Existing Home Sales Report: February 2016

Yesterday, the National Association of Realtors (NAR) released their Existing Home Sales Report for February showing a notable decline with total home sales falling 7.1% since January but remaining 2.2% above the level seen a year earlier.

Single family home sales also slumped with sales falling a notable 7.2% from January but still rising 2.0% above the level seen a year earlier while the median selling price increased 2.3% over the same period.

Inventory of single family homes increased, rising 1.9% from January to 1.65 million units, falling 0.6% below the level seen in February 2015 which, along with the sales pace, resulted in a notably tight monthly supply of 4.4 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.

The Chicago Fed National Activity Index: February 2016

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that the national economic worsened in February with the index falling to a contraction level of -0.29 from a level of 0.41 a month earlier while the three month moving average improved to a level of -0.07.

February's weakness came as a direct result of declines to every component measure of the CFNAI reversing last months improvements and apparently reflecting continued general economic weakness.

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.

The Philly Fed Business Outlook Survey: March 2016

The March release of the Federal Reserve Bank of Philadelphia Business Outlook Survey (BOS) indicated improvement in the regions manufacturing activity with the current activity index increasing to a level of 12.4 while assessments the future activity also improved to a level of 28.8.

The above 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.

Weekly Unemployment Claims: Initial and Continued March 17 2016

Today’s jobless claims report showed an increase to both initial and continued unemployment claims as seasonally adjusted initial claims remained below the 300K level.

Seasonally adjusted “initial” unemployment claims increased by 7,000 to 265,000 claims while seasonally adjusted "continued" unemployment claims increased by 8,000 to 2.235 million resulting in an “insured” unemployment rate of 1.6%.

Industrial Production and Capacity Utilization: February 2016

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing continued weakness in February with total industrial production declining 0.49% from January falling 1.03% below the level seen in February 2015.

Capacity utilization also weakened falling 0.54% from January declining 2.26% below the level seen in February 2015 to stand at 76.669%.

It's important to note that industrial production is still showing significant weakness which, if all past periods were to serve at least as a rough guide, now clearly indicates notable trouble for the macro-economy.

New Residential Construction Report: February 2016

Today’s New Residential Construction Report showed mixed results with total permit activity declining 3.1% since January while total starts increased a notable 5.2% over the same period.

Single family housing permits, the most leading of indicators, increased 0.4% from January to 731K single family units (SAAR), and rose 16.8% above the level seen a year earlier and still remained well below levels seen at the peak in September 2005.

Single family housing starts increased a notable 7.2% from January to 822K units (SAAR) and rose 37.0% above the level seen a year earlier but still remained well below the levels seen at the peak in September 2005.

Reading Rates: MBA Application Survey – March 16 2016

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 points to 3.85% since last week while the purchase application volume increased 0.3% and the refinance application volume decreased 6% 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).

NAHB/Wells Fargo Home Builder Sentiment: March 2016

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 March with the composite HMI index remaining flat at 58 while the "buyer traffic" index improved to a level of 43.

The Empire State Manufacturing Survey: March 2016

The Empire State Manufacturing Survey consists of a series of diffusion indices distilled from a monthly survey of New York regional manufacturing executives and seeks to identify trends across 22 different current and future manufacturing related activities.

Today’s report showed a overall improvement for both current and future assessments of manufacturing activity with the current activity index rising to a level of 0.62 while future activity rose to a weak level of 25.52.

Current prices paid went flat at 2.97 while current new orders improved to 9.57 while assessments of future new orders improved to 38.96.

Retail Sales: February 2016

Today, the U.S. Census Bureau released its latest nominal read of retail sales showing slowing activity in February with sales falling 0.1% from January but rising 3.1% 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 increased 0.66% from January and rose 5.27% above the level seen in February 2015 while, adjusting for inflation, “real” discretionary retail sales increased 0.66% on the month and rose 4.08% since February 2015.

Weekly Unemployment Claims: Initial and Continued March 10 2016

Today’s jobless claims report showed a decrease to both initial and continued unemployment claims as seasonally adjusted initial claims remained below the 300K level.

Seasonally adjusted “initial” unemployment claims declined by 18,000 to 259,000 claims while seasonally adjusted "continued" unemployment claims declined by 32,000 to 2.225 million resulting in an “insured” unemployment rate of 1.6%.

Reading Rates: MBA Application Survey – March 09 2016

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 points to 3.80% since last week while the purchase application volume increased 4% and the refinance application volume decreased 2% 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).

Employment Situation: Nonfarm Payrolls and Civilian Unemployment February 2016

Today's Employment Situation Report indicated that in February, net non-farm payrolls increased by a notable 242,000 jobs overall with the private non-farm payrolls sub-component adding 230,000 jobs while the civilian unemployment went flat at 4.9% over the same period.

Net private sector jobs increased 0.19% since last month climbing 2.18% above the level seen a year ago and climbing 4.78% above the peak level of employment seen in December 2007 prior to the Great Recession.

Employment Situation: Unemployment Duration February 2016

Today's employment situation report showed that conditions for the long term unemployed worsened notably in February.

Workers unemployed 27 weeks or more increased to 2.165 million or 27.7% of all unemployed workers while the median term of unemployment increased to 11.2 weeks and the average stay on unemployment increased to 29.0 weeks.

Employment Situation: Total Unemployment February 2016

Today's Employment Situation report showed that in February “total unemployment” including all marginally attached workers declined to 9.7% while the traditionally reported unemployment rate went flat at 4.9%.

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.