Mish's Global Economic Trend Analysis |
- Are Mortgage Credit Conditions "Tight"?
- New Home Sales "Better, Not Strong", and Regionally Very Uneven: US +6.7%, Midwest +47.4%, Northeast -26.7%
- Amazon to Increase Robots from 1,400 to 10,000 by End of 2014; Day in the Life of a Robot
Are Mortgage Credit Conditions "Tight"? Posted: 23 May 2014 02:49 PM PDT A statement in regards to credit condition in a Bloomberg article this morning on New Home Sales caught my attention and merits further investigation. Here is the statement in question: "Builder optimism has eased as well, reflecting still-tight credit conditions and limited availability of lots. Confidence dropped in May to the lowest level of the year, according to a gauge of builder sentiment from the National Association of Home Builders/Wells Fargo." Let's investigate the claim of "still-tight credit conditions". Net Percentage of Banks Tightening Credit for Prime Mortgages Net Percentage of Banks Tightening Credit for Subprime Mortgages Unfortunately there are gaps in this data series. Net Percentage of Banks Tightening Credit for Nontraditional Mortgages Credit conditions for prime mortgages are anything but tight. There is tightening in the subprime arena, but gaps in the data series make it difficult to discern from when and were. Moreover, after these price runups, banks should be concerned about subprime! There is some tightening in non-traditional loans, but overall, the claim of "still tight" mortgage lending is false. For more on housing, please see ...
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Posted: 23 May 2014 09:58 AM PDT The Census Bureau Residential Home Sales report shows Sales of new single-family houses in April 2014 were at a seasonally adjusted annual rate of 433,000. Sales are 6.4 percent (±15.9%) above the revised March rate of 407,000, but is 4.2 percent (±14.2%) below the April 2013 estimate of 452,000. Supply is 5.3 months at the current rate of sales. "Better, Not Strong" Bloomberg reports Purchases of New U.S. Homes Increase by Most in Six Months but the details (shown below) are interesting. Purchases of new U.S. homes rose in April by the most in six months as buyers began to respond to falling mortgage rates.New Home Sales by Region (in thousands)
Take a good look at that last line. The surge in new homes is entirely in the Midwest. Didn't the Northeast have bad weather? Perhaps the bad weather lingered on in the Northeast. Alternatively, perhaps the Midwest was the most undervalued area. Regardless of reason, this huge distortion should not inspire much national confidence. Percent Changes and 90% Confidence Levels
Year-over-year, the US is down, the South is down, the Northeast is down, and the West is down. Only the Midwest is up. And please note the exceptionally wide confidence levels for Midwest sales. The Census bureau adds these additional notes "Changes in seasonally adjusted statistics often show irregular movement. It takes 3 months to establish a trend for new houses sold. Preliminary new home sales figures are subject to revision due to the survey methodology and definitions used. The survey is primarily based on a sample of houses selected from building permits. Since a "sale" is defined as a deposit taken or sales agreement signed, this can occur prior to a permit being issued. An estimate of these prior sales is included in the sales figure. On average, the preliminary seasonally adjusted estimate of total sales is revised about 4 percent. Changes in sales price data reflect changes in the distribution of houses by region, size, etc., as well as changes in the prices of houses with identical characteristics. Explanations of confidence intervals and sampling variability can be found on our web site listed above." Because of the wide deviation from norm, the census bureau does not have much confidence in the Midwest number. Again, for whatever reason, the Midwest was unusual to say the least. But don't expect most of mainstream media to offer these kind of cautions, and certainly don't expect them to do anything but cheer the increase in sales while also assuming a one-month change in one region translates into a trend change for the country. As with existing home sales, there is little or nothing that suggests a trend change is at hand. Please see Existing Home Sales "Rebound": Headline Hype vs. Reality for additional details. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amazon to Increase Robots from 1,400 to 10,000 by End of 2014; Day in the Life of a Robot Posted: 23 May 2014 12:32 AM PDT Have a job moving stuff or filling orders in a warehouse? If so, your job is in jeopardy. Please consider Bezos expects 10,000 robots at Amazon warehouses by 2015 Amazon.com plans to aggressively expand its use of robots at it warehouses in 2014, rolling out 10,000 of them by the end of 2014.Day in the Life of a Robot In the following video, Kiva Systems founder and CEO Mick Mountz narrates a play-by-play video of how Kiva robots automate a warehouse environment. The video is actually from 2011. Link if video does not play: A Day in the Life of a Kiva Robot. The video is quite interesting. Inquiring minds will want to give it a play. Considering what money-losing IPOs are going for these days, Jeff Bezos appears to have gotten a bargain for $775 million. Here's the question of the day: What took Bezos so long for mass deployment? Whatever the answer, Bezos clearly believes these robots are ready for full scale deployment. Can other online competitors be far behind? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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