by Calculated Risk on 8/16/2010 02:18:00 PM

From the Fed: July 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices

The July survey indicated that, on net, banks had eased standards and terms over the previous three months on loans in some categories, particularly those categories affected by competitive pressures from other banks or from nonbank lenders. While the survey results suggest that lending conditions are beginning to ease, the improvement to date has been concentrated at large domestic banks. Most banks reported that demand for business and consumer loans was about unchanged.
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[commercial real estate] In the July survey, most respondents reported no change in their bank's standards for approving commercial real estate loans.
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[residential real estate] On net, a small fraction of domestic banks reported having eased standards on prime residential mortgage loans; the few respondents that had eased standards were all large banks. The increase in demand over the past few months for prime residential mortgage loans reported by several respondents to the current survey marked a reversal of the net weakening of demand for such loans reported in the April survey.

On residential real estate the pickup in demand was over the last three months (tax credit related) - just wait until Q3.

by Calculated Risk on 8/16/2010 12:13:00 PM

Note: CoreLogic reports the year-over-year change. The headline for this post is for the change from May 2010 to June 2010.

From CoreLogic (formerly First American LoanPerformance): CoreLogic® Home Price Index Increases Decelerate in June

According to the CoreLogic HPI, national home prices, including distressed sales, increased by 1.4 percent in June 2010 compared to June 2009 and increased by 3.7 percent [revised] in May 2010 compared to May 2009. The June 2.3 percentage point deceleration from May is very large by historical standards. The deceleration was most pronounced in more expensive and distressed segments of the market. Excluding distressed sales, year-over-year prices only increased by 0.2 percent in June and May’s non-distressed HPI increased by 0.5 percent.”
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“Home price volatility and collateral risk remain very high. The stabilization phase and policy intervention since the spring of 2009 has run its course. Prices are expected to further moderately decline as the economy remains weak through the fall” said Mark Fleming, chief economist for CoreLogic.

Click on graph for larger image in new window.

This graph shows the national LoanPerformance data since 1976. January 2000 = 100.

The index is up 1.4% over the last year, and off 28% from the peak.

CoreLogic expects prices to "moderately decline" (more negative view than last month). I expect that we will see lower prices on this index later this year and into 2011.

The second graph is an update on the price-to-rent ratio similar to the approach used by Fed economist John Krainer and researcher Chishen Wei in 2004: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

This graph shows the price to rent ratio using the CoreLogic data (January 2000 = 1.0).

This suggests that house prices are much closer to the bottom than the top, but that prices still have a ways to fall on a national basis.

This data is for June and was still impacted by the tax credit. I've been expecting this index to start showing price declines in July as sales collapsed.

by Calculated Risk on 8/16/2010 10:00:00 AM

The National Association of Home Builders (NAHB) reports the housing market index (HMI) was at 13 in August. This is down slightly from 14 in July and below expectations. The record low was 8 set in January 2009, and 13 is very low ...

Note: any number under 50 indicates that more builders view sales conditions as poor than good.

Click on graph for larger image in new window.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the August release for the HMI and the June data for starts (July starts will be released tomorrow).

This shows that the HMI and single family starts mostly move generally in the same direction - although there is plenty of noise month-to-month.

Press release from the NAHB: Builder Confidence Declines In August

Builder confidence in the market for newly built, single-family homes edged down for a third consecutive month in August, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI declined one point to 13, its lowest level since March of 2009.
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“Today’s report reflects single-family home builders’ concerns about current and future economic conditions and about the increasing hesitancy they are seeing among potential home buyers,” added NAHB Chief Economist David Crowe. “It also reflects the frustration that builders are feeling regarding the effects that foreclosed property sales are having on the new-homes market, with 87 percent of respondents reporting that their market has been negatively impacted by foreclosures.”
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Two out of three of the HMI’s component indexes fell in August. The component gauging current sales conditions declined one point to 14, while the component gauging sales expectations for the next six months declined three points to 18. The component gauging traffic of prospective buyers held unchanged at 10.

by Calculated Risk on 8/16/2010 08:31:00 AM

From the NY Fed: Empire State Manufacturing Survey

The Empire State Manufacturing Survey indicates that conditions improved modestly in August for New York manufacturers. The general business conditions index rose 2 points from its July level, to 7.1.
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The new orders index fell below zero for the first time in over a year, dropping 13 points to -2.7—an indication that, on balance, manufacturers saw orders decline slightly.
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Employment indexes were positive and higher than in July, indicating that employment levels and the average workweek expanded in August. The index for number of employees had fallen in June and July, but climbed 6 points, to 14.3, this month.

This was slightly below expectations. The decline in new orders is especially concerning.

by Calculated Risk on 8/15/2010 10:43:00 PM

Here is the summary of last week.

Here is the schedule for this week.

Is the economy threatening retirement plans, or is less spending from those saving for retirement threatening the economy? Probably both ...

This article from the WSJ takes the 2nd view: Another Threat to Economy: Boomers Cutting Back

Low yields present retirees with a difficult choice: Accept the lower income offered by safer bonds, or take the risk of staying in the stock market. Either way, their predicament could put a long-term damper on the consumer spending that typically drives U.S. growth.
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As of 2008, the latest data available, people aged 65 to 74 were spending 12.3% less than they did ten years earlier, in inflation-adjusted terms.

And the job market is tough for older workers too ...

by Calculated Risk on 8/15/2010 06:41:00 PM

Here is the summary of last week.

Here is the schedule for this week.

And some timely thread music ... a new song from Merle Hazard: