Tracking Housing Numbers - January '09

This update represents the final reporting for housing during the month of January.

Thumb Count for 1/31/09: 2 Thumbs Up; 6 Thumbs Down; 1 Abstention

Foreclosure Report -1/31/09

RealtyTrac released their December 2008 Foreclosure Market Report showing total foreclsoure notices at 303,410 for the year, a 40.63 percent increase over 2007. The increase in notices from November '08 to December was 17.11%.

Unemployment - 1/29/09

The Labor Department's website reports about 4.78 million people continued to claim unemployment insurance for the week ending Jan. 17. That seasonally adjusted figure is up 159,000 from the previous week and is the largest in government records going back to 1967. Th recent job losses will appear in the January unemployment numbers to be released on Feb. 6. The unemployment rate stood at 7.2% in December, a 16-year high.

New Home Sales - 1/29/09

Prices for new home sales are still falling. The median price of a new home dropped 9.3% to $206,500 in December from $227,700 in December 2007. The average price decreased 13.2% to $246,900 from $284,400 a year earlier. In November this year, the median price was $219,700 and the average was $288,800.

There were an estimated 357,000 homes for sale at the end of December, representing a 12.9 months' supply at the current sales rate. In November, an estimated 397,000 were for sale, a 12.5 months' inventory.

Regionally last month, new-home sales dropped 28.2% in the Northeast, 20.2% in the West, 12.1% in the South; and 5.6% in the Midwest.

An estimated 23,000 homes were actually sold in December, down from 27,000 in November, based on figures not seasonally adjusted.

Source: WSJ

Jumbo Loan Defaults - 1/28/07

Jumbo loan defaults are rising; many lenders have priced jumbo loan product out of the market or simply not making them available; and downward price pressure is in play.

From the Wall Street Journal:

About 6.9% of prime "jumbo" loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007.

Jumbo mortgages average about $750,000 and can run as high as $5 million or more. More borrowers with such loans are being hit by layoffs that are spreading through practically every sector and pay level of the U.S. economy.

Nearly 25% of prime jumbo mortgages exceeded the value of the homes they backed in September, according to Credit Suisse.

Consumer Confidence - 1/27/09

The Conference Board reported Tuesday that its January consumer confidence index fell to a historic low for the survey, at a reading of 37.7, from the revised 38.6 seen in December. Economists had expected a modest rebound, and had predicted the January index would come in at 39.0. WSJ

The Conference Board's findings are based on a mail-in survey of 5,000 households. The cut off for responses was on Jan. 21.

S&P/Case-Shiller Home Price Indexes - 1/27/09

Indexes for November: "In 20 major metropolitan areas, home prices for November dropped 18.2% from the prior year, also a record, and 2.2% from October. None of the 20 regions could stave off a decline from October to November. Month-to-month decliners were led by Phoenix and Las Vegas, which fell 3.4% and 3.3%, respectively, and Detroit, which dropped 3.1%. Eight cities -- Atlanta, Boston, Charlotte, Chicago, Dallas, New York, Portland and Seattle -- had their largest monthly declines on record. Charlotte posted its third-straight record monthly decline.

"Tight credit and a bleak economic outlook amid mounting job losses have added more stress to U.S. households, meaning the glut of housing remains. Even heightened efforts to help borrowers stay in their homes have made little headway." WSJ

No surprises here. No judgement for thumbs up or down as price declines, while not positive, drives the market to a bottom. Also downward trend numbers are driven by the heavy weight of the metro areas in California, Nevada, Arizona, and Michigan. Case-Shiller numbers also lag behind other market data and today's numbers are for November, not December and/or year-end.

Existing Home Sales - 1/26/09

• National Association of Realtors Reporting Existing Home Sales rose in December to a 4.74 million annual rate, a 6.5% increase from November's revised 4.45 million annual pace.




• 45% of December numbers were distress sales at discounted prices.




• The median home price was $175,400 in December, down 15.3% from $207,000 in December 2007. The median price in November this year was $180,300. The 15.3% drop was the largest on record.




• For all of 2008, sales totaled 4.91 million, down 13.1% from 5.65 million in 2007.




• The average 30-year mortgage rate was 5.29% in December, down from 6.09% in November, according to Freddie Mac.




• Inventories fell 11.7% at the end of December to 3.68 million available for sale, which represented a 9.3-month supply at the current sales pace. There was a 11.2-month supply at the end of November.

Economists Guy LeBas and Janney Montgomery Scott weigh in on the December Existing Sales numbers for the Wall Street Journal:

In these times, it’s nice to see a positive surprise in the housing numbers, but the December pop in existing home sales has us rubbing our eyes to make sure that’s actually a “plus” and not a “minus” in front of the 6.5%… The jump in existing home sales for December was entirely single family-driven, and was accompanied by a welcome collapse in the amount of inventory on the market. The decline in months supply from 10.7 to 8.6 months was not only the result of higher sales, but also of absolute falling inventories. Total home inventories slid 13.2% month-over-month, a huge drop. This decline in inventories, the latest component of a trend that started in July, is encouraging for our expectations of stable housing market in the second half of 2009. Excess supply is the one overhang preventing potential vulture investors from stepping more aggressively into the sector, and with today’s indication that this overhang is easing, we’ll likely see more interest on the demand side as well. Don’t jump out of your chair and call your real estate agent quite yet — we’re talking about the start of a trend that will likely play out over the next six months, not an instant fix.

Housing Starts - 1/22/09

• Total housing starts were at 550 thousand in December, by far the lowest level since the Census Bureau began tracking housing starts in 1959.
  



• Single-family starts were at 398 thousand in December; also the lowest level ever recorded (since 1959).
  



• Single-family permits were at 363 thousand in November, suggesting single family starts may fall even further next month.
  



• Census Bureau report on housing Permits, Starts and Completions.
  



• Single-family housing completions in December were at a rate of 668,000; this is 13.1 percent (±12.5%) below the November figure of 769,000.



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Reduction in starts will reduce housing inventory which is positive, but note that single-family completions are significantly higher than single-family starts. The implication here is negative for jobs as residential construction employment tends to follow completions and completions will probably continue to decline.