Economic Reports Good for Housing

Three recent economic reports all point to continued gains in housing. Existing home sales in November were 5.04 million units, up 5.9% from October and 14.5% from November, 2011.  The upward trend continues.  However, 22% of the sales were short sales or foreclosure transactions, indicating that the recovery is far from complete.

Housing permits and starts for November were also reported. Total permits rose 3.6% from October and 26.8% from November 2011.  Similar results were reported for single family homes with permits flat compared to October and up 25.3% from November of last year.  Starts, whcih jumped in the previous report, slipped back slightly as they lost 3% vs. October but were 21.6% ahead of this time last year. Single family starts were down 4.1% from October but up 22.8% from November 2011. Home construction has clearly turned the corner but with starts at 861,000 in this report, construction is far below the levels we should be seeing, especially given reports of low inventories in many parts of the country.

Housing is contributing to the economy — residential construction reported for third quarter 2012 GDP was up 13.5% from the second quarter at annual rates compared to 3.1% for overall GDP.  Housing is about 2.7% of GDP but provided 10% of the growth in the third quarter punching way above its weight.

Housing And Residential Mortgage Finance Is On The Path To Recovery

National Credit Default Rates Ticked Up in November 2012 According to the S&P/Experian Consumer Credit Default Indices

S&P Dow Jones Indices released the latest results for the S&P/Experian Consumer Credit Default Indices. Data is through November 2012.
S&P/Experian Consumer Credit Default Indices Press Release – December 2012

Foreclosure Activity Slips in November

RealtyTrac® released its U.S. Foreclosure Market Report™ for November 2012 this week. The report shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 180,817 U.S. properties in November, a decrease of 3 percent from October and down 19 percent from November 2011 — marking the 26th consecutive month with an annual decrease in foreclosure activity. The report also shows one in every 728 U.S. housing units with a foreclosure filing during the month.

 “The drop in overall foreclosure activity in November was caused largely by a 71-month low in foreclosure starts for the month, more evidence that we are past the worst of the foreclosure problem brought about by the housing bubble bursting six years ago,” said Daren Blomquist, vice president at RealtyTrac. “But foreclosures are continuing to hobble the U.S. housing market as lenders finally seize properties that started the process a year or two ago — and much longer in some cases. We’re likely not completely out of the woods when it comes to foreclosure starts, either, as lenders are still adjusting to new foreclosure ground rules set forth in the National Mortgage Settlement along with various state laws and court rulings.”

Highlights of the report: 

  • U.S. foreclosure starts were down 13 percent from the previous month and down 28 percent from a year ago to the lowest level since December 2006 — a 71-month low.
  •  U.S. bank repossessions (REO) increased 11 percent from the previous month and were up 5 percent from November 2011, a nine-month high and the first year-over-year increase in REOs since October 2010.
  •  Despite the national decrease in foreclosure activity — driven largely by big year-over-year drops in California, Georgia, Michigan, Texas and Arizona — foreclosure activity increased from a year ago in 23 states and the District of Columbia. Nine states posted 12-month highs in foreclosure activity in November, including Florida, New Jersey, New York, Ohio and South Carolina.
  •  Florida posted the nation’s highest state foreclosure rate for the third month in a row, with one in every 304 housing units with a foreclosure filing in November, followed by Nevada, Illinois, California and South Carolina.
  •  Seven of the top 10 highest metro foreclosure rates nationwide were in Florida, led by Palm Bay-Melbourne-Titusville. The other three metros in the top 10 were in California.
  •  Foreclosure starts — default notices or scheduled foreclosure auctions, depending on the state — were filed for the first time on 77,494 U.S. properties in November, down 13 percent from the previous month and down 28 percent from November 2011. November’s foreclosure starts were at the lowest level since December 2006.
  •  Foreclosure starts decreased from a year ago in 28 states, including Oregon (84 percent), Pennsylvania (67 percent), California (63 percent), Arizona (59 percent), and Georgia (51 percent).
  •  Foreclosure starts increased from a year ago in 18 states, including New Jersey (538 percent), Arkansas (455 percent), New York (209 percent), Washington (97 percent), and Connecticut (95 percent).

 Bank repossessions increased annually for the first time in 25 months — Lenders completed the foreclosure process on 59,134 U.S. properties in November, an 11 percent increase from the previous month and a 5 percent increase from November 2011 — the first year-over-year increase in bank repossessions since October 2010, when the practice of robo-signing foreclosure documents came to light and caused a sharp slowdown in foreclosure activity in the following months.

  •  REO activity increased annually in 29 states and the District of Columbia. Some of the biggest increases were in Indiana (96 percent), Arkansas (88 percent), Missouri (87 percent), New Jersey (84 percent), and Connecticut (60 percent).
  •  REO activity decreased annually in 21 states, including Nevada (64 percent), Oregon (58 percent), Massachusetts (49 percent), Utah (47 percent), and Tennessee (22 percent).

Home Building Boosts Construction Employment

Now that the housing sector is (finally) contributing to the economy, a natural question is whether employment will be boosted by increased home construction. The chart tells the story.  It  shows the number of workers in residential construction and the number of single family and toal number of homes under construction.  The total number of homes under construction has rebounded faster than single family homes, driven by apartments and rising rents.  The data are in thousands — thousands of workers and thousands of homes.  The difference between the total homes under construction and single family homes is apartment construction.

Employment Rises With Construction

Source: US Bureau of the Census (construction) and US Bureau of Labor Statistics (employment)

 The employment data are from the Bureau of Labor Statistics and the monthly employment report, the homes under construction are from the Bureau of the Census.

Rent-Buy and Price-Income Data Show Continuing Improvement in Housing

Price-Income ratios, based on both disposable and per capita disposable income point to moderate gains in the last three months as home prices continue to advance. A comparion of buying and renting shows that the ratio slightly favors buying compared to the average market condition since 1987, leaving room for further gains in housing.  The charts show these relations.

Comparing Home Prices to Incomes

Price to income uses the S&P/Case-Shiller 10-City Composite seasonally adjusted and seasonally adjusted data for disposable personal income and per capita disposabale personal income. “Disposable” means after federal income taxes; per capita divides income by population to correct from increases in income due to increased population.  The Rent-Buy comparison uses the Consumer Price Index series for rent of a primary residence to measure rents and the S&P/Case-Shiller 10-City Composite to measure home prices; both series are seasonally adjusted.

The U.S. Real Estate Industry: Standard & Poor’s Addresses The Top Investor Questions

Why The FHA’s Reserve Shortfall Won’t Likely Affect U.S. Public Finance Housing Ratings

CNBC Exclusive Interview with David Blitzer on U.S. Home Prices for September

David Blitzer, Managing Director and Chairman of the S&P Index Committee, discusses the latest data results for the S&P/Case-Shiller Home Price Indices on CNBC.

Home Prices Rise for the Sixth Straight Month According to the S&P/Case-Shiller Home Price Indices

Data through September 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that home prices continued to rise in the third quarter of 2012.  To access click here:  S&P/Case-Shiller Home Price Indices – November 2012


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