- For the 5,177 commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC), aggregate net income totaled $55.2 billion in fourth quarter 2019, a decline of $4.1 billion (6.9 percent) from a year ago. The decline in net income was led by lower net interest income and higher expenses. Financial results for fourth quarter 2019 are included in the FDIC's latest Quarterly Banking Profile released today. ... The Number of Banks on the "Problem Bank List" Remained Low: The number of problem banks fell from 55 to 51 during the fourth quarter, the lowest number of problem banks since fourth quarter 2006. Total assets of problem banks declined from $48.8 billion in the third quarter to $46.2 billion. The Deposit Insurance Fund's Reserve Ratio Stood at 1.41 Percent: The Deposit Insurance Fund (DIF) balance totaled $110.3 billion in the fourth quarter, up $1.4 billion from the end of last quarter. The quarterly increase was led by assessment income...
CR Note: This is a repeat of earlier posts with updated graphs. A few key points: 1) There is a clear seasonal pattern for house prices. 2) The surge in distressed sales during the housing bust distorted the seasonal pattern. 3) Even though distressed sales are down significantly, the seasonal factor is based on several years of data - and the factor is now overstating the seasonal change (second graph below). 4) Still the seasonal index is probably a better indicator of actual price movements than the Not Seasonally Adjusted (NSA) index. For in depth description of these issues, see former Trulia chief economist Jed Kolko's article "Let’s Improve, Not Ignore, Seasonal Adjustment of Housing Data" Note: I was one of several people to question the change in the seasonal factor (here is a post in 2009) - and this led to S&P Case-Shiller questioning the seasonal factor too (from April 2010). I still use the seasonal factor (I think it is better than using the NSA...
- Fifth District manufacturing activity softened in February, according to the most recent survey from the Richmond Fed. The composite index fell from 20 in January to ?2 in February. All three components of the composite index — shipments, new orders, and employment — moved lower from January. Firms also reported a decrease in backlog of orders. Still, the index for local business conditions remained positive, and manufacturers were optimistic that activity would improve in the coming months. Survey results suggest that firms saw continued growth in employment and wages in February. However firms continued to struggle to find workers with the necessary skills, as this index dropped to ?35. emphasis added
- The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.8% annual gain in December, up from 3.5% in the previous month. The 10-City Composite annual increase came in at 2.4%, up from 2.0% in the previous month. The 20-City Composite posted a 2.9% year-over-year gain, up from 2.5% in the previous month. Phoenix, Charlotte and Tampa reported the highest year-over-year gains among the 20 cities. In December, Phoenix led the way with a 6.5% year-over-year price increase, followed by Charlotte with a 5.3% increase and Tampa with a 5.2% increase. Twelve of the 20 cities reported greater price increases in the year ending December 2019 versus the year ending November 2019. ... The National Index posted a month-over-month increase of 0.1%, while the 10-City Composite posted a 0.1% increase and the 20-City Composite did not post any gains before seasonal adjustment in December. After seasonal adjustment, the National...
- Mortgage rates continue to carve out the unlikeliest of victories in 2020 with significant help from coronavirus. The epidemic has taken a year that was almost certain to start off with a steady move toward higher rates and turned it into one of the strongest starts on record. In fact, when it comes to the combination of ground covered and levels achieved, no other year has started off any better. [Most Prevalent Rates For Top Tier Scenarios 30YR FIXED - 3.375 - 3.5%] emphasis added
Watching existing home "for sale" inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing. And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here. And in 2015, it appeared the inventory build in several markets was ending, and that boosted price increases. I don't have a crystal ball, but watching inventory helps understand the housing market. Click on graph for larger image. This graph below shows existing home months-of-supply (from the NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999). There is a clear relationship, and this is no surprise (but interesting to graph). If months-of-supply is high, price decline. If months-of-supply is low, prices rise. In the existing home sales report released last week, the NAR reported months-of-supply at 3.1...
- Growth in Texas factory activity accelerated further in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose six points to 16.4, suggesting stronger output growth than last month. Other measures of manufacturing activity pointed to continued expansion in February, though demand growth decelerated. The new orders index fell nine points to 8.4, down from a 15-month high in January but still slightly above average. Similarly, the growth rate of orders index fell but remained above average, edging down from 6.1 to 3.6. The capacity utilization and shipments indexes held steady at 11.3 and 8.5, respectively. Perceptions of broader business conditions were slightly more optimistic in February. The general business activity index edged up to 1.2 and the company outlook index ticked up to 3.6, though both readings remain slightly below average. The index measuring...
- The Chicago Fed National Activity Index (CFNAI) increased to –0.25 in January from –0.51 in December. All four broad categories of indicators that make up the index increased from December, but only one of the four categories made a positive contribution to the index in January. The index’s three-month moving average, CFNAI-MA3, moved up to –0.09 in January from –0.23 in December. emphasis added
Note: Most analysts are forecasting that the novel coronavirus will be contained sometime in Q2 (perhaps on the assumption that the virus is seasonal like SARS or the flu). However there are significant downside risks to this view. The CDC has expanded travel advisories to include South Korea, Japan and Hong Kong - and Italy is having a significant outbreak. From Goldman Sachs tonight:
Along with the monthly housing starts for January last week, the Census Bureau released Quarterly Starts by Purpose and Design through Q4 2019. This graph shows the NSA quarterly intent for four start categories since 1975: single family built for sale, owner built (includes contractor built for owner), starts built for rent, and condos built for sale. Click on graph for larger image. Single family starts built for sale (red) were up 18.1% in Q4 2019 compared to Q4 2018. Owner built starts (orange) were up 15.8% year-over-year. Condos built for sale were still near the record low. The 'units built for rent' (blue) and were up 25.3% in Q4 2019 compared to Q4 2018.
The key reports this week are January New Home sales and the second estimate of Q4 GDP. Other key reports include Case-Shiller house prices and Personal Income and Outlays for January. For manufacturing, the February Dallas, Richmond and Kansas City manufacturing surveys will be released.
Earlier: NAR: Existing-Home Sales Decreased to 5.46 million in January A few key points: 1) Existing home sales were up 9.6% year-over-year (YoY) in January. 2) Inventory is very low, and was down 10.7% year-over-year (YoY) in January. Inventory always decreases sharply in December as people take their homes off the market for the holidays, and then inventory starts to increase in February and March. Click on graph for larger image. 3) Sales slumped at the end of 2018 and in January 2019 due to higher mortgage rates, the stock market selloff, and fears of an economic slowdown. The comparison to January of last year will be the easiest for this year.
- The New York Fed Staff Nowcast stands at 2.0% for 2020:Q1. News from this week’s data increased the nowcast for 2020:Q1 by 0.6 percentage point. Positive surprises from regional survey and housing data drove most of the increase. [Feb 21 estimate]
- Existing-home sales declined in January, continuing a fluctuating pattern of monthly increases and declines, according to the National Association of Realtors®. Significant declines in the West region dragged down nationwide numbers, with the other three major U.S. regions reporting marginal – or no – changes last month. Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.3% from December to a seasonally-adjusted annual rate of 5.46 million in January. However, for the second straight month, overall sales substantially increased year-over-year, up 9.6% from a year ago (4.98 million in January 2019).. ... Total housing inventory at the end of January totaled 1.42 million units, up 2.2% from December, but down 10.7% from one year ago (1.59 million). The housing inventory level for January is the lowest level since 1999. Unsold inventory sits at a 3.1-month supply at the current sales pace, up from the...
This is a key housing market to follow since Phoenix saw a large bubble / bust followed by strong investor buying. The Arizona Regional Multiple Listing Service (ARMLS) reports ("Stats Report"): 1) Overall sales were at 6,328 in January, down from 7,585 in December, but up from 5,357 in January 2019. Sales were down 16.6% from December 2019 (last month), but up 18.1% from January 2019. 2) Active inventory was at 11,602, down from 18,990 in January 2019. That is down 38.9% year-over-year. 3) Months of supply increased to 2.54 in January from 2.05 months in December. This remains low. This is another market with increasing sales and falling inventory.
- • Mortgage delinquencies fell by more than 5% in January, hitting their lowest level on record dating back to 2000 • January’s 14% year-over-year decline is the strongest in more than 12 months, with the rate of improvement picking up noticeably in recent months • There are now fewer than 2 million homeowners past due on their mortgages or in active foreclosure, the fewest since March 2005 • Despite the decline in delinquencies, foreclosure starts edged upward in January, but remain nearly 15% below last year’s levels • The number of loans in active foreclosure remained relatively flat for the month (+1,000 properties in foreclosure), and down 19,000 from the same time last year, leaving the national foreclosure rate unchanged • Though falling by 15% in January, prepayment activity remains 113% above last year’s levels
- Manufacturing firms reported an improvement in regional manufacturing activity, according to results from the February Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments increased this month, suggesting more widespread growth. The firms reported expansion in employment, although at a moderated pace from January. The survey’s broad future indexes also showed improvement this month, indicating that growth is expected to continue over the next six months. The diffusion index for current general activity rose nearly 20 points this month to 36.7, its highest reading since February 2017 … The firms reported overall increases in manufacturing employment this month, but the current employment index decreased 10 points to 9.8. Just 18 percent of the firms reported higher employment, compared with 28 percent last month. The average workweek index, however, increased 5 points. emphasis added
- In the week ending February 15, the advance figure for seasonally adjusted initial claims was 210,000, an increase of 4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 205,000 to 206,000. The 4-week moving average was 209,000, a decrease of 3,250 from the previous week's revised average. The previous week's average was revised up by 250 from 212,000 to 212,250. emphasis added
- Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 395,550 units in January, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2020 if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. January’s sales total was down 0.7 percent from the 398,370 level in December and marked the second straight month that sales fell below the 400,000 benchmark. Still, sales were up a solid 10.3 percent from January 2019, largely due to weak sales of a revised 358,540 a year ago. “The strong sales momentum that we saw in the second half of last year carried over into the new year, thanks to favorable homebuying conditions,” said 2020 C.A.R. President Jeanne Radsick, a...
- Participants generally saw the distribution of risks to the outlook for economic activity as somewhat more favorable than at the previous meeting, although a number of downside risks remained prominent. The easing of trade tensions resulting from the recent agreement with China and the passage of the USMCA as well as tentative signs of stabilization in global economic growth helped reduce downside risks and appeared to buoy business sentiment. The risk of a "hard" Brexit had appeared to recede further. In addition, statistical models designed to estimate the probability of recession using financial market data suggested that the likelihood of a recession occurring over the next year had fallen notably in recent months. Still, participants generally expected trade-related uncertainty to remain somewhat elevated, and they were mindful of the possibility that the tentative signs of stabilization in global growth could fade. Geopolitical risks, especially in connection with the...
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