Thursday, January 30, 2014

Pending Home Sales: December 2013

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for December showing that pending home sales plunged with the seasonally adjusted national index dropping a whopping 8.7% from November and falling 8.8% below the level seen in December 2012.

Meanwhile, the NARs chief economist Lawrence Yun is blaming weather, rising home prices and low inventory for the slumping results:

"Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers, ... Home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice. Although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors."

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, January 29, 2014

Reading Rates: MBA Application Survey – January 29 2014

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 points to 4.39% since last week while the purchase application volume increased 2% and the refinance application volume declined 2% over the same period.

Now that the Federal Reserve has actually announced a taper of their bond purchasing by $10 billion per month, it will be interesting to watch the trend for mortgage rates.

Any significant move up in lending rates has the potential to do serious damage to home purchase activity and home prices.

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).




Monday, January 27, 2014

New Home Sales: December 2013

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for December showing a notable decline with sales falling 7.0% from November but still rising 4.5% above the level seen in December 2012 remaining at an historically low level of 414K SAAR units.

The monthly supply increased to 5.0 months while the median selling price increased 4.61% and the average selling price increased 4.08% from the year ago level.

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

Thursday, January 23, 2014

Existing Home Sales Report: December 2013

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for December showing increasing sales with total home sales rising 1% since November but falling 0.6% below the level seen in December 2012.

Single family home sales also rose climbing 1.9% from November falling 0.7% below the level seen in December 2012 while the median selling price increased 9.8% above the level seen a year earlier.

Inventory of single family homes declined from November to 1.64 million units and climbed 1.9% above the level seen in December 2012 which, along with the sales pace, resulted in a monthly supply of 4.6 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.



Tuesday, January 21, 2014

Hong Kong Bubble?: Hong Kong Residential Property Prices November 2013

The latest release of the University of Hong Kong's Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in November, the price of residential properties declined 1.43% since October but still rose 3.82% above the level seen in November 2012.

The last few months of data appear to be indicating that a pullback of sorts is occurring for Hong Kong property prices.  Clearly, it will take some more time and data to discern whether this pullback is just a healthy pause in an astounding run of price inflation as had occurred during 2008 and 2011 or whether some more notable trend is playing out.

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.

Friday, January 17, 2014

Industrial Production: December 2013

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing an increase in December with total industrial production climbing 0.31% since November and rising 3.68% above the level seen in December 2012.

Capacity utilization also improved climbing 0.14% from November and rising 1.81% above the level seen in December 2012 to stand at 79.20%

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.


New Residential Construction Report: December 2013

Today’s New Residential Construction Report showed a notable declines to both total permit activity and total start activity with starts dropping 9.8% from November.

Single family housing permits, the most leading of indicators, declined 4.8% from November to 610K single family units (SAAR), and  increased 4.5% above the level seen in December 2012 but still remained well below levels seen at the peak in September 2005.


Thursday, January 16, 2014

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings January 2014

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that assessments of housing activity worsened in January with the composite HMI index falling to 56 while the "buyer traffic" index declined to a level of 40.

It's important to note that while the last few months results have suggested a pullback of sorts for home builder activity, the latest trend has been very strong and consistent with the overall recovery seen in the nation's housing markets.

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.




Monday, January 13, 2014

SNAP Food Stamp Participation: October 2013

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

The latest data released by the Department of Agriculture indicated that in October, a whopping 110,239 individual recipients were added to the food stamps program with the current total declining 0.29% on a year-over-year basis.

Individuals receiving food stamp benefits increased to 47.41 million which, as a ratio of the overall civilian non-institutional population now stands at a whopping 19.24% of the population.

Households receiving food stamps benefits increased by 54,236 to 23.05 million households with the current total rising 0.48% above the level seen a year earlier

Total nominal benefit cost increased 0.23% on a year-over-year basis to $6.35 billion for the month.

Envisioning Employment: Employment Situation December 2013

The latest Employment Situation Report indicated that in December, net non-farm payrolls increased by just 74,000 jobs overall with the private non-farm payrolls sub-component adding 86,000 jobs while the civilian unemployment rate declined to 6.7% over the same period.

Net private sector jobs increased 0.08% since last month climbing 1.96% above the level seen a year ago but remained 0.55% below the peak level of employment seen in December 2007.

Recovery-less Recovery: Unemployment Duration December 2013


The latest employment situation report showed that conditions for the long term unemployed were mixed in December while still remaining distressed by historic standards.

Workers unemployed 27 weeks or more declined to 3.878 million or 37.7% of all unemployed workers while the median term of unemployment declined increased to 17.1 weeks and the average stay on unemployment went flat at 37.1 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 December 2013

The latest Employment Situation report showed that in December “total unemployment” including all marginally attached workers went flat at 13.1% while the traditionally reported unemployment rate declined to 6.7%.

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.

Wednesday, January 08, 2014

ADP National Employment Report: December 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 December as private employers added 238,000 jobs in the month bringing the total employment level 1.91% above the level seen in December 2012.

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

Reading Rates: MBA Application Survey – January 08 2014

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 6 basis point to 4.58% since last week while the purchase application volume declined 1% and the refinance application volume increased 5% over the same period.

Now that the Federal Reserve has actually tapered their bond purchasing by $10 billion per month, it will be interesting to watch the trend for mortgage rates.

Any significant move up in lending rates has the potential to do serious damage to home purchase activity and home prices.

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).




Monday, January 06, 2014

ISM Non-Manufacturing Report on Business: December 2013

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity slowed in December with the overall non-manufacturing index falling to 53 from last months reading of 53.9.

At 55.2 the business activity index also decreased slightly since last month and declining 9.21% below the level seen a year earlier.

This month, service industry respondents are sounding a bit mixed with respondents citing uncertainty over healthcare legislation and steadily improving conditions:

"Hiring activity seems to remain steady at mid- to senior-level management positions. However, it is uncertain what impact the Affordable Healthcare Act will have on hiring and full-time status in 2014 as more companies are re-evaluating their healthcare benefits strategies for all positions." (Management of Companies & Support Services)

"Business is steady. We are at year-end and the holidays, so it's a little quiet. Expect things to pick up after the first [of the year]." (Construction)

"Early, severe winter weather has had a major impact on business. Both customers and employees were unable to reach the workplace." (Arts, Entertainment & Recreation)

"Steady, with no significant shifts in demand or supply." (Finance & Insurance)

"Overall, we are still seeing the pickup in business which began in the 3rd quarter." (Wholesale Trade)

"General business conditions have improved." (Information)