Monday: ISM Mfg, Construction Spending

Weekend:
• Schedule for Week of July 31, 2016

Monday:
• At 10:00 AM ET: ISM Manufacturing Index for July. The consensus is for the ISM to be at 53.2, unchanged from June. The ISM manufacturing index indicated expansion at 53.2% in June. The employment index was at 50.4%, and the new orders index was at 57.0%.

• Also at 10:00 AM: Construction Spending for June. The consensus is for a 0.6% increase in construction spending.

• At 2:00 PM, the July 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve.

From CNBC: Pre-Market Data and Bloomberg futures: S&P are up 3 and DOW futures are up 38 (fair value).

Oil prices were down over the last week with WTI futures at $41.34 per barrel and Brent at $43.25 per barrel.  A year ago, WTI was at $47, and Brent was at $53 - so prices are down 15% to 20% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.13 per gallon (down over $0.55 per gallon from a year ago).

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/Eb-jtyxUZrw/monday-ism-mfg-construction-spending.html

CoStar: Commercial Real Estate prices increased in June

Here is a price index for commercial real estate that I follow. 

From CoStar: Commercial Property Price Growth Rebounds In Second Quarter

CRE PRICE INDICES RESUMED HEALTHY GROWTH IN SECOND QUARTER. After experiencing modest growth in the first quarter of 2016 in the wake of global economic uncertainty, both CCRSI’s national composite price indices ended the second quarter of 2016 on a stronger note as investor confidence rebounded. The value-weighted U.S. Composite Index, which is influenced by the sale of high-quality, larger assets, advanced by 3.3%, while the equal-weighted U.S. Composite Index, which reflects the more numerous sales of smaller properties, rose 2.1% in the second quarter of 2016.

HOWEVER, THE PACE OF PRICE GROWTH HAS MODERATED ON AN ANNUAL BASIS. While price growth resumed in both composite indices during the second quarter of 2016, the rate of increase has dropped into the single digits as of June 2016 from a double-digit annual pace in the 12-month periods ending in June 2014 and June 2015. This suggests the pace of price growth may continue to plateau in 2016 as the current cycle advances. ...
emphasis added

Click on graph for larger image.

This graph from CoStar shows the the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index indexes.

The value-weighted index increased 1.4% in June and is up 9.0% year-over-year.

The equal-weighted index increased 1.3% in May and is up 6.8% year-over-year.

Note: These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/5UezLpKdaO8/costar-commercial-real-estate-prices.html

Schedule for Week of July 31, 2016

The key report this week is the July employment report on Friday.

Other key indicators include the June ISM manufacturing and non-manufacturing indexes, July auto sales, and the June trade deficit.

----- Monday, Aug 1st -----
10:00 AM: ISM Manufacturing Index for July. The consensus is for the ISM to be at 53.2, unchanged from 53.2 in June.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion at 53.2% in June. The employment index was at 50.4%, and the new orders index was at 57.0%.

10:00 AM: Construction Spending for June. The consensus is for a 0.6% increase in construction spending.

2:00 PM ET: the July 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve.

----- Tuesday, Aug 2nd -----
8:30 AM: Personal Income and Outlays for June. The consensus is for a 0.3% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.1%.

All day: Light vehicle sales for July. The consensus is for light vehicle sales to increase to 17.3 million SAAR in July, from 16.6 million in June (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the June sales rate.

----- Wednesday, Aug 3rd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for July. This report is for private payrolls only (no government). The consensus is for 165,000 payroll jobs added in July, down from 172,000 added in June.

10:00 AM: the ISM non-Manufacturing Index for July. The consensus is for index to decrease to 56.0 from 56.5 in June.

----- Thursday, Aug 4th -----
8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 265 thousand initial claims, down from 266 thousand the previous week.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for June. The consensus is a 1.8% decrease in orders.

----- Friday, Aug 5th -----
8:30 AM: Employment Report for July. The consensus is for an increase of 185,000 non-farm payroll jobs added in July, down from the 287,000 non-farm payroll jobs added in June.

The consensus is for the unemployment rate to decrease to 4.8%.

This graph shows the year-over-year change in total non-farm employment since 1968.

In June, the year-over-year change was 2.45 million jobs.

A key will be the change in wages.

8:30 AM: Trade Balance report for June from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through May. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is for the U.S. trade deficit to be at $43.0 billion in June from $41.1 billion in May.

3:00 PM: Consumer credit from the Federal Reserve.  The consensus is for a $15.5 billion increase in credit.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/tyDJc2Ns9PU/schedule-for-week-of-july-31-2016.html

July 2016: Unofficial Problem Bank list declines to 196 Institutions

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for July 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for July 2016. During the month, the list fell from 203 institutions to 196 after seven removals. Assets dropped by $1.7 billion to an aggregate $58.9 billion. A year ago, the list held 290 institutions with assets of $83.9 billion.

Actions have been terminated against Ponce de Leon Federal Bank, Bronx, NY ($721 million); Pilot Bank, Tampa, FL ($230 million); Native American Bank, National Association, Denver, CO ($83 million); Georgia Heritage Bank, Dallas, GA ($74 million); and Century Bank of Florida, Tampa, FL ($74 million).

Finding merger partners were Tidelands Bank, Mount Pleasant, SC ($464 million Ticker: TDBK) and Calumet County Bank, Brillion, WI ($89 million).

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/VAsNLXa0zGY/july-2016-unofficial-problem-bank-list.html

Lawler: Homebuilder Summary Table for Q2 2016

CR Note: Housing economist Tom Lawler sent me these summary results for several large publicly-traded builders who have reported results for last quarter.

Lawler notes: CalAtlantic was formed with the merger of Standard Pacific and Ryland, completed in October 2015. The Q2/2015 statistics for CalAtlantic are pro forma statistics for Standard Pacific and Ryland combined. Also, while MDC Holdings has not yet released its “official” results for Q2/2016, it did release preliminary estimates of selected operations statistics for the quarter, which are shown above.

	Net Orders			Settlements			Average Closing Price (000s)
Qtr. Ended:	616	6/15	% Chg	6/16	6/15	% Chg	6/16	6/15	% Chg
D.R. Horton	11,714	10,398	12.7%	10,739	9,856	9.0%	$290	290	0.2%
Pulte Group	5,697	5,118	11.3%	4,772	3,744	27.5%	$367	332	10.5%
NVR	4,324	3,796	13.9%	3,581	3,175	12.8%	$379	384	-1.5%
Cal Atlantic	3,921	3,954	-0.8%	3,484	3,119	11.7%	$447	427	4.7%
Beazer Homes	1,490	1,524	-2.2%	1,364	1,293	5.5%	$330	318	4.0%
Meritage Homes	2,073	1,986	4.4%	1,950	1,556	25.3%	$408	380	7.4%
MDC Holdings	1,647	1,481	11.2%	1,272	1,126	13.0%	$448	410	9.3%
M/I Homes	1,354	1,100	23.1%	1,042	919	13.4%	$362	340	6.5%
SubTotal	32,220	29,357	9.8%	28,204	24,788	13.8%	$354	$340	4.0%

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/Pjkh7itHSbI/lawler-homebuilder-summary-table-for-q2.html

Restaurant Performance Index declined in June

Here is a minor indicator I follow from the National Restaurant Association: RPI continues to show mixed results

As a result of softer sales and a dampened outlook among operators, the National Restaurant Association’s Restaurant Performance Index (RPI) declined for the second consecutive month. The RPI stood at 100.3 in June, down 0.3 percent.

“The uneven trend that the RPI followed during the first half of 2016 was due in large part to choppy same-store sales and customer traffic results,” said Hudson Riehle, senior vice president of research for the National Restaurant Association.

“This uncertainly likely contributed to the Expectations Index dipping to a six-month low in June. However, it’s hard to draw definitive conclusions in either direction right at this point, because the indicators continue to send mixed signals,” Riehle said.
emphasis added

Click on graph for larger image.

The index decreased to 100.3 in June, down from 100.6 in May. (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/PxKX32g1y7A/restaurant-performance-index-declined.html

Q2 GDP: Investment Slump

The graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy.

In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So the usual pattern - both into and out of recessions is - red, green, blue.

The dashed gray line is the contribution from the change in private inventories.

Click on graph for larger image.

There was an investment slump in Q2, even though consumer spending was strong (PCE increased at 4.2% annual rate in Q2).

Residential investment (RI) decreased at a 6.1% annual rate in Q2.  Equipment investment decreased at a 3.5% annual rate, and investment in non-residential structures decreased at a 7.9% annual rate.

On a 3 quarter trailing average basis, RI (red) is positive,  equipment (green) and nonresidential structures (blue) are negative.

Nonresidential investment in structures typically lags the recovery, however investment in energy and power provided a boost early in this recovery - and is now causing a decline.  I'll post more on the components of non-residential investment once the supplemental data is released.

I expect investment to pick up going forward (except for maybe energy and power), and for the economy to grow at a steady pace.


The second graph shows residential investment as a percent of GDP.

Residential Investment as a percent of GDP has generally been increasing, but is only just above the bottom of the previous recessions - and I expect RI to continue to increase for the next few years.

I'll break down Residential Investment into components after the GDP details are released.

Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

The third graph shows non-residential investment in structures, equipment and "intellectual property products".  Investment in equipment - as a percent of GDP - has been mostly moving sideways.  Investment in nonresidential structures - as a percent of GDP - has been moving down recently due to less investment in energy and power.

Although there was an investment slump in Q2 - no worries - residential investment will pickup (still very low), and non-residential (except energy) will also pickup.  Investment in inventory has been negative for five consecutive quarters, and that should make a positive contribution soon.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/iHu5N1XXTfk/q2-gdp-investment-slump.html

Chicago PMI declines in July, Final July Consumer Sentiment at 90.0

Chicago PMI: July Chicago Business Barometer Down 1 Point to 55.8

The MNI Chicago Business Barometer fell 1 point to 55.8 in July from the 1½-year high of 56.8 in June, led by a fall in New Orders. Smaller declines were seen in Production and Order Backlogs, which offset a strong increase in the Employment component.

The Barometer’s three-month average, though, which provides a better picture of the underlying trend in economic activity, rose to 54.0 from 52.2 in Q2, the highest since February 2015.
...
“Demand and output softened somewhat in July following a solid showing in June but still outperformed the very weak results seen earlier in the year. On the upside, it was the first time since January 2015 that all five Barometer components were above 50. Looking at the three-month average, the Chicago Business Barometer so far suggests economic activity running at a healthier pace in Q3,” said Lorena Castellanos, senior economist at MNI Indicators.
emphasis added

This was above the consensus forecast of 54.0.


Click on graph for larger image.

The final University of Michigan consumer sentiment index for July was at 90.0, up from the preliminary reading 89.5, and down from 93.5 in June. Read more at http://www.calculatedriskblog.com/#pJ9c42Ql0QpF5rzW.99:

"Although confidence strengthened in late July, for the month as a whole the Sentiment Index was still below last month's level mainly due to increased concerns about economic prospects among upper income households. The Brexit vote was spontaneously mentioned by record numbers of households with incomes in the top third (23%), more than twice as frequently as among households with incomes in the bottom two-thirds (11%). Given the prompt rebound in stock prices as well as the tiny direct impact on U.S. trade, it is surprising that concerns about Brexit remained nearly as high in late July as immediately following the Brexit vote. While concerns about Brexit are likely to quickly recede, weaker prospects for the economy are likely to remain. Uncertainties surrounding global economic prospects and the presidential election will keep consumers more cautious in their expectations for future economic growth. "
emphasis added

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/oQ_71o9aWaw/chicago-pmi-declines-in-july-final-july.html

BEA: Real GDP increased at 1.2% Annualized Rate in Q2

From the BEA: Gross Domestic Product: Second Quarter 2016 (Advance Estimate)

Real gross domestic product increased at an annual rate of 1.2 percent in the second quarter of 2016, according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 percent (revised).
...
The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

The acceleration in real GDP growth in the second quarter reflected an acceleration in PCE, an upturn in exports, and smaller decreases in nonresidential fixed investment and in federal government spending. These were partly offset by a larger decrease in private inventory investment, and downturns in residential fixed investment and in state and local government spending.
emphasis added

The advance Q1 GDP report, with 1.2% annualized growth, was below expectations of a 2.6% increase.

Personal consumption expenditures (PCE) increased at a 4.2% annualized rate in Q2, up from 1.6% in Q1.   Residential investment (RI) decreased at a 6.1% pace. Equipment investment decreased at a 3.5% annualized rate, and investment in non-residential structures decreased at a 7.9% pace (due to the recent decline in oil prices).

The key negatives were investment in inventories (subtracted 1.16 percentage points), fixed investment (subtracted 0.52 percentage point), and government spending (subtracted 0.16 percentage points).

I'll have more later ...

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/DuRm1wQn_6Y/bea-real-gdp-increased-at-12-annualized.html

Friday: Q2 GDP, Chicago PMI, Consumer Sentiment

Note: As part of the GDP release tomorrow, the BEA will also release the annual revision. From the BEA:

The annual revision of the national income and product accounts, covering the first quarter of 2013 through the first quarter of 2016, will be released along with the "advance" estimate of GDP for the second quarter of 2016 on July 29. For more information, see “Preview of the Upcoming Annual NIPA Revision” included in the May Survey of Current Business article on “GDP and the Economy”.

Friday:
• At 8:30 AM ET, Gross Domestic Product, 2nd quarter 2016 (Advance estimate). The consensus is that real GDP increased 2.6% annualized in Q2. The annual revision will also be released.

• At 9:45 AM, Chicago Purchasing Managers Index for July. The consensus is for a reading of 54.0, down from 56.8 in June.

• At 10:00 AM, University of Michigan's Consumer sentiment index (final for July). The consensus is for a reading of 90.6, up from the preliminary reading 89.5, and down from 93.5 in June.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/_SHYXlrUfAY/friday-q2-gdp-chicago-pmi-consumer.html

Fannie Mae: Mortgage Serious Delinquency rate declined in June, Lowest since May 2008

Fannie Mae reported today that the Single-Family Serious Delinquency rate declined in June to 1.32%, down from 1.38% in May. The serious delinquency rate is down from 1.66% in June 2015.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

This is the lowest rate since May 2008.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Click on graph for larger image

Although the rate is generally declining, the "normal" serious delinquency rate is under 1%. 

The Fannie Mae serious delinquency rate has fallen 0.34 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until the second half of 2017.

Note: Freddie Mac reported yesterday.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/Cddx5aTz2O8/fannie-mae-mortgage-serious-delinquency.html

Zillow Forecast: Expect slightly slower YoY Growth in June for the Case-Shiller Indexes

The Case-Shiller house price indexes for May were released Tuesday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Zillow: June Case-Shiller Forecast: Expect a Third Straight Monthly Decline in 10- and 20-City Indices

May Case-Shiller data showed modestly slower growth largely in line with expectations, with seasonally adjusted home prices falling for two months in a row on the 10- and 20-city indices – a rare occurrence since the recovery began in earnest. Looking ahead, Zillow’s June Case-Shiller forecast calls for more of the same, with seasonally adjusted prices in the 10- and 20-city indices set to fall for a third straight month, while annual growth stays largely flat.

The June Case-Shiller National Index is expected to grow 5.1 percent year-over-year and 0.2 percent month-to-month (seasonally adjusted). We expect the 10-City Index to grow 4.1 percent year-over-year and to fall 0.2 percent (SA) from May. The 20-City Index is expected to grow 5 percent between June 2015 and June 2016, and fall 0.1 percent (SA) from May.

Zillow’s June Case-Shiller forecast is shown in the table below. These forecasts are based on today’s May Case-Shiller data release and the June 2016 Zillow Home Value Index (ZHVI). The June Case-Shiller Composite Home Price Indices will not be officially released until Tuesday, August 30.

The year-over-year change for the 20-city index will probably be slightly lower in the June report than in the May report.  The change for the National index will probably be about the same.



from
http://feedproxy.google.com/~r/CalculatedRisk/~3/2cJBl-b8RdY/zillow-forecast-expect-slightly-slower.html

Kansas City Fed: Regional Manufacturing Activity "Declined Modestly" in July

From the Kansas City Fed: Tenth District Manufacturing Activity Declined Modestly

The Federal Reserve Bank of Kansas City released the July Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined modestly.

“Factories in our region reported a slight pullback in July following modest expansion in June,” said Wilkerson. “However, their expectations for future activity continued to increase.”
...
The month-over-month composite index was -6 in July, down from 2 in June and -5 in May ... The employment index inched down to -5 ...
emphasis added

This was the last of the regional Fed surveys for July.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through July), and five Fed surveys are averaged (blue, through July) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through June (right axis).

It seems likely the ISM manufacturing index will show expansion again in July.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/U3z7ZbBN5Ks/kansas-city-fed-regional-manufacturing.html

HVS: Q2 2016 Homeownership and Vacancy Rates

The Census Bureau released the Residential Vacancies and Homeownership report for Q2 2016.

This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn't rely on the absolute numbers.  The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.

Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate decreased to 63.1% in Q2, from 63.5% in Q1.

I'd put more weight on the decennial Census numbers - and given changing demographics, the homeownership rate is probably close to a bottom.

The HVS homeowner vacancy was unchanged at 1.7% in Q2. 

Once again - this probably shows the general trend, but I wouldn't rely on the absolute numbers.

The rental vacancy rate declined to 6.7% in Q2.

I think the Reis quarterly survey (large apartment owners only in selected cities) is a much better measure of the rental vacancy rate - and the Reis survey is showing rental vacancy rates have started to increase.

The quarterly HVS is the most timely survey on households, but there are many questions about the accuracy of this survey.

Overall this suggests that vacancies have declined significantly, and my guess is the homeownership rate is probably close to the bottom.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/4A2h7tsdmW0/hvs-q2-2016-homeownership-and-vacancy.html

10 Secret Words To Add To Your Home’s Listing

Making your listing the most attractive option to potential buyers can be the only thing standing between a quick closing and a house that lingers too long on the market. Even in seller’s markets like New York, NY, and San Francisco, CA, the competition is clamoring to attract the increasingly discerning buyer. To keep on […]

The post 10 Secret Words To Add To Your Home’s Listing appeared first on Trulia's Blog.

from
http://www.trulia.com/blog/how-to-write-home-listing-tips/

Weekly Initial Unemployment Claims increased to 264,000

The DOL reported:

In the week ending July 23, the advance figure for seasonally adjusted initial claims was 266,000, an increase of 14,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 253,000 to 252,000. The 4-week moving average was 256,500, a decrease of 1,000 from the previous week's revised average. The previous week's average was revised down by 250 from 257,750 to 257,500.

There were no special factors impacting this week's initial claims. This marks 73 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The previous week was revised down.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims declined to 256,500.

This was close to the consensus forecast. The low level of claims suggests relatively few layoffs.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/hUTJvOt1gec/weekly-initial-unemployment-claims_28.html

Thursday: Unemployment Claims

Based on the FOMC statement, the likelihood of a rate hike in September (or November or December) has increased. Most analysts talk about possible rate hikes in September or December (ignoring November) because of the scheduled press conferences. However Fed Chair Janet Yellen has made it clear that all meetings are "live", so November is possible too. Some people think the Fed will wait until after the election, but I doubt that is a factor being considered.

Back to the FOMC statement: The first paragraph was about as upbeat as back in April when many analysts thought a rate hike in June was possible. So now the key is the data (the minutes will also be interesting). There are two employment reports (the July and August reports) between now and the meeting on September 20th and 21st.  Also the advance and second estimate of Q2 GDP will be released, and PCE for June and July, and CPI for July and August will be released before the September meeting.  If the data is solid, the FOMC might raise rates in September.

If the data is disappointing - as has happened so many times before - the FOMC will wait.

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 264 thousand initial claims, up from 253 thousand the previous week.

• At 10:00 AM, the Q2 Housing Vacancies and Homeownership from the Census Bureau.

• At 11:00 AM, Kansas City Fed Survey of Manufacturing Activity for July.  This is the last of the regional Fed surveys for July.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/ZJLSk6k1_aU/thursday-unemployment-claims.html

Freddie Mac: Mortgage Serious Delinquency rates declined in June, Lowest since July 2008

Freddie Mac reported that the Single-Family serious delinquency rate decreased in June to 1.08% from 1.11% in May.  Freddie's rate is down from 1.53% in June 2015.

This is the lowest rate since July 2008.

Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

Click on graph for larger image

Although the rate is generally declining, the "normal" serious delinquency rate is under 1%. 

The Freddie Mac serious delinquency rate has fallen 0.45 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will be below 1% in two or three months.

Note: Fannie Mae will report in the next few days.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/tlEdijOgFeQ/freddie-mac-mortgage-serious.html

FOMC Statement: No Change to Policy, Upgrade Economy, Risks "diminished"

FOMC Statement:

Information received since the Federal Open Market Committee met in June indicates that the labor market strengthened and that economic activity has been expanding at a moderate rate. Job gains were strong in June following weak growth in May. On balance, payrolls and other labor market indicators point to some increase in labor utilization in recent months. Household spending has been growing strongly but business fixed investment has been soft. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will strengthen. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook have diminished. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent. emphasis added

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/A8RPkPfymE4/fomc-statement-no-change-to-policy.html

NAR: Pending Home Sales Index increased Slightly in June, up 1.0% year-over-year

From the NAR: Pending Home Sales Marginally Rise in June

Pending home sales were mostly unmoved in June, but did creep slightly higher as supply and affordability constraints prevented a bigger boost in activity from mortgage rates that lingered near all-time lows through most of the month, according to the National Association of Realtors®. Increases in the Northeast and Midwest were offset by declines in the South and West.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, inched 0.2 percent to 111.0 in June from 110.8 in May and is now 1.0 percent higher than June 2015 (109.9). With last month's minor improvement, the index is now at its second highest reading over the past 12 months, but is noticeably down from this year's peak level in April (115.0).
...
The PHSI in the Northeast advanced 3.2 percent to 96.0 in June, and is now 1.7 percent above a year ago. In the Midwest the index increased 0.8 percent to 108.9 in June, and is now 1.6 percent higher than June 2015.

Pending home sales in the South decreased modestly (0.6 percent) to an index of 125.9 in June but are still 1.8 percent higher than last June. The index in the West declined 1.3 percent in June to 101.3, and is now 1.8 percent below a year ago.
emphasis added

This was below expectations of a 1.3% increase for this index.  Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in July and August.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/fZpRJdC_VRQ/nar-pending-home-sales-index-increased.html

MBA: "Mortgage Applications Decrease in Latest Weekly Survey"

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

Mortgage applications decreased 11.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 22, 2016.

... The Refinance Index decreased 15 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier to the lowest level since February 2016. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 12 percent higher than the same week one year ago.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.69 percent from 3.65 percent, with points unchanged at 0.36 (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 since 1990.

Refinance activity has increased this year since rates have declined.

However it would take another significant move down in mortgage rates to see a large increase in refinance activity.


The second graph shows the MBA mortgage purchase index.

The purchase index is "12 percent higher than the same week one year ago".

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/ELAIPwadqZY/mba-mortgage-applications-decrease-in_27.html

Wednesday: FOMC Announcement, Pending Home Sales, Durable Goods

Here was my FOMC preview: FOMC Preview: No Rate Hike, Possibly Preparing for September Rate Hike

From Merrill Lynch on the FOMC:

The July meeting of the Federal Open Market Committee (FOMC) is unlikely to result in any policy changes by the Fed, in our view. In fact, we do not expect the Fed to give any signals about September or subsequent meetings, maintaining its data dependent approach to a gradual hiking cycle. Markets will likely be looking for any clues of how this week's meeting will set up Fed policy decisions at subsequent meetings this year. Our base case remains that the Fed will next hike in December, but a September move cannot be completely ruled out. We believe the bar to hike then, however, is relatively high: the US activity data would need to remain solid, inflation indicators generally would need to point higher, and global risks would have to settle down to a dull rumble.

Our base case of a more optimistic tone to the July statement, given better data on net, should lead at most to a modest increase in market-implied probabilities of hikes this year. More substantive language changes are unlikely, in our view, but would be more market moving if they occur. Perhaps the biggest risk to market pricing will come not from this week's statement, but from the minutes in three weeks' time. Recall the sharp market reaction when the April minutes revealed significant support on the FOMC for a possible June rate hike. There is the potential for a similarly surprising amount of FOMC interest in a September hike this time around.

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, Durable Goods Orders for May from the Census Bureau. The consensus is for a 1.3% decrease in durable goods orders.

• At 10:00 AM, Pending Home Sales Index for June. The consensus is for a 1.3% increase in the index.

• At 2:00 PM, FOMC Meeting Announcement. No change in policy is expected at this meeting.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/0-WSNVmHrgk/wednesday-fomc-announcement-pending.html

Real Prices and Price-to-Rent Ratio in May

Here is the earlier post on Case-Shiller: Case-Shiller: National House Price Index increased 5.0% year-over-year in May

The year-over-year increase in prices is mostly moving sideways now around 5%. In May, the index was up 5.0% YoY.

In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $275,000 today adjusted for inflation (37%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).

It has been almost ten years since the bubble peak.  In the Case-Shiller release this morning, the National Index was reported as being 2.8% below the bubble peak.   However, in real terms, the National index is still about 17.1% below the bubble peak.

Nominal House Prices


The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through May) in nominal terms as reported.

In nominal terms, the Case-Shiller National index (SA) is back to November 2005 levels, and the Case-Shiller Composite 20 Index (SA) is back to June 2005 levels, and the CoreLogic index (NSA) is back to June 2005.

Real House Prices

The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

CPI less Shelter has declined over the last two years pushing up real house prices.

In real terms, the National index is back to January 2004 levels, the Composite 20 index is back to October 2003, and the CoreLogic index back to November 2003.

In real terms, house prices are back to late 2003 levels.

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: 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.

Here is a similar graph using the Case-Shiller National, Composite 20 and CoreLogic House Price Indexes.

This graph shows the price to rent ratio (January 1998 = 1.0).

On a price-to-rent basis, the Case-Shiller National index is back to July 2003 levels, the Composite 20 index is back to June 2003 levels, and the CoreLogic index is back toMay 2003.

In real terms, and as a price-to-rent ratio, prices are back to late 2003  - and the price-to-rent ratio maybe moving a little more sideways now.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/Caz7ANdrZbM/real-prices-and-price-to-rent-ratio-in.html

Neighbor Disputes: 7 Ways To Keep The Peace

It could be a scene right out of The Big Bang Theory, Friends, or, really, any sitcom where a lot of the takes occur in an apartment complex or housing community: neighbor conflict. Even the likable Dunphys in Modern Family struggle with how to tell their new Los Angeles, CA — area neighbors that they’re […]

The post Neighbor Disputes: 7 Ways To Keep The Peace appeared first on Trulia's Blog.

from
http://www.trulia.com/blog/neighbor-notes-neighbor-disputes-ways-to-keep-the-peace/

A few Comments on June New Home Sales

The new home sales report for June was strong at 592,000 on a seasonally adjusted annual rate basis (SAAR) - the highest since early 2008 - and combined sales for March, April and May were revised up by 22 thousand SAAR.

Sales were up 25.4% year-over-year (YoY) compared to June 2015. And sales are up 10.1% year-to-date compared to the same period in 2015.

Earlier: New Home Sales increased to 592,000 Annual Rate in June, Highest since 2008.


Click on graph for larger image.

This graph shows new home sales for 2015 and 2016 by month (Seasonally Adjusted Annual Rate).  Sales to date are up 10.1% year-over-year, mostly because of the solid growth in Q2.

There will probably be solid year-over-year growth in Q3 this year too.

Overall  I expected lower growth this year, in the 4% to 8% range.  Slower growth seemed likely this year because Houston (and other oil producing areas) will have a problem this year.

And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years.

The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through June 2016. This graph starts in 1994, but the relationship had been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.

I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales.

However, this assumes that the builders will offer some smaller, less expensive homes. If not, then the gap will persist.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/3CKIyEhfsrA/a-few-comments-on-june-new-home-sales.html

The 10 Best Cities For Sun Worshippers

We’re full swing into summer, and it’s hot out: Eggs are frying on pavement, cookies are baking on car dashboards, and we’re hearing the term “heat wave” on the regular from our weather people. Even if you’re doing everything you can to make like a vampire and avoid direct sunlight, plenty of people out there love […]

The post The 10 Best Cities For Sun Worshippers appeared first on Trulia's Blog.

from
http://www.trulia.com/blog/sunniest-cities-in-the-us-sun-worshippers/

New Home Sales increased to 592,000 Annual Rate in June, Highest since 2008

The Census Bureau reports New Home Sales in June were at a seasonally adjusted annual rate (SAAR) of 592 thousand.

The previous three months were revised up by a total of 22 thousand (SAAR).

"Sales of new single-family houses in June 2016 were at a seasonally adjusted annual rate of 592,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.5 percent above the revised May rate of 572,000 and is 25.4 percent above the June 2015 estimate of 472,000."
emphasis added

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Even with the increase in sales since the bottom, new home sales are still fairly low historically.

The second graph shows New Home Months of Supply.

The months of supply decreased in June to 4.9 months.

The all time record was 12.1 months of supply in January 2009.

This is now in the normal range (less than 6 months supply is normal).

"The seasonally adjusted estimate of new houses for sale at the end of June was 244,000. This represents a supply of 4.9 months at the current sales rate."

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In June 2016 (red column), 54 thousand new homes were sold (NSA). Last year 44 thousand homes were sold in June.

The all time high for June was 115 thousand in 2005, and the all time low for May was 28 thousand in June 2010 and June 2011.

This was above expectations of 562,000 sales SAAR in June, and prior months were revised up.   A solid report.  I'll have more later today.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/qUYl7dcUMvg/new-home-sales-increased-to-592000.html