Pending Home Sales: August 2012

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for August  showing that pending home sales declined with the seasonally adjusted national index falling 2.6% since July while increasing 10.7% above the level seen in August 2011.

Meanwhile, the NARs chief economist Lawrence Yun points out that there have been 16 consecutive months of annual gains suggesting that buying activity remains on the mend:

"The performance in month-to-month contract signings has been uneven with ongoing shortages of lower priced inventory in much of the country, and across most price ranges in the West, but activity has remained at notably higher levels this year,... The index shows 16 consecutive months of year-over-year increases, and that has translated into a higher number of closed sales. Year-to-date existing-home sales are 9 percent above the same period last year, but sales were relatively flat from 2008 through 2011,"

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).

Bull Trip!: GDP Report Q2 2012 (Third Estimate)

Today, the Bureau of Economic Analysis (BEA) released their third "estimate" of the Q2 2012 GDP report showing that the economy continued to expand with real GDP increasing at a tepid annualized rate of 1.3% from Q1 2012.

On a year-over-year basis real GDP increased 2.14% while the quarter-to-quarter non-annualized percent change was 0.31%.

The latest quarterly results indicate that the most notable source of weakness in the economy came from durable goods spending which declined at a rate of 0.2% from Q1 2012 while government spending declined across the board. 

Other categories such as residential structures also saw notable slowing from the prior quarter registering a still respectable rate of 8.5% while non-residential fixed structures expand by just 0.6%. 

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.

New Home Sales: August 2012

Yesterday, the U.S. Census Department released its monthly New Residential Home Sales Report for August showing a slight monthly decline with sales dropping 0.3% since July but rising 27.7% above the level seen in August 2011 and remaining at an historically low level of 373K SAAR units.

It's important to recognize that the inventory of new homes has now fallen to a new series low at 141K units, lowest level seen in in at least 47 years while the median number of months for sale increased to 8.3.

The monthly supply went flat at 4.5 months while the median selling price increased 16.99% and the average selling price increased 13.88% from the year ago level.

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

FHFA Monthly Home Prices: July 2012

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that in July, nationally, home prices increased 0.2% since June rising 3.90% above the level seen in July 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.

S&P/Case-Shiller: July 2012

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

The latest release of the S&P/Case-Shiller (CSI) home price indices for July reported that the non-seasonally adjusted Composite-10 price index increased 1.52% since June while the Composite-20 index increased 1.59% over the same period.

The latest CSI data clearly indicates that the price trends are experiencing a lift through the typically more active spring-summer season and as I recently pointed out, the more timely and less distorted Radar Logic RPX data while continuing to capture rising prices, is starting to see a leveling off of the trend as the data moves through the summer transactions and heads for the typical declines seen in late-summer and fall.

The 10-city composite index increased 0.62% as compared to July 2011 while the 20-city composite increased 1.20% over the same period.

Both of the broad composite indices show significant peak declines slumping -30.49% for the 10-city national index and -29.98% 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.

Radar Watching: July 2012

As I have noted in the past, since the home price index data provided by Radar Logic is more timely, unadjusted and un-smoothed it is particularly useful for gaining deeper visibility over our housing markets.

As for the latest trends, it’s important to note that the 25-MSA Composite is showing continued year-over-year while prices continue to bounce from the lows set in late-January.

The latest data shows that as of late-July, prices have increased 4.0% above the level seen in July 2011 continuing the pattern of past years with prices now starting lose a little lift as the data moves from the typically most active spring period into a topping of activity seen in summer.

Look for tomorrow's S&P/Case-Shiller report to indicate more or less consistent trends with July showing continued but slowing improvement.

The Chicago Fed National Activity Index: August 2012

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) showed a worsening of the national economy with the index declining from the prior month to stand at a very weak -0.87 while the three month moving average also declined near contraction territory at -0.47.

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.

Massive Unemployment: Mass Layoffs August 2012

The latest release of the Bureau of Labor Statistics (BLS) Mass Layoff Report indicated a decline in large-scale layoffs with 1267 mass layoff events for August resulting in 127,454 initial unemployment claimants on a seasonally adjusted basis.

The BLS considers a mass layoff event to be a condition where there are at least fifty initial claims for unemployment insurance originating from a single employer over a period of five consecutive weeks.

The Philly Fed Business Outlook Survey: September 2012

The September 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 rising to a contraction level of -1.9 while assessments the future activity index increased notably to a level of 41.2.

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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims September 20 2012

Today’s jobless claims report indicated that both initial and continued unemployment claims declined slightly as seasonally adjusted initial claims remained just below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims declined by 3,000 to 382,000 claims from a revised 385,000 claims for the prior week while seasonally adjusted “continued” claims declined by 32,000 resulting in an “insured” unemployment rate of 2.6%.

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 2.16 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.93 million people that are currently counted as receiving traditional continued unemployment benefits, there are 5.09 million people on state and federal unemployment rolls.

Existing Home Sales Report: August 2012

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for August showing a notable increase in sales with total home sales climbing 7.8% since July rising 9.3% above the level seen in August 2011.

Single family home sales also improved rising 8.0% from July and 10.0% above the level seen in August 2011 while the median selling price went flat on the month but increased 10.2% above the level seen in August 2011.

Inventory of single family homes increased 6.3% from July dropping 16.3% below the level seen in
August 2011 which, along with the sales pace, resulted in a fairly balanced monthly supply of 6.2 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.

New Residential Construction Report: August 2012

Today’s New Residential Construction Report showed gains in August with single family permits increasing from July while starts also increased over the same period.

Single family housing permits, the most leading of indicators, increased a slight 0.2% from July to 512K single family units (SAAR), and increased 19.3% above the level seen in August 2011 but still remained  an astonishing 71.52% below the peak in September 2005.

Single family housing starts increased 5.5% from July to 535K units (SAAR), and climbed 26.8% above the level seen in August 2011 and remained a stunning 70.65% below the peak set in early 2006.

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings September 2012

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing an notable improvement in September with the composite HMI index rising to 40 while the "buyer traffic" index climbed to 31, a level not seen since May 2006.

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.

The Empire State Manufacturing Survey: September 2012

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 notable deceleration of current assessments of manufacturing activity and an improvement to future assessments with the current activity index falling to a notably weak level of -10.41 while future activity improved to 27.22.

Current prices paid rose to 19.15 while current new orders weakened to -14.03 as assessments of future new orders improved to 17.02.

Production Pullback: Industrial Production August 2012

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing a notable pullback in August with total industrial production declining 1.16% since July but rising 2.80% above the level seen in August 2011.

Capacity utilization declined a notable 1.30% from July remaining just 1.42% above the level seen in August of 2011 to stand at 78.19%

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.

Conspicuous Correlation: Retail Sales August 2012

Today, the U.S. Census Bureau released its latest nominal read of retail sales showing an increase of 0.9% from July and an increase of 4.7% 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 just 0.24% from July and a tepid 1.93% above the level seen in August 2011 while, adjusting for inflation, “real” discretionary retail sales increased a slight 0.24% 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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims September 13 2012

Today’s jobless claims report indicated that initial unemployment claims increased while continued unemployment claims declined as seasonally adjusted initial claims remained just below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims increased by 15,000 to 382,000 claims from a revised 367,000 claims for the prior week while seasonally adjusted “continued” claims declined by 49,000 resulting in an “insured” unemployment rate of 2.6%.

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 2.22 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.08 million people that are currently counted as receiving traditional continued unemployment benefits, there are 5.31 million people on state and federal unemployment rolls.

Reading Rates: MBA Application Survey – September 12 2012

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 to 3.62% since last week while the purchase application volume increased 8% and the refinance application volume increased 12% 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).