Thursday, March 28, 2013

Bull Trip!: GDP Report Q4 2012 (Third Estimate)

Today, the Bureau of Economic Analysis (BEA) released their third "estimate" of the Q4 2012 GDP report showing that the economy barely registered growth in Q4 2012 with real GDP improving at an annualized rate of just 0.4% from Q3 2012.

On a year-over-year basis, real GDP increased 1.67% while the quarter-to-quarter non-annualized percent change was an increase of a slight 0.09%.

The latest quarterly results indicate that the most notable source of weakness in the economy came from declines in exports with the "net-exports" component declining at an annualized rate of 2.8% from Q3, and notable declines in government spending particularly on national defense with a 22.1% decline in federal national defense spending from Q3.

Residential investment, on the other hand, worked to buoy the overall fixed investment component growing at an annualized rate of 17.6% from Q3.

Keep in mind that these results are likely very poorly estimated and are sure to be revised notably in following quarters and even years to come.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims March 28 2013

Today’s jobless claims report showed a notable increases to initial unemployment claims and a decline to continued unemployment claims as initial claims trended well below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims increased by 16,000 to 357,000 claims from 341,000 claims for the prior week while seasonally adjusted “continued” claims declined by 27,000 claims to 3.050 million resulting in an “insured” unemployment rate of 2.4%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.90 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.46 million people that are currently counted as receiving traditional continued unemployment benefits, there are 5.36 million people on state and federal unemployment rolls.


Wednesday, March 27, 2013

Pending Home Sales: February 2013

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for February showing that pending home sales declined with the seasonally adjusted national index dropping 0.4% from January but increasing 8.4% above the level seen in February 2012.

Meanwhile, the NARs chief economist Lawrence Yun suggests that new home inventory is needed in order to relieve the current "shortage" :

"Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels, ... Most local home builders are small businesses and simply don't have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market."

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Reading Rates: MBA Application Survey – March 27 2013

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) declined 2 basis points to 3.65% since last week while the purchase application volume increased 7% and the refinance application volume increased 8% 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).




New Home Sales: February 2013

Yesterday, the U.S. Census Department released its monthly New Residential Home Sales Report for February showing a notable monthly decline with sales falling 4.6% from January but rising 12.3% above the level seen in February 2012 but still remaining at an historically low level of 411K SAAR units.

It's important to recognize that the inventory of new homes appears to be mounting as unsold units totaled 152K, still though near the lowest level seen in in at least 47 years while the median number of months for sale rose to 5.0.

The monthly supply increased to 4.4 months while the median selling price increased 2.88% and the average selling price increased 14.49% from the year ago level.

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

Tuesday, March 26, 2013

S&P/Case-Shiller: January 2013

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 increased again rising a slight 0.16% since December while the Composite-20 index increased 0.13% over the same period.

The latest CSI data is beginning to demonstrate more resiliency than seen in recent years as prices continue to move up, even just slightly, in the face of typical lower seasonal transactions.

If this trend continues, rather than declining as has been seen in past years, prices may just remain flat into the February-March release in advance of the typical uplift from the more active spring transactions.

The 10-city composite index increased 7.25% as compared to January 2012 while the 20-city composite increased 8.08% over the same period.

Both of the broad composite indices show significant peak declines slumping -29.86% for the 10-city national index and -29.24% for the 20-city national index on a peak comparison basis.

To better visualize today’s results use Blytic.com to view the full release.

Monday, March 25, 2013

The Chicago Fed National Activity Index: February 2013

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated improvement for the national economy with the index rising to a level of 0.44 from a level of -0.49 in January while the three month moving average declined to a level of 0.09.

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.

Thursday, March 21, 2013

The Philly Fed Business Outlook Survey: March 2013

The March release of the Federal Reserve Bank of Philadelphia Business Outlook Survey (BOS) indicated an improvement of the regions manufacturing activity with the current activity index climbing to a weak expansionary level of 2 while assessments the future activity remained flat at level of 32.5.

The following chart shows the current and future activity indexes both with their corresponding 3-month moving averages. The red line marks the threshold between contraction and expansion for these diffusion indexes.

Existing Home Sales Report: February 2013

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for February showing an increase in sales with total home sales rising 0.8% since January climbing 10.2% above the level seen in February 2012.

Single family home sales, on the other hand, declined falling 0.2% from January but still rose 8.7% above the level seen in February 2012 while the median selling price increased a notable 11.3% above the level seen a year earlier.

Inventory of single family homes increased from January to 1.68 million units dropping 19.2% below the level seen in February 2012 which, along with the sales pace, resulted in a monthly supply of 4.6 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.



FHFA Monthly Home Prices: January 2013

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 0.55% from December and rose 6.5% above the level seen in December 2011.

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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims March 21 2013

Today’s jobless claims report showed a increases to both initial and continued unemployment claims as initial claims trended well below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims increased by 2,000 to 336,000 claims from 334,000 claims for the prior week while seasonally adjusted “continued” claims increased by 5,000 claims to 3.053 million resulting in an “insured” unemployment rate of 2.4%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.78 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.04 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.82 million people on state and federal unemployment rolls.


Wednesday, March 20, 2013

Reading Rates: MBA Application Survey – March 20 2013

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) went flat at 3.67% since last week while the purchase application volume declined 4% and the refinance application volume declined 8% 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).




Tuesday, March 19, 2013

New Residential Construction Report: February 2013

Today’s New Residential Construction Report showed broad improvement in February with solid increases for both single family permits and starts as well as improvement for total housing starts.

Single family housing permits, the most leading of indicators, rose 2.7% from January to 600K single family units (SAAR), and increased 25.52% above the level seen in February 2012 but still remained an astonishing 66.63% below the peak in September 2005.

Single family housing starts increased 0.5% from December to 618K units (SAAR), and rose 31.49% above the level seen in February 2012 but still remained 66.10% below the peak set in early 2006.


Monday, March 18, 2013

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings March 2013

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that assesments of housing activity declined in March with the composite HMI index falling to 44 while the "buyer traffic" index inscreased to 35.

It's important to note that March continued to show a flattening of sorts to future expectations, a development that is worth noting as the new home market moves through it's most active months at the start of the year (see Bob Tolls explanation for January - early spring being the new home markets most active period annually).

While all indicators have made truly spectacular improvements this year, it's important to note that conditions still remain fairly distressed by historic standards.

Although, looking at the data, it is fairly clear that the last few months 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.




Friday, March 15, 2013

Production Pullback: Industrial Production February 2013

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing a notable increase in February with total industrial production climbing 0.71% since January and rising 2.52% above the level seen in February 2012.

Capacity utilization also rise climbing 0.55% from January rising 0.83% above the level seen in February of 2012 to stand at 79.63%

It's important to recognize that though the "recovery" is well over two years old, both industrial production and capacity utilization are notably below the peaks set in late 2007.


Thursday, March 14, 2013

Extended Unemployment: Initial, Continued and Extended Unemployment Claims March 14 2013

Today’s jobless claims report showed a decline to both initial and continued unemployment claims as initial claims trended well below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims declined by 10,000 to 332,000 claims from 342,000 claims for the prior week while seasonally adjusted “continued” claims declined by 89,000 claims to 3.024 million resulting in an “insured” unemployment rate of 2.4%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.91 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.61 million people that are currently counted as receiving traditional continued unemployment benefits, there are 5.52 million people on state and federal unemployment rolls.


Wednesday, March 13, 2013

Reading Rates: MBA Application Survey – March 13 2013

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 9 basis points to 3.67% since last week while the purchase application volume declined 3% and the refinance application volume declined 5% 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).




Conspicuous Correlation: Retail Sales February 2013

Today, the U.S. Census Bureau released its latest nominal read of retail sales showing a notable increase of 1.1% from January, a gain of 4.6% on a year-over-year basis on an aggregate of all items including food, fuel and healthcare services.

Nominal "discretionary" retail sales including home furnishings, home garden and building materials, consumer electronics and department store sales, on the other hand, declined  a sight 0.12% from January but remained 0.98% above the level seen in February 2012 while, adjusting for inflation, “real” discretionary retail sales declined 0.31% over the same period.

On a “nominal” basis, there had appeared to be “rough correlation” between strong home value appreciation and strong retail spending preceding the housing bust and an even stronger correlation when home values started to decline.

The following chart shows the year-over-year change to nominal discretionary retail sales and the year-over-year change to nominal the S&P/Case-Shiller Composite home price index since 1993 and since 2000.

As you can see there is, at the very least, a coincidental change to home values and consumer spending during the boom and then the bust, but as home values have continued to decline, retail spending has remained low but has not continued to consistently contract.

Looking at the chart below (click for full-screen dynamic version), adjusted for inflation (CPI for retail sales, CPI “less shelter” for S&P/Case-Shiller Composite) the “rough correlation” between the year-over-year change to the “discretionary” retail sales series and the year-over-year S&P/Case-Shiller Composite series seems now even more significant.