”

Comparisons between Decennial Census results and the HVS clearly indicate that the HVS estimates have not reliably reflected overall US housing trends in a number of important respects, including (but not limited to) overall vacancy rates (overstated), homeownership rates (overstated), and the distributed of households by age (overstated share of younger householders). These HVS errors widened from 2000 to 2010. It is not clear how much of the HVS estimation problem has been related to its “sampling frame” and how much is related to “non-sampling” errors. To the extent that the new sample better reflects the actual characteristics of the US housing stock, however, then one would expect that the phasing-in of the new sample would, among other things, result in (1) faster than “actual” household growth; (2) faster than “actual” growth in renter households relative to owner households; and (3) larger than “actual” declines in the homeownership rate.

My understanding is that Census “phases in” the new sample over such a long period of time so that there is not a “really big” discontinuous” shift it the CPS/HVS time series. If there are huge differences between the old and new samples, however, then even with such a “phasing in” there can be discontinuities in time series estimates. It would be nice, however, if Census would show a comparison of HVS results using the old sample and HVS results using the new sample so that analysts could assess the “sampling” vs. “non-sampling” errors of HVS results themselves.

While recognizing that the overall change in owner-occupied vs. renter-occupied housing units as estimated by the HVS over the last year may not reflect “actual” changes, I thought some folks might be interested in HVS-based estimates of owner- vs. renter-occupied housing units by units in structure. The HVS does not actually publish such estimates, but in detailed tables HVS shows estimates of (1) the distribution of rental and owner housing units (renter occupied plus for rent or owner occupied plus for sale only) by units in structure, and (2) vacancy rates by units in structure for renter and owner housing units. As such, one can produce the implied HVS occupied renter and owner housing units by units in structure. The HVS includes one-unit manufactured/mobile housing units in its one-unit structure category, so this category is not the same as what analysts generally consider “single-family” housing units. Here is a comparison of the first quarter of 2015 with the first quarter of 2014.

HVS-Based Estimates of Owner and Renter Occupied Housing Units by Units in Structure (000's)
	Q1/2014	Q1/2015	Change
Renter-Occupied Total	40,357	42,222	1,865
One-Unit	15,831	16,572	741
2-4 Units	7,753	8,090	337
5-9 Units	5,051	5,300	249
10+ Units	11,722	12,260	538
Owner-Occupied Total	74,404	74,018	-386
One-Unit	70,920	70,518	-402
2-4 Units	1,335	1,347	12
5-9 Units	574	563	-11
10+ Units	1,575	1,590	15

HVS estimates suggest that the trend toward more single-family units being rented rather than owned continued over the last year. Compared to the fourth quarter of 2005, HVS estimates suggest that the number of owner-occupied one-unit homes fell by about 1.969 million units, while the number of renter-occupied one-unit housing units increased by about 4.345 million units.