Tuesday: ISM Mfg, Construction Spending, Vehicle Sales

From Matthew Graham at Mortgage News Daily: Mortgage Rates End October Just Off 5-Month Highs

Mortgage Rates moved sideways to slightly lower for the 2nd day in a row, after hitting the highest levels in 5 months on Thursday. While the positive progress is better than a sharp stick in the eye, it nonetheless leaves us right in line with highs for all practical purposes. In fact, virtually all lenders are putting out quotes today that are indistinguishable from Thursday's for most prospective borrowers. The most prevalently-quoted conventional 30yr fixed rate remains 3.625% on top tier scenarios, with a handful of the most aggressive lenders at 3.5%.
emphasis added

Tuesday:
• At 10:00 AM ET, ISM Manufacturing Index for October. The consensus is for the ISM to be at 51.6, up from 51.5 in September. The ISM manufacturing index indicated expansion at 51.5% in September. The employment index was at 49.7%, and the new orders index was at 55.1%.

• At 10:00 AM, Construction Spending for September. The consensus is for a 0.6% increase in construction spending.

• All day: Light vehicle sales for October. The consensus is for light vehicle sales to decrease to 17.6 million SAAR in October, from 17.7 million in  September (Seasonally Adjusted Annual Rate).

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/wlSSGhVjZYQ/tuesday-ism-mfg-construction-spending.html

Q3 2016 GDP Details on Residential and Commercial Real Estate

The BEA has released the underlying details for the Q3 advance GDP report this morning.

The BEA reported that investment in non-residential structures increased at a 5.4% annual pace in Q3.  This is a turnaround from recent quarters when non-residential investment declined due to less investment in petroleum exploration. Investment in petroleum and natural gas exploration still declined in Q3, from a $47.1 billion annual rate in Q2 to a $42.2 billion annual rate in Q3 - and is down from $149 billion in Q3 2014 (down by more than two-thirds).

Excluding petroleum, non-residential investment in structures increased at a 10% annual rate in Q3.

Click on graph for larger image.

The first graph shows investment in offices, malls and lodging as a percent of GDP. Office, mall and lodging investment has increased a little recently, but from a very low level.

Investment in offices increased in Q3, and is up 28% year-over-year -increasing from a very low level - and is now above the lows for previous recessions (as percent of GDP).

Investment in multimerchandise shopping structures (malls) peaked in 2007 and was up year-over-year.   The vacancy rate for malls is still very high, so investment will probably stay low for some time.

Lodging investment increased further in Q3, and with the hotel occupancy rate near record levels, it is likely that hotel investment will increase further in the near future.  Lodging investment is up 23% year-over-year.

My guess is office and hotel investment growth will start to slow (office vacancies are still high, although hotel occupancy is near record levels).  But investment growth has been very strong this year.

The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes).

Home improvement was the top category for five consecutive years following the housing bust ... but now investment in single family structures has been back on top for three years and will probably stay there for a long time.

However - even though investment in single family structures has increased from the bottom - single family investment is still very low, and still below the bottom for previous recessions as a percent of GDP. I expect further increases over the next few years.

Investment in single family structures was $237 billion (SAAR) (about 1.3% of GDP), and was down in Q3 compared to Q2, but is down slightly year-over-year.

Investment in home improvement was at a $223 billion Seasonally Adjusted Annual Rate (SAAR) in Q2 (about 1.1% of GDP), and is up 9% year-over-year.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/o4Lxtk94Wog/q3-2016-gdp-details-on-residential-and.html

Dallas Fed: Regional Manufacturing Activity Increases in October

From the Dallas Fed: Texas Manufacturing Activity Increases Again, but at a Slower Pace

Texas factory activity increased again in October, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, posted a fourth consecutive positive reading but moved down to 6.7. This suggests output grew but at a slower pace this month. ...
...
The general business activity index has been negative for nearly two years, although it continued to push closer to positive territory in October, coming in at -1.5.
...
Labor market measures indicated flat employment levels and slightly shorter workweek length. The employment index came in at 0.2, suggesting little change in headcounts in October. The hours worked index edged down to -1.8. ...
emphasis added

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

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

It seems likely the ISM manufacturing index will show expansion again in October, and the consensus is for a reading of 51.6.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/0iTmDP5KfMM/dallas-fed-regional-manufacturing.html

Is Renovating Cheaper Than A Teardown And New Build? (The Answer Might Surprise You)

Renovating your home could be just the thing you need to make it truly yours. But be careful: This decision could lead you down a never-ending (and stealthily expensive) home improvement rabbit hole. Once you’ve turned your kitchen from drab to fab, for example, your family room now seems out of place, the living room looks […]

The post Is Renovating Cheaper Than A Teardown And New Build? (The Answer Might Surprise You) appeared first on Trulia's Blog.

from
https://www.trulia.com/blog/renovating-cheaper-teardown-new-build-answer-might-surprise/

Pay Up! How Renters With Roommates Should Divvy Up Expenses

Having a roommate or two can help you handle the financial burdens of renting, because you don’t need to shoulder the total cost of your living expenses. Splitting rent with a roommate also can help you choose a better location that you couldn’t afford on your own — for instance, a Federal Hill apartment in […]

The post Pay Up! How Renters With Roommates Should Divvy Up Expenses appeared first on Trulia's Blog.

from
https://www.trulia.com/blog/splitting-rent-expenses-with-roommates/

Black Knight: House Price Index up 0.3% in August, Up 5.3% year-over-year

Note: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight, Zillow, FHFA, FNC and more). Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.

From Black Knight: Black Knight Home Price Index Report: August 2016 Transactions U.S. Home Prices Up 0.3 Percent for the Month; Up 5.3 Percent Year-Over-Year

• August’s 5.3 percent annual home price appreciation (HPA) continues a trend of very stable growth, with seven of the last eight months seeing the same rate of annual HPA

• At $266K, the U.S. is now within just 0.7 percent of a new national peak and up over 33 percent from the market’s bottom

• Nine states saw negative monthly price movement, led by South Carolina, North Dakota, Virginia, Connecticut and Missouri, all down 0.3 percent from July

• Home prices in nine of the nation’s 20 largest states and nine of the 40 largest metros hit new peaks

The year-over-year increase in this index has been about the same for the last year.

Note that house prices are close to the bubble peak in nominal terms, but not in real terms (adjusted for inflation).

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/rrIMSbFPPaM/black-knight-house-price-index-up-03-in.html

Personal Income increased 0.3% in September, Spending increased 0.5%

The BEA released the Personal Income and Outlays report for September:

Personal income increased $46.7 billion (0.3 percent) in September according to estimates released today by the Bureau of Economic Analysis ... Personal consumption expenditures (PCE) increased $61.0 billion (0.5 percent).
...
Real PCE increased 0.3 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

On inflation: The PCE price index increased 1.2 percent year-over-year due to the sharp decline in oil prices (This was up from 1.0% year-over-year in August). The core PCE price index (excluding food and energy) increased 1.7 percent year-over-year in September (the same as in August).

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/uyXemJY6Zvk/personal-income-increased-03-in.html

Sunday Night Futures: Gasoline Prices up Slightly Year-over-year

Weekend:
• Schedule for Week of Oct 30, 2016

• "How do I protect myself if Trump is elected?"

Monday:
• At 8:30 AM ET, Personal Income and Outlays for September. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 9:45 AM, the Chicago Purchasing Managers Index for October. The consensus is for a reading of 54.3, up from 54.2 in September.

• At 10:30 AM, the Dallas Fed Survey of Manufacturing Activity for October. This is the last of the regional Fed surveys for October.

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

Oil prices were down over the last week with WTI futures at $48.70 per barrel and Brent at $49.71 per barrel.  A year ago, WTI was at $47, and Brent was at $48 - so oil prices are UP slightly year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.20 per gallon - a year ago prices were $2.18 per gallon - so gasoline prices are up slightly year-over-year.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/ffIU1D3ze4w/sunday-night-futures-gasoline-prices-up.html

"How do I protect myself if Trump is elected?"

Quite a few readers have asked me this question. My usual answer is that I expect Ms. Clinton to be elected President, and that the expansion will continue.

I've spoken to several key analysts and economists, and for their forecasts, all are assuming Ms. Clinton will be the next President (my forecasts also assume a Clinton presidency).  So if Trump is elected, expect some market volatility as forecasts are changed.  As Merrill Lynch recently noted:

"As our strategists have noted, the initial reaction to a potential Trump victory would likely be a risk-off event in the markets, which we think could end up delaying the Fed from hiking in December."

That is just a guess at the short term reaction.  The general rule is don't invest based on your political views. 

However policy does matter for investing and the economy.  As an example, it was obvious to invest in oil when George W. Bush became President.  And insurance companies like United Healthcare and Aetna seemed like good bets with a President Obama.

Another example of policy is the deregulation of banks (and the anti-regulation attitude of the Bush administration) as part of the housing bubble story.

But what about with Mr. Trump?  He has said he'd "build a wall" along the border with Mexico, renegotiate all trade deals, cut taxes on high income earners, repeal Obamacare and more.   But it is unclear what he'd actually do as President.   As an example, no one really thinks a wall will be built along the entire border (maybe sections of a wall - and Mexico wouldn't pay for it).

Repealing the ACA - without a replacement - would lead to many millions of Americans without health insurance.  And those with preexisting conditions would be uninsurable.   This seems politically unlikely (without a replacement policy), but if it happens, sell those health insurance companies.

Right now it is hard to guess what policy would look like with Mr. Trump (Trump doesn't seem to understand policy issues - like his ignorant comments on the VAT while talking about trade with Mexico).  One key concern with Trump is the potential for a trade war - and that could happen almost without warning.

Long time readers remember when I used to write about the impact of policy (both good and bad), but there hasn't been much policy to discuss for the last few years.  If Trump is elected, I'd expect a GOP sweep, and then I'll be writing frequently about policy again.  Since Trump is at war with the data (he rejects data that doesn't fit his views), I don't expect evidence based policy proposals - and that almost always means bad results.

Until we see the actual policy proposals, it is hard to predict the impact.  I will not predict a recession just because Trump is elected, but I do think the economy would perform better under Clinton than Trump.

Also, the words of a President matter.  Mr Trump has been reckless and irresponsible with his comments, and that would probably continue. One absurd comment could send the markets into a tailspin (and that could happen at any time).   That should make investors more cautious (as an example, I'm recommending that my home builder friends ease back on their spec building if Trump is elected).

In conclusion: I expect Ms. Clinton to be elected and I'm currently taking no action to protect myself against the risks of a Trump presidency.    The risks are real, but I think the odds of Trump winning are very low.  If the unimaginable happens, I'll be writing about when to head to the bunker.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/pszBmuz2ZoY/how-do-i-protect-myself-if-trump-is.html

October 2016: Unofficial Problem Bank list declines to 177 Institutions

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

Here is the unofficial problem bank list for October 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for October 2016.  During the month, the list fell from 177 institutions to 173 after five removals and one addition.  Assets dropped by $562 million to an aggregate $54.9 billion.  A year ago, the list held 264 institutions with assets of $79.2 billion.

Actions have been terminated against Horry County State Bank, Loris, SC ($383 million  Ticker: HCFB) and Heritage Community Bank, Greeneville, TN ($89 million).  Finding merger partners were Landmark Community Bank, National Association, Isanti, MN ($80 million); Citizens State Bank, Kingsland, GA ($56 million); and Home Savings Bank, Jefferson City, MO ($24 million).  Added this month was The First National Bank of Lacon, Lacon, IL ($70 million).

In a change, the OCC released an update on its enforcement action activity today, the last Friday of the month.  Historically, the OCC has issued its update on the first Friday following the 15th of the month.  While the FDIC provides a release on the last Friday of the month as well; however, it only includes action changes for the preceding month, so their information has a longer lag time.  Conversely, the Federal Reserve releases individual action changes as they occur instead of waiting to accumulate them in a monthly release.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/vWZj3M2jcKc/october-2016-unofficial-problem-bank.html

Schedule for Week of Oct 30, 2016

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

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

The FOMC meets on Tuesday and Wednesday, and no change to policy is expected.

----- Monday, Oct 31st -----
8:30 AM ET: Personal Income and Outlays for September. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the Core PCE price index to increase 0.1%.

9:45 AM: Chicago Purchasing Managers Index for October. The consensus is for a reading of 54.3, up from 54.2 in September.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for October. This is the last of the regional Fed surveys for October.

----- Tuesday, Nov 1st -----
10:00 AM: ISM Manufacturing Index for October. The consensus is for the ISM to be at 51.6, up from 51.5 in September.

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

The ISM manufacturing index indicated expansion at 51.5% in September. The employment index was at 49.7%, and the new orders index was at 55.1%.

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

All day: Light vehicle sales for October. The consensus is for light vehicle sales to decrease to 17.6 million SAAR in October, from 17.7 million in  September (Seasonally Adjusted Annual Rate).

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

----- Wednesday, Nov 2nd -----
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 October. This report is for private payrolls only (no government). The consensus is for 170,000 payroll jobs added in October, up from 154,000 added in September.

2:00 PM: FOMC Meeting Announcement. No change to policy is expected at this meeting.

----- Thursday, Nov 3rd -----
8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 255 thousand initial claims, down from 258 thousand the previous week.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for September. The consensus is a 0.2% increase in orders.

10:00 AM: the ISM non-Manufacturing Index for October. The consensus is for index to decrease to 56.1 from 57.1 in August.

----- Friday, Nov 4th -----
8:30 AM: Employment Report for October. The consensus is for an increase of 178,000 non-farm payroll jobs added in October, up from the 156,000 non-farm payroll jobs added in September.

The consensus is for the unemployment rate to decline to 4.9%.

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

In September, 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 September from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through July. 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 $38.9 billion in September from $40.7 billion in August.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/M9T_Wf36OvE/schedule-for-week-of-oct-30-2016.html

Fannie Mae: Mortgage Serious Delinquency rate unchanged in September

Fannie Mae reported today that the Single-Family Serious Delinquency rate was at 1.24% in September, unchanged from 1.24% in August. The serious delinquency rate is down from 1.59% in September 2015.

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

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 0.35 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% for about 8 more months.

Note: Freddie Mac reported yesterday.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/7RWmhhi4cO4/fannie-mae-mortgage-serious-delinquency.html

Q3 GDP: Investment

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.

Residential investment (RI) decreased at a 6.2% annual rate in Q3.  Equipment investment decreased at a 2.7% annual rate, and investment in non-residential structures increased at a 5.4% annual rate.

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

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, 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 declined a little recently..  Investment in nonresidential structures - as a percent of GDP - had been moving down due to less investment in energy and power, and is now moving sideways.

Still no worries - residential investment will pickup (still very low), and non-residential will also pickup.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/7wQx_lLZwcI/q3-gdp-investment.html

October Consumer Sentiment declines to 87.2

The final University of Michigan consumer sentiment index for October was at 87.2, down from the preliminary estimate of 87.9, and down from 91.2 in September.

The Sentiment Index slipped in October to the same low recorded last September and to the lowest level since October 2014. The October decline was due to less favorable prospects for the national economy, with half of all consumers anticipating an economic downturn sometime in the next five years for the first time since October 2014. Objectively, the probability of a downturn during the next five years is far from zero-this would be the longest expansion in 150 years if it lasted just over half of the five year horizon. Nonetheless, the October rise may simply reflect a temporary bout of uncertainty caused by the election.
emphasis added

Click on graph for larger image.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/2mKtJ5tI-TU/october-consumer-sentiment-declines-to.html

BEA: Real GDP increased at 2.9% Annualized Rate in Q3

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

Real gross domestic product increased at an annual rate of 2.9 percent in the third quarter of 2016, according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.4 percent.
...
he increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and nonresidential fixed investment that were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP growth in the third quarter reflected an upturn in private inventory investment, an acceleration in exports, a smaller decrease in state and local government spending, and an upturn in federal government spending. These were partly offset by a smaller increase in PCE, and a larger increase in imports.
emphasis added

The advance Q1 GDP report, with 2.9% annualized growth, was above expectations of a 2.5% increase.

Personal consumption expenditures (PCE) increased at a 2.1% annualized rate in Q3, down from 4.3% in Q2.   Residential investment (RI) decreased at a 6.2% pace. Equipment investment decreased at a 2.7% annualized rate, and investment in non-residential structures increased at a 5.4% pace.

I'll have more later ...

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/2xWXoxSUJhM/bea-real-gdp-increased-at-29-annualized.html

Goldman: FOMC Preview

A few excerpts from a piece by Goldman Sachs economists Zach Pandl and Jan Hatzius

• We expect the statement following next week’s FOMC meeting to remain relatively upbeat about US growth prospects ... However, the committee is very unlikely to raise the funds rate. ...

• To keep markets on notice for a possible rate hike in December, we expect the statement to indicate that the committee is considering action “at its next meeting”—although this is a close call. The statement will likely again say that risks to the economic outlook are “roughly balanced”.

• A statement along these lines should keep the committee on track to raise the funds rate at the December meeting. We see a 75% chance of an increase, roughly in line with market expectations. The remaining uncertainty relates to incoming economic data and financial conditions ... conditional on decent data and stable markets, a December rate hike looks very likely.

CR note: The next FOMC meeting is next week, on November 1st and 2nd and it seems very unlikely there will be a change in policy at this meeting.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/awu14OwIxzQ/goldman-fomc-preview.html

Friday: GDP

From Goldman Sachs economist Elad Pashtan

Our final Q3 GDP tracking estimate stands at +2.9% (qoq ar), roughly in line with the consensus of forecasts that were updated after the September trade report. We look for a strong boost from net exports, solid consumer spending, a small contribution from capital expenditures, and another (albeit smaller) drag from inventories.

Friday:
• At 8:30 AM ET, Gross Domestic Product, 3rd quarter 2016 (Advance estimate). The consensus is that real GDP increased 2.5% annualized in Q3.

• At 10:00 AM, University of Michigan's Consumer sentiment index (final for October). The consensus is for a reading of 88.5, up from the preliminary reading 87.9.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/y8f9zClG3yk/friday-gdp.html

Freddie Mac: Mortgage Serious Delinquency rate declined slightly in September, Lowest since July 2008

Freddie Mac reported that the Single-Family serious delinquency rate declined in September to 1.02%, down from 1.03% in August.  Freddie's rate is down from 1.41% in September 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 0.39 percentage points over the last year, and at that rate of improvement, the serious delinquency rate could be below 1% next month (October).

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

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/-TAko3HO0sc/freddie-mac-mortgage-serious.html

5 Affordable Upgrades That Won’t Overimprove Your Home

Say you’re living in a starter home. You don’t plan on being there forever, but you also aren’t going anywhere anytime soon. You’d like to make some home improvements, but you’re worried you won’t get much return on your investment when you’re ready to sell. While this thinking could be accurate if you’re planning to […]

The post 5 Affordable Upgrades That Won’t Overimprove Your Home appeared first on Trulia's Blog.

from
https://www.trulia.com/blog/affordable-home-improvement-ideas/

HVS: Q3 2016 Homeownership and Vacancy Rates

The Census Bureau released the Residential Vacancies and Homeownership report for Q3 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 increased to 63.5% in Q3, from 62.9% in Q2.

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 1.8% in Q2. 

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

The rental vacancy rate increased to 6.8% 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 slightly.

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/~3/1Dkcuf8El7I/hvs-q3-2016-homeownership-and-vacancy.html

Kansas City Fed: Regional Manufacturing Activity "Expanded Moderately" in October

From the Kansas City Fed: Tenth District Manufacturing Activity Expanded Moderately

The Federal Reserve Bank of Kansas City released the October 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 expanded again at a moderate pace.

“This was the second consecutive month of rising factory activity in the Tenth District, the first time that has happened in nearly two years,” said Wilkerson. “Much of the improvement recently has been in machinery and fabricated metals manufacturing.”
...
The month-over-month composite index was 6 in October, equal to 6 in September and up from -4 in August ... Most month-over-month indexes improved further in October.  The production index edged higher from 15 to 18, and the shipments, new orders, and order backlog also rose moderately.  The employment index climbed from -3 to 7, its highest level in almost two years.  ...
emphasis added

The Kansas City region was hit hard by the decline in oil prices, and it appears activity is starting to expand again.

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

NAR: Pending Home Sales Index increased 1.5% in September, up 2.4% year-over-year

From the NAR: Pending Home Sales Edge Up in September

Pending home sales shifted higher in September following August's notable dip and are now at their fifth highest level over the past year, according to the National Association of Realtors®. Increases in the South and West outgained declines in the Northeast and Midwest.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew 1.5 percent to 110.0 in September from a slight downward revision of 108.4 in August. With last month's gain, the index is now 2.4 percent higher than last September (107.4) and has now risen year-over-year for 22 of the last 25 months.
...
The PHSI in the Northeast fell 1.6 percent to 96.5 in September, but is still 7.7 percent above a year ago. In the Midwest the index declined modestly (0.2 percent) to 104.6 in September, and is now 1.0 percent lower than September 2015.

Pending home sales in the South rose 1.9 percent to an index of 122.1 in September and are now 1.7 percent higher than last September. The index in the West jumped 4.7 percent in September to 107.3, and is now 4.0 percent above a year ago.
emphasis added

This was above expectations of a 1.0% 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 October and November.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/Mtaf__DrOK4/nar-pending-home-sales-index-increased.html

Weekly Initial Unemployment Claims decrease to 258,000

The DOL reported:

In the week ending October 22, the advance figure for seasonally adjusted initial claims was 258,000, a decrease of 3,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 260,000 to 261,000. The 4-week moving average was 253,000, an increase of 1,000 from the previous week's revised average. The previous week's average was revised up by 250 from 251,750 to 252,000.

There were no special factors impacting this week's initial claims. This marks 86 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

The previous week was revised up.

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 increased to 253,000.

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

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/l850kyNSwSU/weekly-initial-unemployment-claims_27.html

Thursday: Durable Goods, Unemployment Claims, Pending Home Sales and More

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released.  The consensus is for 255 thousand initial claims, down from 260 thousand the previous week.  Note: I expect some further impact on claims due to Hurricane Matthew.

• Also at 8:30 AM, Durable Goods Orders for September from the Census Bureau. The consensus is for a 0.2% increase in durable goods orders.

• At 10:00 AM, Pending Home Sales Index for September. The consensus is for a 1.0% increase in the index.

• Also at 10:00 AM, the Q3 Housing Vacancies and Homeownership from the Census Bureau.

• At 11:00 AM, the Kansas City Fed Survey of Manufacturing Activity for October.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/S4rHNFr0KGs/thursday-durable-goods-unemployment.html

Trulia’s Guide To What Homebuyers Want In Every State

If you’re planning to sell your home in 2017, it’s a good idea to spend some time in 2016 planning how to market your home in Santa Fe, NM, or Philadelphia, PA, real estate. Whether you intend to check some best-for-ROI upgrades off your to-do list or play up the features your home already has, […]

The post Trulia’s Guide To What Homebuyers Want In Every State appeared first on Trulia's Blog.

from
https://www.trulia.com/blog/trulias-guide-to-what-homebuyers-want-in-every-state/

Philly Fed: State Coincident Indexes increased in 36 states in September

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for September 2016. In the past month, the indexes increased in 36 states, decreased in 11, and remained stable in three, for a one-month diffusion index of 50. Over the past three months, the indexes increased in 40 states, decreased in nine, and remained stable in one, for a three-month diffusion index of 62.

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Philly Fed.Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In September, 39 states had increasing activity (including minor increases).

Eight states have seen declines over the last 6 months, in order the five worst are Wyoming (worst), Alaska, Louisiana, Kansas, Oklahoma - mostly due to the decline in oil prices.

Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and is mostly green now.

Source: Philly Fed. Note: For complaints about red / green issues, please contact the Philly Fed.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/qAIUDvIkZ0Q/philly-fed-state-coincident-indexes.html

Zillow Forecast: Expect "Modest Acceleration" in YoY Growth in September for the Case-Shiller Indexes

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

From Zillow: September Case-Shiller Forecast: Modest Acceleration in Home Price Growth Will Continue

According to Zillow’s September Case-Shiller forecast, the national index and both smaller 10 and 20-city indices look set to continue the acceleration in home price growth they exhibited in August. And after more than two years of steady growth around 5 percent annually, the U.S. National Case-Shiller home price index is within striking distance of reaching its July 2006 peak levels, just 0.1 percent off those levels, according to today’s data.

The September Case-Shiller National Index is expected to grow 5.4 percent year-over-year and 0.7 percent month-to-month (seasonally adjusted). We expect the 10-City Index to grow 4.3 percent year-over-year and 0.3 percent (SA) from July. The 20-City Index is expected to grow 5.1 percent between September 2015 and September 2016, and rise 0.4 percent (SA) from August.

Zillow’s September Case-Shiller forecast is shown in the table below. These forecasts are based on today’s August Case-Shiller data release and the September 2016 Zillow Home Value Index (ZHVI). The September S&P CoreLogic Case-Shiller Indices will not be officially released until Tuesday, November 29.

The year-over-year change for the 10-city and 20-city indexes will probably be about the same in the September report as in the August report.  The change for the National index will probably be slightly higher.



from
http://feedproxy.google.com/~r/CalculatedRisk/~3/2QXGVByRxXg/zillow-forecast-expect-modest.html

A few Comments on September New Home Sales

New home sales for September were reported below the consensus forecast at 593,000  on a seasonally adjusted annual rate basis (SAAR). And the three previous months were all revised down significantly.

However, sales were up 29.8% year-over-year in September, and this is the best month for September (NSA) since 2007. And sales are up 13.0% year-to-date compared to the same period in 2015.

The glass is more than half full.  This is very solid year-over-year growth.

Earlier: New Home Sales at 593,000 Annual Rate in September.

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 13.0% year-over-year, because of very strong year-over-year growth over the last six months.

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.   It looks like I was too pessimistic on new home sales 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 September 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.

Another way to look at this is a ratio of existing to new home sales.

This ratio was fairly stable from 1994 through 2006, and then the flood of distressed sales kept the number of existing home sales elevated and depressed new home sales. (Note: This ratio was fairly stable back to the early '70s, but I only have annual data for the earlier years).

In general the ratio has been trending down, and this ratio will probably continue to trend down over the next several years.

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/MbURaSSQdQI/a-few-comments-on-september-new-home.html

New Home Sales at 593,000 Annual Rate in September

The Census Bureau reports New Home Sales in September were at a seasonally adjusted annual rate (SAAR) of 593 thousand.

The previous three months were revised down by a total of 85 thousand (SAAR).

"Sales of new single-family houses in September 2016 were at a seasonally adjusted annual rate of 593,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.1 percent above the revised August rate of 575,000 and is 29.8 percent above the September 2015 estimate of 457,000. "
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 September to 4.8 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 September was 235,000. This represents a supply of 4.8 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 September 2016 (red column), 50 thousand new homes were sold (NSA). Last year 35 thousand homes were sold in September.

The all time high for September was 99 thousand in 2005, and the all time low for September was 24 thousand in 2011.

This was below expectations of 600,000 sales SAAR in September.   I'll have more later today.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/wHH4_w03iW0/new-home-sales-at-593000-annual-rate-in.html