University of Michigan Survey of Consumers March 2012 (Final)

Today's final release of the Reuters/University of Michigan Survey of Consumers for March indicated an increase in consumer sentiment with a reading of 74.5 and climbing 12.89% above the level seen last year while one year inflation expectations jumped to 3.9%.

The Index of Consumer Expectations (a component of the Conference Board's Index of Leading Economic Indicators) declined to 69.8, and the Current Economic Conditions Index climbed to 86.

It's important to recognize that consumer sentiment has seriously eroded over the past few months with the current results remaining near levels not seen since 1980, a major indication that consumers are in the process of tightening even further on spending.

Kansas City Fed Manufacturing Survey: March 2012

The Federal Reserve Bank of Kansas City, like other district FRBs (New York, Philadelphia, Richmond and Dallas), tracks its region’s manufacturing activity by surveying a number of important indicators such as general activity, production, shipments, orders, employment and prices for raw materials and finished products.

The latest results are indicating that the manufacturing activity declined to a weak growth level of 9 in March with more component measure declining than increasing while prices paid for raw materials declined somewhat at 33.

It's important to note that although this data-set has a history that only runs as far back as mid-2001, the composite index never fell below 10 during the "recovery" that followed the tech-wreck of the early aughts.

Today, we see the composite index not only remaining depressed but occasionally turning notably negative, clearly indicating the internal weakness of our current economic expansion and possibly presenting a strong signal of recession to come.

The following chart plots the seasonally adjusted Composite index since 2001 with the solid red line indicating the threshold between expansion and contraction.

Bull Trip!: GDP Report Q4 2011 (Third Rough Estimate)

Today, the Bureau of Economic Analysis (BEA) released their third "estimate" of the Q4 2011 GDP report showing that the economy continued to expand at a faster pace than initially estimated with real GDP increasing at an annualized rate of 3.0% from Q3 2011.

On a year-over-year basis real GDP increased 1.61% while the quarter-to-quarter non-annualized percent change was 0.73%.

The latest quarterly results indicate that the most notable source of weakness in the economy came from government defense spending which declined at a rate of 12.1% from Q3 while change in private nonfarm inventories made notable contributions accounting for 1.81% of the percent change of final real GDP while providing the majority of the 22.1% quarter-to-quarter rate of change for the entire Gross Private Domestic Investment category. 

That very same category also saw fixed residential investment expand at a rate of 11.6% while fixed non-residential structures declined at a rate of 0.9% over the same period.

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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims March 29 2012

Today’s jobless claims report showed that both initial and continued unemployment claims declined while seasonally adjusted initial claims continued to trend well below the closely watched 400K level.

Seasonally adjusted “initial” declined to 359,000 claims from last week’s revised 364,000 claims while seasonally adjusted “continued” claims declined by 41,000 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 3.23 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.81 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.04 million people on state and federal unemployment rolls.

Reading Rates: MBA Application Survey – March 28 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) increased 4 basis points to 4.10% since last week while the purchase application volume increased 3.3% and the refinance application dropped 4.6% over the same period.

With rates jumping in recent weeks and housing activity remaining largely weak, it will be interesting to see if concern over housing leads the doves on the FOMC to further promote QE3 in an effort to keep long rates at historically low levels. 

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 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 January reported that the non-seasonally adjusted Composite-10 price index declined 0.83% since December while the Composite-20 index declined 0.84% over the same period resulting in the lowest level seen to on the Composite-10 since June 2003 and the largest peak decline seen since the nearly six year old housing bust began in 2006.

The latest CSI data clearly indicates that the price trends are experiencing a declining trend into the typically less active summer and fall season and as I recently pointed out, the more timely and less distorted Radar Logic RPX data is continuing to capture notable falling prices driven primarily by seasonality.

The 10-city composite index declined 3.86% as compared to January 2011 while the 20-city composite declined 3.78% over the same period.

Topping the list of regional peak decliners was Las Vegas at -61.56%, Phoenix at -54.78%, Miami at -50.66%, Tampa at -47.86% and Detroit at -45.84%.

Additionally, both of the broad composite indices show significant peak declines slumping -34.42% for the 10-city national index and -34.41% 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.

Pending Home Sales: February 2012

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for February showing that pending home sales declined a bit with the seasonally adjusted national index falling 0.5% since January while increasing 9.2% above the level seen in February 2011.

Meanwhile, the NARs chief economist Lawrence Yun suggests that the emerging spring selling season could be strong with potential for the best year seen in five years.

"The spring home buying season looks bright because of an elevated level of contract offers so far this year ... If activity is sustained near present levels, existing-home sales will see their best performance in five years. Based on all of the factors in the current market, that’s what we’re expecting with sales rising 7 to 10 percent in 2012."

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).

The Chicago Fed National Activity Index: February 2012

Today’s release of the Chicago Federal Reserve National Activity Index (CFNAI) showed a weakening of the national economy with the index dropping into negative territory at -0.09 while the three month moving average improved to 0.30.

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.

New Home Sales: February 2012

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for February showing a monthly decline with sales dropping 1.57% since January but rising 11.4% above the level seen in February 2011 and remaining at an historically low level of 313K SAAR units.

It's important to recognize that the inventory of new homes has now fallen to a new series low at 150K units, lowest level seen in in at least 47 years while the median number of months for sale increased to 7.6.

The monthly supply increased to 5.8 months while the median selling price increased 6.17% and the average selling price declined 5.11% 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: January 2012

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that, nationally, home prices declined 0.04% since December and declined 0.75% below the level seen in January 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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims March 22 2012

Today’s jobless claims report showed that both initial and continued unemployment claims declined while seasonally adjusted initial claims continued to trend well below the closely watched 400K level.

Seasonally adjusted “initial” declined to 348,000 claims from last week’s revised 353,000 claims while seasonally adjusted “continued” claims declined by 9,000 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 3.31 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.86 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.17 million people on state and federal unemployment rolls.

Existing Home Sales Report: February 2012

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for February showing an decline in sales with total home sales falling 0.9% since January but climbing 8.8% above the level seen in February 2010.

Single family home sales declined 1.0% from January but rose 9.4% above the level seen in February 2011 while the median selling price increased 0.1% below the level seen in February 2011.

Inventory of single family homes increased 1.4% from January dropping 18.2% below the level seen in February 2011 which resulted in a 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.

Reading Rates: MBA Application Survey – March 21 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) jumped 12 basis points to 4.06% since last week while the purchase application volume declined 1.0% and the refinance application dropped 9.3% over the same period.

With rates trending ever lower, the economy weak and the FOMC members remaining dovish, it will be interesting to see how far rates on the long end can decline.  All things being equal, falling home prices, declining purchase applications and record low long lending rates all appear to indicate a deflationary for the macro-economy.

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).

New Residential Construction Report: February 2012

Today’s New Residential Construction Report showed mixed results in February with single family permits increasing from January while starts declined over the same period.

Single family housing permits, the most leading of indicators, increased a whopping 4.9% from last month to 472K single family units (SAAR), and increased 23.6% above the level seen in February 2011 but remaining an astonishing 73.75% below the peak in September 2005.

Single family housing starts plunged 9.86% to 457K units (SAAR), but climbed 17.78% above the level seen in February 2011 and remaining a stunning 74.93% below the peak set in early 2006.

With the substantial headwinds of elevated unemployment, epic levels of foreclosure and delinquency, mounting bankruptcies, contracting consumer credit, and falling real wages, an overhang of inventory and still falling home prices, the environment for “organic” home sales remains weak and likely very fragile.

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

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing a flattening of most measures in March with the composite HMI index remaining unchanged at 28 while the "buyer traffic" index stayed put at 22.

While all indicators have made notable increases as of late, it's important to note that conditions still remain distressed by historic standards though, the last few months results appears to indicate a major change in the builder sentiment.

The new home market will likely not resume any significant form of healthy function until the considerable overhang of inventory is cleared.