Paper Economy - A US Real Estate Bubble Blog

Wednesday, November 30, 2011

Following the Economy (on Your Android Mobile Device)

As most longtime PaperEconomy readers know, I rely heavily on Blytic.com to provide the majority of the interactive data visualizations embedded in my posts.

While Blytic’s platform for conveniently publishing data visualizations is very cool, particularly for bloggers or any other finance related content publishers, today Blytic.com has announced an interesting new Android app that allows users to “keep track the most important trends shaping our economy as well as make predictions and participate in discussions on hundreds of different real-time economic data points.”

With nifty swipeable, pinchable and tappable charts, Blytic’s mobile app delivers hundreds of economic trends directly to your mobile device keeping the data fresh and sorted by the most recently updated.

The predictions aspect of the app is probably the most interesting feature in that it turns the app into a macroeconomic game of sorts.

You log in (or not if you wish to remain anonymous) and then, while browsing charts, record predictions of where you think a particular data point will go in the next period (next quarter, month, week, day, etc.).

Then, when the actual data value is published for that next period, your prediction is scored and your overall score is tallied allowing you to be ranked against all other users.

It’s a very fun and interactive way of staying on top of all the most important economic trends while letting you showcase your economic forecasting prowess.

Available in Android Market

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Pending Home Sales: October 2011

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for October showing that home sales increased with the seasonally adjusted national index jumping a notable 10.41% since September and increasing 9.15% above the level seen in October 2010.

Meanwhile, the NARs chief economist Lawrence Yun hopes that today's numbers indicate that the buyers are coming back to the market.

"Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years. We hope this is indicates more buyers are taking advantage of the excellent affordability conditions..."

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

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ADP National Employment Report: November 2011

Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved in November as private employers added 206,000 jobs in the month bringing the total employment level 1.73% above the level seen in November 2010.

Looking at the chart (click for full-screen dynamic version) showing ADP’s total private nonfarm payrolls since 2001 as well as the year-over-year and month-to-month percent change, you can see that while the job recovery had been anemic throughout most of 2010, more recently the trend had been picking up momentum.

Although the level of jobs is still far below the peak seen in late 2007 and still near the lows seen during the worst period of the "dot-com" recession, the bottom looks to be clearly defined and the trend is looking comparable to past recoveries.

Perusing the rest of the data in the ADP dataset you can see the the economy is currently showing the most growth for small to mid-sized service providing jobs with goods-producing jobs remaining near trough levels.

Look for Friday’s BLS Employment Situation Report to likely show somewhat similar trends.

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Reading Rates: MBA Application Survey – November 30 2011

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) declined 4 basis points to 4.10% since last week while the purchase application volume declined 0.8% and the refinance application slumped 15.3% over the same period.

With rates at or near generational lows (including the 10-year T-Bill), the economy seemingly near recession and the FOMC members becoming more dovish by the day, it will be interesting to see how low rates on the long end can decline.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




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Tuesday, November 29, 2011

S&P/Case-Shiller: September 2011

Note... be sure to bookmark the overall S&P/Case-Shiller Dashboard or the Scary Housing Dashboard of the weakest markets for a real-time view of all the markets tracked by S&P.

Today’s release of the S&P/Case-Shiller (CSI) home price indices for September reported that the non-seasonally adjusted Composite-10 price index declined 0.42% since August while the Composite-20 index declined 0.64% over the same period with both measures continuing to decline notably since last year.

The latest CSI data clearly indicates that the price trends are experiencing a declining trend into the typically less active summer and fall season and as I recently pointed out, the more timely and less distorted Radar Logic RPX data is starting to capture notable falling prices driven primarily by seasonality.

The 10-city composite index declined 3.27% as compared to August 2010 while the 20-city composite declined 3.59% over the same period.

Topping the list of regional peak decliners was Las Vegas at -60.05%, Phoenix at -55.93%, Miami at -50.22%, Tampa at -46.50% and Detroit at -42.41%.

Additionally, both of the broad composite indices show significant peak declines slumping -31.18% for the 10-city national index and -31.26% for the 20-city national index on a peak comparison basis.

To better visualize today’s results use Blytic.com to view the full release.

The following charts (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as compared to each metros respective price peak set between 2005 and 2007 as well as annual and monthly changes.



Additionally, in order to add some historical context to the perspective, I updated my “then and now” CSI charts that compare our current circumstances to the data seen during 90s housing decline.

To create the following annual and normalized charts I simply aligned the CSI data from the last month of positive year-over-year gains for both the current decline and the 90s housing bust and plotted the data side-by-side (click for larger version).


The “peak” chart compares the percentage change, comparing monthly CSI values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.

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FHFA Monthly Home Prices: September 2011

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that, nationally, home prices increased 0.94% since August but declined 2.52% below the level seen in September 2010.

The FHFA monthly HPI are formulated from home purchase information collected from mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.

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Monday, November 28, 2011

More Pain, Less Gain: S&P/Case-Shiller Preview for September 2011

As I demonstrated in prior posts, given their strong correlation, the home price indices provided daily by Radar Logic, averaged monthly, can effectively be used as a preview of the monthly S&P/Case-Shiller home price indices.

The current Radar Logic 25 MSA Composite data reported on residential real estate transactions (condos, multi and single family homes) that settled as late as September 26 and averaged for the month indicates that with the slowing summer/fall transactions has come a notable decline of prices (the typical trend) with the national index declining 1.43% since August and falling 4.80% below the level seen in September 2010.

The Radar Logic index will likely be capturing an decline in prices from now until early 2012 as transactions continue to trend down.

Look for tomorrow's S&P/Case-Shiller home price report to reflect this declining trend though to a lesser degree due to its three month rolling-average nature with prices moderately higher.

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The Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey: November 2011

Today, the Federal Reserve Bank of Dallas released their latest read on manufacturing in their region indicating that manufacturing activity improved slightly but remained weak with the current general business activity index increasing to a weak expansion level of 3.2 while the future general business activity index declined to 9.7.

These results are coming, more or less, inline with the other regional manufacturing survey all indicating that business activity has slowed sharply in 2011 and may possibly indicate recession is upon us.

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New Home Sales: October 2011

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for October showing a monthly increase with sales climbing 1.3% since September and increase 8.87% above the level seen in October of 2010 and remaining at an epically low level of 307K SAAR units.

It's important to recognize that the inventory of new homes has now fallen to a new series low at 162K units, lowest level seen in in at least 47 years while the median number of months for sale declined to 7.4.

The monthly supply remained declined to 6.3 months while the median selling price increased 0.04% and the average selling price declined 0.05% from the year ago level.

The following chart show the extent of sales decline to date (click for full-larger version).

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Wednesday, November 23, 2011

University of Michigan Survey of Consumers November 2011 (Final)

Today's final release of the Reuters/University of Michigan Survey of Consumers for November indicated improvement in consumer sentiment with a reading of 64.1 but falling 10.47% below the level seen last year while one year inflation expectations went flat at 3.2%.

The Index of Consumer Expectations (a component of the Conference Board's Index of Leading Economic Indicators) rose to 55.4, and the Current Economic Conditions Index climbed to 77.6.

It's important to recognize that consumer sentiment has seriously eroded over the past few months with the current results remaining near levels not seen since 1980, a major indication that consumers are in the process of tightening even further on spending.


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Extended Unemployment: Initial, Continued and Extended Unemployment Claims November 23 2011

Today’s jobless claims report showed an increase to both initial and continued unemployment claims as a slight rising trend was firmly called into question for initial claims.

Seasonally adjusted “initial” unemployment increased 2,000 to 393,000 claims from last week’s revised 391,000 claims while seasonally adjusted “continued” claims increased by 68,000 resulting in an “insured” unemployment rate of 2.9%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 3.45 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.17 million people that are currently counted as receiving traditional continued unemployment benefits, there are 6.63 million people on state and federal unemployment rolls.


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Reading Rates: MBA Application Survey – November 23 2011

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) increased 1 basis points to 4.14% since last week while the purchase application volume declined jumped 8.2% while the refinance application declined 4% over the same period.

With rates at or near generational lows (including the 10-year T-Bill) and the FOMC members becoming more dovish by the day, it will be interesting to see where rates will go as clear details of QE3, likely to be focused more on long term rates, are revealed.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




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Tuesday, November 22, 2011

Massive Unemployment: Mass Layoffs October 2011

The latest release of the Bureau of Labor Statistics (BLS) Mass Layoff Report indicated a decline in large-scale layoffs with 1353 mass layoff events for October resulting in 118,689 initial unemployment claimants on a seasonally adjusted basis.

The BLS considers a mass layoff event to be a condition where there are at least fifty initial claims for unemployment insurance originating from a single employer over a period of five consecutive weeks.


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The Richmond Fed Survey of Manufacturing Activity: November 2011

Today, the Federal Reserve Bank of Richmond released their Survey of Manufacturing Activity for November showing that the composite index, the broadest measure of manufacturing activity, improved 6 points to a weak level of 0.

The most notable component measures also showed similar results with the new orders improving to -2, shipments increasing to 1 and backlog of orders climbing to a weak -10.

The following chart plots the composite index with the red line marking a level of 0, or the threshold between increasing and declining activity.

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Bull Trip!: GDP Report Q3 2011 (Second Rough Estimate)

Today, the Bureau of Economic Analysis (BEA) released their second "estimate" of the Q3 2011 GDP report showing that the economy continued to expand at a notably slower pace than originally estimated with real GDP increasing at an annualized rate of just 2.0% from Q2 2011.

On a year-over-year basis real GDP increased 1.51% while the quarter-to-quarter non-annualized percent change was 0.50%.

The latest quarterly results indicate that the most notable source of weakness in the economy came from the change in private inventories component resulting in an overall 0.9% decline to gross private domestic investment and government expenditures with non-defense spending declining 3.8% while state and local spending declined declined by 1.4%.

Fixed investment purportedly made notable contributions to Q3 GDP with non-residential fixed investment increasing 14.8% from Q2 2011 while residential fixed investment increased 1.6% over the same period.  
Personal consumption expenditures also increased notably increasing 2.3% from Q2 2011.

Keep in mind that these results are likely very poorly estimated and are sure to be revised notably in following quarters and even years to come.

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Monday, November 21, 2011

Existing Home Sales Report: October 2011

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for October showing an increase in sales with total home sales climbing 1.4% since September and 13.5% above the level seen in October 2010.

Single family home sales increased 1.6% from September and rose 13.8% above the level seen in October 2010 while the median selling price declined 5.8% below the level seen in October 2010.

Inventory of single family homes declined 0.5% from September dropping 12.2% below the level seen in October 2010 which, combined with the relatively slow pace of sales, resulted in an still elevated monthly supply of 7.8 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.



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The Chicago Fed National Activity Index: October 2011

Today’s release of the Chicago Federal Reserve National Activity Index (CFNAI) continued to indicate weakness in national economic trends with the index remaining in contraction territory for a third consecutive month at -0.13 while the three month moving average declined to -0.27.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

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