Market Mover Thursday: Retail sales drop, Foreclosures hit new record, Weekly jobless claims rise…

Update: Courtesy of Diana Olick CNBC (she has a great housing blog), signs the contagion of foreclosures is spreading nationwide as unemployment (not speculators flipping homes AZ CA NV FL) becomes the driver:

Foreclosures, y/y per RealtyTrack:

OR up 84% – MN up 147% – UT up 93% – KS up 95% – NJ up 40% – MA up 43% – ME up 60% –

A bad day for the bulls on the economic data-

Despite the billions for Cash for Clunkers, retail sales fell overall, no topline growth folks, even at WalMart who beat on the Q2 earnings forecast but showed US comp stores down 1.5%…

CNBC:

Sales at U.S. retailers unexpectedly fell in July and the number of workers filing new claims for jobless benefits rose last week...A Commerce Department report Thursday showed total retail sales edged down 0.1 percent after increasing 0.8 percent in June, compared with market forecasts for a 0.7 percent gain.Analysts had expected a boost in retail sales from the government’s “cash for clunkers” program

…A separate report from the Labor Department showed first-time applications for state unemployment insurance benefits climbed 4,000 to a seasonally adjusted 558,000 last week.

“Retail sales were unexpectedly weaker than expected, suggesting that the money spent on the ‘Cash for Clunkers’ plan wasn’t spent on other things,” said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

“The claims data shows that the labor market, while improving, remains difficult. People are still losing jobs. Less bad doesn’t mean good. It’s still tough, and it’s a wake-up call.”

There was more bad news on the home foreclosures front, where RealtyTrac reported that U.S. home loans failed at a record pace in July despite ongoing federal and state programs to avoid foreclosures.

Foreclosure activity jumped 7 percent in July from June and 32 percent from a year earlier as one in every 355 households with a loan got a foreclosure filing, RealtyTrac said….

More on the foreclosure numbers here:

…”July marks the third time in the last five months where we’ve seen a new record set for foreclosure activity,” James J. Saccacio, RealtyTrac’s chief executive, said in a statement….

…More than 360,000 households with loans drew a foreclosure filing in July, a record dating back to January 2005, when RealtyTrac started tracking monthly activity.

Notices of default, auction or repossession have reached nearly 2.3 million in the first seven months of the year — with more than half a million bank repossessions, the Irvine, California-based company said.

As MiM has said repeatedly, get the housing programs WORKING Team TOTUS, stop jumping to the next ‘big thing’ when the steps you have taken on one of the drivers of the downturn are not succeeding. It is not enough to have a plan in place, the plan has to actually work….

According to UBS’ data, 2010 will see the projected peak of foreclosures, but look at how spread out the damage is in housing for the next 2 years. I think anyone who expects a huge upturn in time for Congressional midterms is smokin rope, if they can’t unemployment to level off, housing will keep falling and consumers simply will not spend:

…At this time, the firm projects an extended period of deterioration before the housing market bottoms sometime in mid-2009. Additionally, analysts believe the 2006/2007 vintages will continue their seasoning curve as loans roll into delinquency and foreclosure.

Analysts based their projections on data from Loan Performance, Intex and the Mortgage Bankers Association‘s National Delinquency Survey. They then used a default timing curve to convert the delinquency data into a monthly foreclosure and REO forecast.

Based on their expectation of a 5% liquidation rate, analysts expect total foreclosure inventory to peak in mid-2009 at $450 billion, or 1.83 million loans.  Assuming a 1% liquidation rate, foreclosures won”t peak until 2012, while a 7% liquidation rate will put the peak in early 2009.

Analysts said that the majority of foreclosures will be from subprime. They added their foreclosure outlook for Alt-A is less than 50% of subprime, while foreclosures for option ARMs will occur later than the other sectors and remain strong into 2011 and 2012.

In terms of jumbo mortgage foreclosures, although troublesome for investors, they are relatively minor compared to the other sectors. Jumbo foreclosures is projected to begin peaking in early 2009 and hold around there through 2010.

On the agency side, analysts said data is limited. They expect the foreclosure ra te will be less than jumbos, a view supported by the collateral characteristics. Additionally, agencies have lower exposure to California.The firm’s analysis suggested that the peak in agency foreclosures will begin in early- to mid- 2010 and extend into 2011….

Tim Curry performs on German TV courtesy of strogenwb

August 13, 2009. Tags: , , , , . Economy, Entertainment, Finance, Foreclosures, Housing, Obama Administration, Politics, Unemployment Statistics, Wall St.

3 Comments

  1. Housing Update: All About Fannie Mae – Delinquency rate explodes, book of business now at $3.242 trillion « Moderate in the Middle replied:

    […] still deny they need) here. Our coverage of the impending second collapse in housing courtesy of UBS’ think tank here. Some highlights: According to UBS’ data, 2010 will see the projected peak of foreclosures, but […]

    Like

  2. Housing: Foreclosures still rising – RealtyTrac confirms earlier UBS’ forecast- won’t peak until 2010… « Moderate in the Middle replied:

    […] – RealtyTrac confirms earlier UBS’ forecast- won’t peak until 2010… Here is our post on the UBS forecast for housing foreclosures and mortgage […]

    Like

  3. Market Update: Gold! « Moderate in the Middle replied:

    […] the face with another 3-4 million in foreclosures expected to peak at the end of 2010, early 2011 (see our previous post here). And of course employment being a lagging indicator we cannot expect a jobs […]

    Like

%d bloggers like this: