Extended Unemployment: Initial, Continued and Extended Unemployment Claims March 31 2011

Today’s jobless claims report showed a decline to both initial unemployment claims and continued unemployment claims as a significant declining trend continued to materialize for both initial and traditional continued claims.

Seasonally adjusted “initial” unemployment declined by 6,000 to 388,000 claims from last week’s revised 394,000 claims while seasonally adjusted “continued” claims declined by 51,000 resulting in an “insured” unemployment rate of 3.0%.

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 4.36 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 4.27 million people that are currently counted as receiving traditional continued unemployment benefits, there are 8.63 million people on state and federal unemployment rolls.

ADP National Employment Report: March 2011

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. continued to improve in March as private employers added 201,000 jobs in the month bringing the total employment level 1.29% above the level seen in March 2010.

Looking at the chart (click for full-screen dynamic version) showing ADP’s total private nonfarm payrolls since 2001 as well as the year-over-year and month-to-month percent change, you can see that while the job recovery had been anemic throughout most of 2010, more recently the trend has been picking up momentum.

Although the level of jobs is still far below the peak seen in late 2007 and still near the lows seen during the worst period of the "dot-com" recession, the bottom looks to be clearly defined and the trend is looking comparable to past recoveries.

Perusing the rest of the data in the ADP dataset you can see the the economy is currently showing the most growth for small to mid-sized service providing jobs with goods-producing jobs remaining near trough levels.

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

Reading Rates: MBA Application Survey – March 30 2011

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 increased 12 basis point to 4.92% since last week while the purchase application volume declined 1.7% and the refinance application volume declined a notable 10.1% over the same period.

While rates have generally trending up for the last four months, it will take some time to determine if this trend will continue or if rates will begin to slide back down to the historically low levels seen in mid-2010.

In any event, the purchase application volume remains near the lowest level seen in well over a decade while refinance activity continues to slow.

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).

S&P/Case-Shiller: January 2011

Note... be sure to bookmark the overall S&P/Case-Shiller Dashboard or the Dashboard of the weakest markets for a real-time view of all the markets tracked by the S&P.

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 declined a notable 0.90% since December indicating that housing is continuing slump into a double-dip.

The latest CSI data clearly indicates that the price trends are continuing to slump and, as I recently pointed out, the more timely and less distorted Radar Logic RPX data is continuing to capture notable price weakness nationwide.

Further, both composite indices are now showing notable year-over-year declines, a weak sign indeed.

The 10-city composite index declined 2.04% as compared to January 2010 while the 20-city composite declined 3.06% over the same period.

Topping the list of regional peak decliners was Las Vegas at -57.73%, Phoenix at -55.35%, Miami at -49.69%, Detroit at -48.04% and Tampa at -46.02%.

Additionally, both of the broad composite indices show significant peak declines slumping -31.66% for the 10-city national index and -31.79% 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.

The following chart (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as compared to each metros respective price peak set between 2005 and 2007.

The following chart (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as on a year-over-year basis.

The following chart (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as on a month-to-month basis.

Additionally, in order to add some historical context to the perspective, I updated my “then and now” CSI charts that compare our current circumstances to the data seen during 90s housing decline.

To create the following annual charts I simply aligned the CSI data from the last month of positive year-over-year gains for both the current decline and the 90s housing bust and plotted the data with side-by-side columns (click for larger version).


The “peak” chart compares the percentage change, comparing monthly CSI values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.

More Pain, Less Gain: S&P/Case-Shiller Preview for January 2011

As I demonstrated in prior posts, given their strong correlation, the home price indices provided daily by Radar Logic, averaged monthly, can effectively be used as a preview of the monthly S&P/Case-Shiller home price indices.

The current Radar Logic 25 MSA Composite data reported on residential real estate transactions (condos, multi and single family homes) that settled as late as January 24 and averaged for the month indicates that in the wake of the expiration of the government's final housing tax gimmick prices have continued to decline nationally dropping 3.39% below the level seen in January 2010.

The latest daily RPX data is indicating that the price decline picked up steam throughout January and is currently down roughly 3.44% on a year-over-year basis.

This trend is likely telling us that, as transactions collapse down to the weak "organic" level post-housing tax scam, prices have followed.

Look for tomorrow's S&P/Case-Shiller home price report to reflect an equivalent declining trend for prices as the source data moves further through months affected by the tax credit activity and into reality.

Pending Home Sales: February 2011

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for February showing home sales increasing slightly with the seasonally adjusted national index climbing 2.14% since January while remaining 8.19% below the level seen in February 2010.

Meanwhile, the NARs chief economist Lawrence Yun appears to be doing all he can to portray this latest data-point in a favorable light.

"Month-to-month movements can be instructive, but in this uneven recovery it’s important to look at the longer term performance. ... Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines. Contract activity is now 20 percent above the low point immediately following expiration of the home buyer tax credit."

Looking at the confluence of truly hideous trends currently playing out for housing it's no wonder the NAR is grasping for any positive number but the writing is on the wall... housing is now within a notable post-government manipulated second dip.

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).

University of Michigan Survey of Consumers March 2011 (Final)

Today's final release of the Reuters/University of Michigan Survey of Consumers for March indicated a decline in consumer sentiment with a reading of 67.5 falling 8.29% below the level seen last year while inflation expectations jumped notably to 4.6%.

The Index of Consumer Expectations (a component of the Index of Leading Economic Indicators) plunged to 57.9, and the Current Economic Conditions Index fell to 82.5.

It's important to recognize that while consumer sentiment is still higher than the panic laden trough level seen in late 2008, the current sentiment level is still far lower than any level seen during the 2001 tech recession and roughly equivalent to the worst seen during the early 1990s and second dip 1982 recessions.

Bull Trip!: GDP Report Q4 2010 (Third Rough Estimate)

Today, the Bureau of Economic Analysis (BEA) released their third "estimate" of the Q4 2010 GDP report showing that the economy continued to expand with real GDP increasing at an annualized rate of 3.1% from Q3 2010.

On a year-over-year basis real GDP increased 2.78% while the quarter-to-quarter non-annualized percent change was 0.77%.

The latest report reveals an unexpected increase for housing with residential fixed investment increasing at a rate of 3.3% from the third quarter though additional revisions are needed to get something that resembles accuracy from this figure.

Note that the administration (and the BEA) have yet to take down their estimates for Q2 residential fixed investment which still sits at the lofty level of a supposed 25.7% quarter-to-quarter change... not likely.... look for that figure to be revised down in coming releases impacting the anemic "final" Q2 results.

Non-residential fixed investment in structures supposedly increased at 7.6% from the third quarter while the "change in real private inventories" began to bear down subtracting some 3.42% from real GDP after having worked to prop the value for five consecutive quarters.

Both imports and exports of goods and services worked to contribute positively to GDP with exports increasing at a rate of 8.6% while imports declined at a rate of 12.6% (counted as a contribution to GDP) from the third quarter.

Hey Big Spender: Discretionary Durable Goods Orders February 2011

Today’s Durable Goods Manufacturers’ Shipments, Inventories and Orders report indicated that total new orders declined 0.9% from January to $199,993 billion while excluding transportation, new orders declined 0.6% to $149,821 billion.

Stripping durable goods orders of defense orders AND non-defense aircraft orders yields an effective measure of orders coming as a direct result of typical discretionary consumer durable goods spending on items such as motor vehicles, furniture, consumer electronic devices and home appliances.

Looking at the latest release, "discretionary" durable goods orders declined 0.78% since January but still remaining 9.42% above the level seen in February 2010.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims March 24 2011

Today’s jobless claims report showed a decline to both initial unemployment claims and continued unemployment claims as a significant declining trend continued to materialize for both initial and traditional continued claims.

Seasonally adjusted “initial” unemployment declined by 5,000 to 382,000 claims from last week’s revised 387,000 claims while seasonally adjusted “continued” claims declined by 2,000 resulting in an “insured” unemployment rate of 3.0%.

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 4.34 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 4.29 million people that are currently counted as receiving traditional continued unemployment benefits, there are 8.64 million people on state and federal unemployment rolls.

New Home Sales: February 2011

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for February showing a truly dramatic decline of 16.9% in sales nationally since January dropping to the lowest level on record and falling 28.0% below the level seen in February 2010 to just 250K SAAR units.

These results, while being pretty shocking especially considering the delusions of housing recovery that circulated in 2010, clearly indicate that the nation's housing markets are now firmly entrenched in a double-dip and come fully in-line with the other pitiful housing data-points I have outlined in past weeks.

As a result of the slower sales pace, the monthly supply increased to 8.9 months while the median selling price declined a notable 8.92% and the average selling price declined a whopping 13.41%.

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

Commercial Cataclysm!: Moody’s/REAL Commercial Property Price Index January 2011

The latest release of the Moody’s/REAL Commercial Property Index showed a notable monthly decline of 1.2% since December suggesting that the nation’s commercial property markets are continuing to slump through a tremendous downturn that has seen prices down some 42.70% since the peak set in October 2007.

The Moody’s/REAL CPPI data series is produced by the MIT/CRE but is noted to be “complimentary” to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc and Real Estate Analytics LLC.

Reading Rates: MBA Application Survey – March 23 2011

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 increased 1 basis point to 4.80% since last week while the purchase application volume increased 2.7% and the refinance application volume increased 2.7% over the same period.

While rates have generally trending up for the last four months, it will take some time to determine if this trend will continue or if rates will begin to slide back down to the historically low levels seen in mid-2010.

In any event, the purchase application volume remains near the lowest level seen in well over a decade while refinance activity continues to slow.

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).

Hong Kong Bubble?: Hong Kong Residential Property Prices January 2011

There has been much speculation recently about an ongoing price bubble occurring in the Hong Kong residential property market.

The University of Hong Kong’s Residential Real Estate Series (HKU-REIS) indicated that, in January, the price of residential properties increased a whopping 2.89% since December climbing 22.12% above the level seen in January 2010.

The “Hong Kong Island” index, “Kowloon” and “New Territories” sub-components also showed notable year-over-year increases with "New Territories" outpacing the pack with notable 4.15% monthly increase while the "Hong Kong Island" series indicated that prices have now far outpaced the prior 1997 peak.

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.

The Housing Meltdown Continues

Given the circumstances in Japan, I need to apologize for the analogy I’m making but unfortunately it’s the best I can do at this point.

Dousing the markets with easy money, containing toxic “assets” through the suspension of “mark-to-market” accounting, propping up besieged mortgage security markets, rescuing “underwater” households, securing the foundations of teetering financial institutions through direct-inject recapitalization… try as they might the Feds were unable to prevent the continued meltdown of the nation’s housing markets.

It’s a sad day for those policy junkies who believe that government meddling is the solution to all the “evils” that nature stirs up.

Like the influence of gravity, nature sometimes appears susceptible to human power… just lift your leg and you’re defeating the force of gravity generated by the entirety of the mass of earth.

But as we are all well aware… you can only hold your leg elevated for so long… eventually gravity wins out as the human relents to a natural force that never yields.

Similarly, the housing collapse is a natural progression playing out in a fashion that is more akin to an organic process than we would like to admit.

The Feds mobilized in the face of the “crisis” and were able to hold back the pressures for a time with tax giveaways and propping mortgage securities but it’s looking like these efforts were in vain as the true organic trends continue to force losses while naturally flushing the mistakes from the system.

Today’s existing home sales numbers support this thesis as single family home sales declined a notable 9.6% since last month with prices falling and inventory rising.

The National Association of Realtors (NAR) Chief Economist, Lawrence Yun, blames “unnecessarily tight credit” and “contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers”... Like the Feds before him, Yun would like to believe that the current circumstances are the part of a “crisis”, an anomaly not the norm.

Yet the “tight” credit and strict appraisals are but minor examples of the true organic processes currently playing out.

The latest daily Radar Logic national home price index (RPX) indicates that prices nationally prices are continuing to fall with the index breaking below 180 for the first time since April 2003 while eleven markets tracked by the S&P/Case-Shiller are setting fresh post-collapse lows with several markets falling to levels last seen in the late 90s.

Taken together with the latest miserable showing for new residential construction, depressed level of hombuilder sentiment and estimates of buyer traffic and weak purchase applications, total housing meltdown is back on the table with the ultimate reversion to the mean (and possibly beyond) being the likely outcome of this “crisis”.

Existing Home Sales Report: February 2011

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for February showing a notable triple blow to the nation's housing market with declining sales, falling prices and increasing inventory clearly indicating that housing remains historically weak and adds further evidence that a double-dip has materialized in the wake of the governments housing tax scams.

Single family home sales declined 9.6% since January and fell 2.7% below the level seen last year while prices declined a notable 4.2% below the level seen in February 2010.

Further, inventory of single family homes remains high climbing 1.7% above the level seen in February 2010 which, combined with the relatively slow pace of sales, resulted in a monthly supply of 8.4.

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: February 2011

Today’s release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that national economic activity slowed in February with the index weakening to -0.04 while the three month moving increased to 0.11.

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.

It’s important to note that at 0.11, the current three month average index value is indicating weak trend growth.