Paper Economy - A US Real Estate Bubble Blog

Tuesday, April 15, 2014

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings April 2014

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that assessments of housing activity went flat in April with the composite HMI index climbing to 47 from 46 the prior month while the "buyer traffic" index remained unchanged at a level of 32.

The recent pullback has been notable and while many are suggesting that inclement weather is responsible, only time will tell if this is the beginning of an ongoing downtrend for new construction or just a momentary pause.

Looking at the data, it is fairly clear that the last year of results indicate a major change in builder sentiment likely coming as a result of improvements in confidence given the notable rise in buyer traffic, reduced inventory and a more balanced monthly supply.




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Friday, April 04, 2014

Envisioning Employment: Employment Situation March 2014

The latest Employment Situation Report indicated that in March, net non-farm payrolls increased by 192,000 jobs overall with the private non-farm payrolls sub-component adding 192,000 jobs while the civilian unemployment rate went flat at 6.7% over the same period.

It's important to note that with today's release (and revisions), the private non-farm payroll level has risen to the highest level seen in over six years and finally climbed higher then the level seen before the start of the Great Recession.

Net private sector jobs increased 0.17% since last month climbing 1.99% above the level seen a year ago and climbing 0.36% above the peak level of employment seen in December 2007 prior to the Great Recession.

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Recovery-less Recovery: Unemployment Duration March 2014


Today's employment situation report showed that conditions for the long term unemployed improved in February while still remaining distressed by historic standards.

Workers unemployed 27 weeks or more declined to 3.739 million or 35.8% of all unemployed workers while the median term of unemployment declined to 16.3 weeks and the average stay on unemployment went declined to 35.6 weeks.

Looking at the charts below (click for super interactive versions) you can see that today’s sorry situation far exceeds even the conditions seen during the double-dip recessionary period of the early 1980s, long considered by economists to be the worst period of unemployment since the Great Depression.



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On The Margin: Total Unemployment March 2014

Today's Employment Situation report showed that in March “total unemployment” including all marginally attached workers increased to 12.7% while the traditionally reported unemployment rate went flat at 6.7%.

The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.

The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.

The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.

To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.

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Wednesday, April 02, 2014

ADP National Employment Report: March 2014

Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved in March as private employers added 191,000 jobs in the month bringing the total employment level 1.97% above the level seen in March 2013.

Look for Friday’s (possibly postponed) BLS Employment Situation Report to likely show somewhat similar trends.

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Reading Rates: MBA Application Survey – April 02 2014

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) increased 2 basis points to 4.41% since last week while the purchase application volume increased 1% and the refinance application volume declined 3% over the same period.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




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Tuesday, March 25, 2014

FHFA Monthly Home Prices: January 2014

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that in January, nationally, home prices increased 0.5% from December and rose 7.38% above the level seen in January 2013.

The FHFA monthly HPI are formulated from home purchase information collected from mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.

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S&P/Case-Shiller: January 2014

Today's release of the S&P/Case-Shiller (CSI) home price indices for January reported that the non-seasonally adjusted Composite-10 price index went flat with prices rising just 0.01% from December while the Composite-20 index actually declined 0.08% over the same period.

The latest CSI data appears to be indicating that the typical seasonal deceleration in prices is underway with the extent of the slowing still to be decided with coming months data.

The 10-city composite index increased 13.54% as compared to January 2013 while the 20-city composite increased 13.24% over the same period.

Both of the broad composite indices still show significant peak declines slumping -20.42% for the 10-city national index and -19.86% for the 20-city national index on a peak comparison basis.

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New Home Sales: February 2014

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for February showing a notable decline with sales falling 3.3% from January dropping 1.1% below the level seen in February 2013 and remaining at an historically low level of 440K SAAR units.

The monthly supply increased to 5.2 months while the median selling price declined 1.24% and the average selling price increased 1.60% from the year ago level.

The following chart show the extent of sales decline to date (click for full-larger version).

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Thursday, March 20, 2014

Existing Home Sales Report: February 2014

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for February showing weak sales with total home sales falling 0.4% since January dropping 7.1% below the level seen in February 2013.

Single family home sales also weakened dropping 0.2% from January falling a notable 6.9% below the level seen in February 2013 while the median selling price increased 9.0% above the level seen a year earlier.

Inventory of single family homes increased from January to 1.73 million units and climbed 4.8% above the level seen in February 2013 which, along with the sales pace, resulted in a monthly supply of 5.1 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.



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Wednesday, March 12, 2014

Reading Rates: MBA Application Survey – March 12 2014

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) increased 5 basis point to 4.37% since last week while the purchase application volume declined 1% and the refinance application volume declined 3% over the same period.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




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Wednesday, March 05, 2014

ADP National Employment Report: February 2014

Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved in February as private employers added 139,000 jobs in the month bringing the total employment level 1.90% above the level seen in February 2013.

Look for Friday’s (possibly postponed) BLS Employment Situation Report to likely show somewhat similar trends.

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Monday, March 03, 2014

Construction Spending: January 2014

Today, the U.S. Census Bureau released their latest read of construction spending showing mixed results for January with total private construction spending and single family construction spending rising since December while non-residential construction spending declined over the same period.

On a month-to-month basis, total residential spending increased 1.10% from December climbing 14.60% above the level seen in January 2013 and remaining well below the peak level seen in 2006.

Single family construction spending increased 2.30% from December rising 21.00% since January 2013 remaining well below it's peak level reached in 2006.

Non-residential construction spending declined 0.20% from December rising 9.70% below the level seen in December 2012 and remaining a well below the peak level reached in October 2008.

The following charts (click for larger dynamic versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year, month-to-month and peak percent change to each since 1994 and 2000 – 2005.



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Monday, February 24, 2014

The Chicago Fed National Activity Index: January 2014

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that the national economic activity worsened in January with the index falling to a very weak level of -0.39 from a level of -0.03 in December while the three month moving average declined to a level of -0.10.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

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Existing Home Sales Report: January 2014

On Friday, the National Association of Realtors (NAR) released their Existing Home Sales Report for January showing plunging sales with total home sales falling 5.1% since December and falling 5.1% below the level seen in January 2013.

Single family home sales also crashed dropping 5.8% from December falling a notable 6% below the level seen in January 2013 while the median selling price increased 10.4% above the level seen a year earlier.

Inventory of single family homes increased from December to 1.69 million units and climbed 7% above the level seen in January 2013 which, along with the sales pace, resulted in a monthly supply of 5.0 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.



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