Wednesday, July 31, 2013

ADP National Employment Report: July 2013

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 July as private employers added 200,000 jobs in the month bringing the total employment level 1.79% above the level seen in July 2012.

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

Reading Rates: MBA Application Survey – July 31 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 1 basis point to 4.44% since last week while the purchase application volume declined 3% and the refinance application volume decreased 4% over the same period.

Rates now appear to possibly be trending down after weeks of explosive increases that saw a rise of over 100 basis points seemingly directly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.

It appears now though that Chairman Bernanke's latest comments might have worked to provide a bit more clarity surrounding the Feds plans for QE thereby working to halt the recent run-up in rates.

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, July 30, 2013

S&P/Case-Shiller: May 2013

Today's release of the S&P/Case-Shiller (CSI) home price indices for May reported that the non-seasonally adjusted Composite-10 price index rose a notable 2.48% since April while the Composite-20 index also increased 2.44% over the same period.

The latest CSI data is continuing to demonstrate significant resiliency compared to past years, as prices remained stable through the typically slow winter and early spring period and now appear to be rising notably through the more active late spring period.

The 10-city composite index increased 11.82% as compared to May 2012 while the 20-city composite increased 12.17% over the same period.

Both of the broad composite indices still show significant peak declines slumping -25.01% for the 10-city national index and -24.39% 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, July 29, 2013

Pending Home Sales: June 2013

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for June showing that pending home sales declined with the seasonally adjusted national index falling 0.4% from May but increasing 10.9% above the level seen in June 2012.

Meanwhile, the NARs chief economist Lawrence Yun is suggests that the recent run-up in interest rates worked to depress the latest read of contract activity:

"Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June, ... The persistent lack of inventory also is contributing to lower contract signings."

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).

Wednesday, July 24, 2013

New Home Sales: May 2013

Yesterday, the U.S. Census Department released its monthly New Residential Home Sales Report for May showing a improvement with sales climbing a notable 8.3% from April and rising 38.1% above the level seen in May 2012 but still remaining at an historically low level of 497K SAAR units.

It's important to recognize that the inventory of new homes appears to be mounting as unsold units totaled 161K, still though near the lowest level seen in in at least 47 years while the median number of months for sale decreased to 3.9.

The monthly supply declined to 3.9 months while the median selling price increased 7.35% and the average selling price increased 8.54% from the year ago level.

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

Reading Rates: MBA Application Survey – July 24 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 declined notably dropping 10 basis points to 4.43% since last week while the purchase application volume declined 2% and the refinance application volume decreased 1% over the same period.

Rates now appear to possibly be trending down after weeks of explosive increases that saw a rise of over 100 basis points seemingly directly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.

It appears now though that Chairman Bernanke's latest comments might have worked to provide a bit more clarity surrounding the Feds plans for QE thereby working to halt the recent run-up in rates.

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, July 23, 2013

FHFA Monthly Home Prices: May 2013

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that in May, nationally, home prices increased 0.68% from April and rose 7.24% above the level seen in May 2012.

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.

Monday, July 22, 2013

Existing Home Sales Report: June 2013

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for June showing a decline in sales with total home sales sliding 1.2% since May but climbing 15.2% above the level seen in June 2012.

Single family home sales also declined falling 1.1% from May but still rising 14.5% above the level seen in June 2012 while the median selling price increased a notable 10.5% above the level seen a year earlier.

Inventory of single family homes increased from May to 1.96 million units but still remained 6.7% below the level seen in June 2012 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.



The Chicago Fed National Activity Index: June 2013

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that the national economy remained near contraction in June with the index improving to weak level of -0.13 from a level of -0.29 in May while the three month moving average improved to a level of -0.26.

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.

Wednesday, July 17, 2013

Reading Rates: MBA Application Survey – July 17 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 4.53% since last week while the purchase application volume increased 1% and the refinance application volume decreased 4% over the same period.

Rates have literally exploded rising a whopping 106 basis points over the past nine weeks seemingly directly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.

Clearly, steadily increasing rates is working to tamp down mortgage application activity but thus far, the spillover to home sales and price indicators appears minimal.

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 Residential Construction Report: June 2013

Today’s New Residential Construction Report showed mixed results in June with an 9.9% decline to total housing starts and a 7.5% decline to total housing permits while both single family housing permits and starts improved on the month.

Single family housing permits, the most leading of indicators, increased 0.6% from May to 624K single family units (SAAR), and  increased 24.6% above the level seen in June 2012 but still remained well below levels seen at the peak in September 2005.

Single family housing starts declined 0.8% from May to 591K units (SAAR), and rose 11.5% above the level seen in June 2012 but still remained well below the peak set in early 2006.


Tuesday, July 16, 2013

Production Pullback: Industrial Production June 2013

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing an increase in June with total industrial production climbing 0.31% since May and rising 1.98% above the level seen in June 2012.

Capacity utilization also improved climbing 0.17% from May and rising 0.18% above the level seen in June 2012 to stand at 77.84%

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.


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

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that assessments of housing activity improved notably in July with the composite HMI index climbing to 57, the highest level seen since early 2006, while the "buyer traffic" index also improved, rising to a level of 45.

It's important to note that July continued to firmly reverse the weakening trend seen earlier in the year, suggesting that activity in the new home market has picked up notably and is remaining strong even beyond the traditionally strong first quarter period.

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.




Friday, July 12, 2013

SNAP Food Stamp Participation: April 2013

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

In fact, household participation has been climbing so steadily that it has dwarfed the last peak (which looks like a minor blip by comparison) set as a result of the immediate fallout following hurricane Katrina.

The latest data released by the Department of Agriculture indicated that in April, a notable 175,902 individual recipients were removed from the food stamps program with the current total still increasing 2.75% on a year-over-year basis.

Individuals receiving food stamp benefits declined to 47.54 million which, as a ratio of the overall civilian non-institutional population now stands at a whopping 19.39% of the population.

Households receiving food stamps benefits declined by 76,082 to 23.03 million households with the current total rising 3.72% above the level seen a year earlier

As participation continues to swell, so too has the total nominal benefit cost climbing 2.80% on a year-over-year basis to $6.29 billion for the month.

Thursday, July 11, 2013

Extended Unemployment: Initial, Continued and Extended Unemployment Claims July 11 2013

Today’s jobless claims report showed an increase 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 16,000 to 360,000 claims from 344,000 claims for the prior week while seasonally adjusted “continued” claims increased by 24,000 claims to 2.977 million resulting in an “insured” unemployment rate of 2.3%.

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 1.64 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.78 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.43 million people on state and federal unemployment rolls.


Wednesday, July 10, 2013

Recession Watch 2013: Term Spread Probability Series


With the weak economic recovery lagging through its fourth continuous year, its sensible to start looking for clues, however so slight, of the possibility of oncoming recession.

First, let’s remember that while the NBER makes the official call of both the “peak” of a business cycle expansion and the “trough” of the subsequent recession, their officiating is delayed to say the least.

For a more “real time” assessment of the prospects of recession, various methods of number crunching have been formulated to distill out a basic probability assessment from several underlying macro series data sets.

One popular statistical method is the yield-curve based “Term Spread” probability method.


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.

The latest data indicates that the probability for recession is remains elevated with a January 2014 probability (the probability that there will be a recession by that date) of 4.4%.

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.

Recession Watch 2013: Piger Probability Series


Last year I reported on a relatively new recession probability indicator (… the “markov switching” series recently introduced to the Fed FRED/Blytic) that was giving a pretty clear, though preliminary, indication of probable recession.

While I noted that the series was highly revised, I pointed out that even taking into account the revisions, the series was giving a recession signal since using just the "maximum" reported values (values that had been all been revised lower) the reporting 20% probability was very unusual and typically associated to oncoming trouble.

In the latest release, the April data (... there is a reporting lag) indicates that the probability of recession has increased to 3.08% while the standout August 2012 value (that initially peaked interest in this series) has now been revised to 1.22%.

It's important to note though that the point of my prior post was to highlight just the "maximum" reported values and while the latest release revises down August's 19.6% and reports an additional low probability for the latest month, it makes no difference... the fact remains that this series has NOT given such a significant over estimate of recession without there being a probable recession ahead.

Now clearly, there could always be a first time... this is just estimated data... but the prior 19.6% reported figure clearly argues for following this series very closely in the coming months.  

Reading Rates: MBA Application Survey – July 10 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) rose again climbing 10 basis points to 4.52% since last week while the purchase application volume decreased 3% and the refinance application volume decreased 4% over the same period.

Rates have literally exploded rising a whopping 106 basis points over the past nine weeks seemingly directly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.

Clearly, steadily increasing rates is working to tamp down mortgage application activity but thus far, the spillover to home sales and price indicators appears minimal.

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).