Wednesday, August 12, 2015

Reading Rates: MBA Application Survey – August 12 2015

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) decreased 1 basis point to 4.05% since last week while the purchase application volume decreased 4% and the refinance application volume increased 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).




Monday, August 03, 2015

Construction Spending: June 2015

Today, the U.S. Census Bureau released their latest read of construction spending showing weakening results for June with total private construction spending, single family construction spending and non-residential construction spending all declining over the month.

On a month-to-month basis, total residential spending declined 0.5% from May but remained 13.7% above the level seen in June 2014 and remained well below the peak level seen in 2006.

Single family construction spending declined 0.3% from May and rose 12.8% since June 2014 but remaining well below it's peak level reached in 2006.

Non-residential construction spending declined 1.3% from May and rose 14.6% above the level seen in June 2014 but 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.



Friday, July 17, 2015

Hong Kong Residential Property Prices: HKU-REIS March 2015

The latest release of the University of Hong Kong's Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in March, the price of residential properties declined 1.06% since February but still remained 16.57% above the level seen in March 2014.

The HKU-REIS is a set of property price indices constructed monthly using a “modified” repeat-sale methodology similar to that of the S&P/Case-Shiller indices yet suited to the Hong Kong property market.

New Residential Construction Report: June 2015

Today’s New Residential Construction Report showed generally improving results with total permit activity rising 7.4% since May while total starts surged 9.8% over the same period.

Single family housing permits, the most leading of indicators, increased 0.9% from May to 687K single family units (SAAR), and rose 6.0% above the level seen a year earlier but still remained well below levels seen at the peak in September 2005.

Single family housing starts declined 0.9% from May to 685K single family units (SAAR) but still remained 14.7% above the level seen a year earlier.


Thursday, July 16, 2015

NAHB/Wells Fargo Home Builder Sentiment: July 2015

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that overall assessments of housing activity generally went flat in July with the composite HMI index remaining at 60 while the "buyer traffic" index declined to a level of 43 from 44 in the prior month.

Overall, conditions for new home construction appear to have remained stable recently but still remain below the peak assessments see prior to the Great Recession.




SNAP Food Stamp Participation: April 2015

As a logical consequence of the prolonged economic downturn, participation in the federal food stamp program is continuing to rise.

The latest data released by the Department of Agriculture indicated that in April, 202,930 individual recipients were removed from the food stamps program with the current total declining 1.75% on a year-over-year basis.

Individuals receiving food stamp benefits declined to 45.43 million which, as a ratio of the overall civilian non-institutional population now stands at a whopping 18.15% of the population.

Households receiving food stamps benefits declined to 22.39 million households with the current total falling 0.77% below the level seen a year earlier

Total nominal benefit cost declined 0.23% on a year-over-year basis to $5.75 billion for the month.

Weekly Unemployment Claims: Initial and Continued July 16 2015

Today’s jobless claims report showed declines to both initial and insured (continued) unemployment claims as seasonally adjusted initial claims remained below the 300K level.

Seasonally adjusted “initial” unemployment claims declined by 15,000 to 281,000 claims while seasonally adjusted “insured” claims declined by 112,000 to 2.215 million resulting in an “insured” unemployment rate of 1.6%.


Wednesday, July 15, 2015

Recession Watch: Piger and Term Spread Probabilities


For forecasting oncoming recession, from a purely statistical standpoint, we have two interesting data series to follow, the Piger Recession Probabilities and the Term Spread Probability of Recession

In the latest release of the Piger Recession Probability, the April data (... there is a reporting lag) indicates that the probability of recession has increased to 1.69%.

In 2008, Marcelle Chauvet of the University of California and Jeremy Piger of the University of Oregon published a paper titled “A Comparison of the Real-Time Performance of Business Cycle Dating Methods” which outlined two novel statistical methods (most notably the markov-switching method) for distilling recessionary turning points out of the very same macro data series that the NBER uses to make it’s cycle assessments.

As for the Term-Spread Probability of Recession, the latest data indicates that the probability for recession appears to be on the rise with the January 2016 probability (the probability that there will be a recession by that date) of 4.4%.

Spearheaded by economist Professor Arturo Estrella of the Rensselaer Polytechnic Institute, this method derives a probability of recession from the spread between long and short yields (10-year and 3-month) and is by all accounts the standard for recession probability forecasting.

Keep in mind that a positive indication using this method would require this probability to reach 30% so while the probability is clearly rising, the current probability is still quite low.

Industrial Production and Capacity Utilization: June 2015

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing an increase in June with total industrial production increasing 0.33% since May and climbing 1.54% above the level seen in June 2014.

Capacity utilization also improved slightly rising 0.19% from May but falling 1.05% below the level seen in June 2014 to stand at 78.398%.

It's important to note that the last few months have seen a notable weakening trend in these measures with capacity utilization showing the first year-on-year declines since early 2010 at the start of the recovery.

It will be interesting to watch these series in the coming months to see if this is a momentary weakening or if we are possibly entering a new cyclical downturn.



Reading Rates: MBA Application Survey – July 15 2015

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 1 basis point to 4.15% since last week while the purchase application volume decreased 8% and the refinance application volume increased 4% 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).




Thursday, July 09, 2015

Weekly Unemployment Claims: Initial and Continued July 07 2015

Today’s jobless claims report showed a an increase to both initial and insured unemployment claims as seasonally adjusted initial claims approched the 300K level.

Seasonally adjusted “initial” unemployment claims increased 15,000 to 297,000 claims while seasonally adjusted “insured” claims increased by 69,000 to 2.334 million resulting in an “insured” unemployment rate of 1.7%.


Monday, June 22, 2015

The Chicago Fed National Activity Index: May 2015

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that the national economic activity remained weak in May with the index rising slightly to a level of -0.17 from a level of -0.19 in April while the three month moving average also improved slightly to a tepid level of -0.16.

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.

Existing Home Sales Report: May 2015

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for May showing strong sales with total home sales rising 5.1% since April and climbing 9.2% above the level seen in May 2014.

Single family home sales also increased with sales rising 5.6 from April but and climbing 9.7% above the level seen in May 2014 while the median selling price increased 8.6% above the level seen a year earlier.

Inventory of single family homes increased from April to 2.03 million units rising 1.5% above the level seen in May 2014 which, along with the sales pace, resulted in a monthly supply of 5.2 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.



Tuesday, June 16, 2015

New Residential Construction Report: May 2015

Today’s New Residential Construction Report showed mixed results with total permit activity increasing 11.8% since April while total starts declined 11.1% over the same period.

Single family housing permits, the most leading of indicators, increased 2.6% from April to 683K single family units (SAAR), and rose 9.1% above the level seen a year earlier but still remained well below levels seen at the peak in September 2005.


Friday, June 05, 2015

Employment Situation: Nonfarm Payrolls and Civilian Unemployment May 2015

Today's Employment Situation Report indicated that in May, net non-farm payrolls increased by a notable 280,000 jobs overall with the private non-farm payrolls sub-component adding 262,000 jobs while the civilian unemployment rate increased slightly to 5.5% over the same period.

Net private sector jobs increased 0.22% since last month climbing 2.53% above the level seen a year ago and climbing 3.52% above the peak level of employment seen in December 2007 prior to the Great Recession.