Reading Rates: MBA Application Survey – August 21 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 a notable 14 basis point to 4.54% since last week while the purchase application volume increased 1% and the refinance application volume declined 8% over the same period.

Rates now appear to be rising again after some settling and following 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 "taper" the GSE and treasury purchases later this year.

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).

The Chicago Fed National Activity Index: July 2013

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that the national economy remained near contraction in July with the index improving to weak level of -0.15 from a level of -0.23 in June while the three month moving average improved to a level of -0.15.

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.

SNAP Food Stamp Participation: May 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 May, 86,720 individual recipients were added to the food stamps program with the current total still increasing 2.45% on a year-over-year basis.

Individuals receiving food stamp benefits increased to 47.63 million which, as a ratio of the overall civilian non-institutional population now stands at a whopping 19.41% of the population.

Households receiving food stamps benefits increased by 32,084 to 23.07 million households with the current total rising 3.29% above the level seen a year earlier

As participation continues to swell, so too has the total nominal benefit cost climbing 2.27% on a year-over-year basis to $6.32 billion for the month.

Reading Rates: MBA Application Survey – August 14 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 7 basis point to 4.40% since last week while the purchase application volume declined 5% and the refinance application volume declined 4% over the same period.

Rates now appear to be settling a bit 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).

Conspicuous Correlation: Retail Sales July 2013

Today, the U.S. Census Bureau released its latest nominal read of retail sales showing an increase of 0.2% from June, and a gain of 5.4% 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 0.1% from June but still increased 2.61% above the level seen in July 2012 while, adjusting for inflation, “real” discretionary retail sales declined 0.1% on the month and increased 0.80% since July 2012.

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 August 08 2013

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

Seasonally adjusted “initial” unemployment claims rose by 5,000 to 333,000 claims from 328,000 claims for the prior week while seasonally adjusted “continued” claims rose by 67,000 claims to 3.018 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 1.51 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.92 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.44 million people on state and federal unemployment rolls.

Reading Rates: MBA Application Survey – August 07 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 3 basis point to 4.47% since last week while the purchase application volume increased 1% and the refinance application volume went flat over the same period.

Rates now appear to be settling a bit 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).

Envisioning Employment: Employment Situation July 2013

Today’s Employment Situation Report indicated that in July, net non-farm payrolls increased by 162,000 jobs overall with the private non-farm payrolls sub-component adding 161,000 jobs while the civilian unemployment rate declined to 7.4% over the same period.

Net private sector jobs increased 0.14% since last month climbing 2.07% above the level seen a year ago but remained 1.28% below the peak level of employment seen in December 2007.

Recovery-less Recovery: Unemployment Duration July 2013

Today's employment situation report showed that conditions for the long term unemployed improved in July while still remaining distressed by historic standards.

Workers unemployed 27 weeks or more declined to 4.246 million or 37.0% of all unemployed workers while the median term of unemployment declined to 15.7 weeks and the average stay on unemployment increased to 36.6 weeks.

Looking at the charts below (click for super interactive versions) you can see that today’s sorry situation far exceeds even the conditions seen during the double-dip recessionary period of the early 1980s, long considered by economists to be the worst period of unemployment since the Great Depression.

On The Margin: Total Unemployment July 2013

Today's Employment Situation report showed that in July “total unemployment” including all marginally attached workers declined to 14.0% while the traditionally reported unemployment rate dropped to 7.4%.

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.

Construction Spending: June 2013

Today, the U.S. Census Bureau released their latest read of construction spending showing notable weakening in June with total private construction spending declining 0.41% from May while single family private residential construction spending and non-residential construction spending also declined on the month.

On a month-to-month basis, total residential spending declined 0.02% from May climbing 22.40% above the level seen in June 2012 while still remaining a whopping 50.91% below the peak level seen in 2006.

Single family construction spending declined 0.81% since May rising 31.28% since June 2012 but remained a whopping 64.96% below it's peak in 2006.

Non-residential construction spending declined 0.86% since May falling 1.47% below the level seen in June 2012 and remained a whopping 31.80% below the peak level reached in October 2008.

The following charts (click for larger dynamic versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year, month-to-month and peak percent change to each since 1994 and 2000 – 2005.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims August 01 2013

Today’s jobless claims report showed declines 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 19,000 to 326,000 claims from 345,000 claims for the prior week while seasonally adjusted “continued” claims declined by 52,000 claims to 2.951 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 1.56 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.05 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.61 million people on state and federal unemployment rolls.

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).

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.