March 24, 2012

U.S. ECONOMIC TRENDS: Recap Mar 19-23, Preview Mar 26-30

March 24, 2012

U.S. ECONOMIC TRENDS: Recap Mar 19-23, Preview Mar 26-30

Rundown of trends in U.S. economic data.

Next up is WeeklyBasis, rate market outlook in plain English.


Homebuilder Confidence Steady But Low: The National Association of Homebuilder’s confidence index for March was 28, which was even vs. February after five months of gains. It’s the highest since May 2007 but still way below 50, which is the dividing line between positive and negative sentiment. The last 50+ reading was April 2006. Here’s how it looks 1985-Present.

New Construction Better But Mixed: February’s Housing Starts (aka new construction) were up down slightly to 698k but it’s because January was revised from 699k to 706k (seasonally adjusted, annualized). This makes the three-month average 695k, highest since November 2008. Trend is improving but still below 1.5m needed to keep in line with population growth and scrappage, and this chart shows we’ve got a long way to go. Single Family Starts were down 9.86% from 507k in January to 457k in February. The more volatile Multi-Family Starts were up 21.1% from 199k in January to 241k in February. Building Permits rose from 682k in January to 717k in February (seasonally adjusted, annualized).

Existing Home Sales OK But Buyers Still Jittery: NAR’s February existing home sales were 4.59m annualized, down 0.9% for the month and up 8.8% vs. a year ago. This broke a three-month streak of monthly gains. Distressed sales were 34% of sales (20% foreclosures, 14% short sales). Total housing inventory is up 4.3% to 2.43m. This is a 6.4 month supply, up from 6 months last month. Median prices were $156,600, lower than last month as distressed sales drag prices. Buyers still very jittery, plus loans and appraisals are tough as evidenced by these stats: 18% of Realtors report delays in closing and 31% of Realtors report cancelled contracts.

New Home Sales Slowing and Median Prices Rising: February New Home Sales were 313k (annualized) down 1.6% from last month’s 318k and up 11.4% from year ago. A healthy market is considered 700k new home sales or better. This is the second month of New Home Sales declines, and sales have fallen nearly 7% since December. This has a lot to do with the fact that there’s so much Existing Home Sales inventory for consumers to choose from. And Existing Home Sales are way cheaper: as of February, median Existing Home price was $156,600 and median New Home price was $233,700—a full 49.23% higher.

Jobless Claims At Lowest Level Since March 2008: Claims for unemployment insurance were 348,000 for week ended March 17 (seasonally adjusted), down 5,000 from previous week’s 353,000 and the lowest level since March 2008. The 4-week moving average was 355,000, down 1,250 from previous week. This shows steady albeit slow job market improvement.


Next week’s economic calendar is busy. Highlights below with rate impacts.

Will Pending Home Sales Hold Near 2yr High?: February’s Pending Home Sales index from NAR is Monday. Expectations are for a 0.5% gain, smaller than January’s 2% gain which put the index at 97.0, which was the highest since April 2010. A level of 100 is considered healthy. Pending Home Sales measures new contracts on existing homes expected to close within 60 days, so it’s forward looking, then actual closed sales are measured by NAR’s existing home sales which is discussed above. And here’s a good Pending & Existing home sales chart. This report has minimal rate impact unless it’s a big miss.

New Record Low For National Home Prices? But Local Prices Are What Matter: January’s Case Shiller Home Price report is Tuesday and expectations are similar to December’s numbers—which showed home prices across 20 ‘cities’ were down 1.1% in December and down 4% year-over-year through December. From June/July 2006 peak through December 2011, the price decline was -33.8%, a new record low. But here’s why this data isn’t relevant for local decisions. And I’ll do a Part 2 of that piece Tuesday to get deeper into local analytics. Minimal short-term rate impact from this report.

Final 4Q GDP: The third of three 4Q2011 GDP readings is Thursday. The second reading last month was revised from 2.8% to 3%. But two-thirds of new figure was wholesale inventory growth that will be given back if consumer spending doesn’t keep pace. Here are some GDP Charts as of the last reading. Surprises don’t (usually) come at this third revision stage, so rates should be steady on this report.

Fed’s Preferred Consumer Inflation Gauge Likely To Remain Flat: The Personal Consumption Expenditures Index (PCE) is how the Fed prefers to view inflation, and February’s numbers are out Friday. They’re expected to be similar to January—which showed monthly PCE was 0.2% total and 0.2% ex-Food/Energy. Annual PCE was 2.4% total and 1.9% ex-Food/Energy. The Fed especially focuses on those monthly/annual figures that exclude food and energy because they think these items have too much short-term volatility. Rates could rise if there’s an uptick here.

Personal Income Flat, Spending Up? Also Friday is February’s Personal Income & Spending and expectations are for income to be flat and spending to be up. January’s personal income was 0.3% month/month and 3.6% year/year. Consumer spending was 0.2% month/month and 3.8% year/year. But in real (inflation adjusted) terms, income dropped and real spending has been flat for 3 months. Not much rate impact from this report.


Don’t miss WeeklyBasis, short and sweet outlook on next week’s rate and stock markets.

And catch up on top on the web’s best mortgage/housing stories last week.