Housing Industry Took a Hit
July 29, 2011
In the month of April, housing starts slid dramatically as reported by the Census Bureau. Construction starts for privately owned homes for the month of April decreased to an annual rate of 523,000, which is a huge 10.6% drop from what was seen in the month of March at 585,000, and was 23.9% below the April 2010 rate of 687,000, as stated by the Census Bureau. In the month of April, single family home starts decreased to 394,000, which was 5.1% below the March figure of 415,000.
Permit for construction for private housing units decreased to a rate of 551,000, which is 4% below the March rate of 574,000 and 12.8% below the April 2010 estimate of 632,000. Construction permits for single-family homes decreased to a rate of 385,000, which is 1.8% below the March figure of 392,000.
The housing starts and construction permits were not the only area where decreases were seen. According to the National Association of Realtors sales of existing single-family homes, townhomes, condominiums and co-ops decreased 0.8% to a seasonally adjusted annual rate of 5.05 million in the month of April, which is down from the numbers seen in March at 5.09 million. April’s figure was 12.9% below what was seen in April of 2010 at 5.8 million.
NAR chief economist Lawrence Yun stated, “Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger,” and went on to say, “although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations.”
According to reports by the Federal Reserve, industrial production for the month of April was unchanged after seeing an increase of 0.7% in the month of March.
Manufacturing also decreased 0.4% in the month of April after seeing nine months of increases. The auto industry saw total motor vehicle assemblies decrease from an annual rate of 9 million units in the month of March to 7.9 million units in the month of April, mainly due to parts shortages that were the direct result of the earthquake in Japan. Not including motor vehicles and parts, factory production increased 0.2% in the month of April.
April’s total industrial production was at 93.1% of the 2007 average and is still 5% higher than the 2010 level. The overall rate of capacity utilization for all industry production decreased 0.1% to 76.9 percent, which is a rate 3.5% below its average from 1972 to 2010.
There was good news. First unemployment claims for the week that ended on May 14 dropped to 409,000, a decrease of 29,000 from the prior week’s figure of 438,000, as reported by the Employment and Training Administration. The four-week moving average was at 439,000, which is an increase of 1,250 from the prior week’s average of 437,750.
The entire number for seasonally adjusted insured unemployment during the week that ended on May 7 was 3,711,000, which is a drop of 81,000 from the prior week’s level of 3,792,000. The four-week moving average was at 3,728,250, which was an increase of 750 from the prior week’s average of 3,727,500.
Upcoming reports
New home sales for April – May 23
Durable good orders – May 25
1st quarter gross domestic product – May 26
First jobless claims – May 26
Personal Income and expenditures for April – May 27
Consumer sentiment for May – May 27
New Home Sales Increased
March 5, 2011
New home sales increased 17.5 percent in the month of December to a seasonally adjusted annual rate of 329,000 units from a rate of 280,000 units seen in the month November. Economists had believed to see a pace of 300,000 units.
The pending home sales index which is a forward-looking indicator based on signed contracts from the National Association of Realtors reported an increase of 2 percent in the month of December after seeing a 3.1 percent increase in the month of November. On a year-over-year basis, pending sales are down 4.2 percent.
The Standard & Poor’s/Case-Shiller 20-city housing price index on a non-seasonally adjusted basis decreased 1 percent in the month of November after seeing a 1.3 percent fall in the month of October. On a year-over-year basis, prices decreased 1.6 percent when compared with November of 2009.
The gross domestic product, which is the total output of goods and services, produced in the United States announced by the Commerce Department increased at an annual rate of 3.2 percent in the last quarter of 2010. This is after a 2.6 percent of grown seen in the 3rd quarter of 2010.
The consumer confidence index increased to 60.6 in January from an upwardly revision of 53.3 in the month of December. It was the highest level seen since May. The index was benchmarked at 100 in 1985; a year chosen because it was did not show peak or a trough in consumer confidence.
Durable goods orders, which are items that are expected to last three or more years, decreased 2.5 percent in the month of December after seeing a 0.1 percent fall in the month of November. Excluding volatile transportation-related goods, orders posted saw a monthly increase of 0.5 percent.
First claims for unemployment benefits increased by 51,000 to 454,000 for the week that ended on January 22, while continuing claims for the week that ended on January 15 increased by 94,000 to 3.9 million.
Economic Calendar reports upcoming
February 1 – construction spending
February 3 – factory orders
Construction Spending Increased
November 19, 2010
The monthly composite index of manufacturing activities as reported by the Institute for Supply Management was 56.9 for the month of October after seeing a 54.4 for the month of September. Economists believed the figure would have been at 54.5. All readings above 50 are a sign of expansion. This was the 15th month in a row that expansion was seen.
Construction spending increased 0.5 percent to $801.7 billion for the month of September after seeing a decrease in August of 0.2 percent. Economist had thought a 0.5 percent decrease would be seen in the month of September.
The seasonally adjusted composite index of mortgage applications as reported by the Mortgage Bankers Association for the week that ended on October 29 decreased 5 percent, refinancing applications fell 6.4 percent, and purchase volume increased 1.4 percent.
In September, factory orders increased 2.1 percent to be at a seasonally adjusted amount of $420 billion after a decrease in the month of August of 0.5 percent. The increase was due to an increase in the demand of commercial aircraft of 15.8 percent. Not including volatile transportation sector orders increased 0.4 percent.
the monthly composite index of non-manufacturing activity as reported by the Institute for Supply Management reported increased to 54.3 in the month of October after seeing 53.2 in the month of September. All readings above 50 are a sign of expansion.
The National Association of Realtors stated pending homes sales index, which is look at signed contracts for the future, decreased 1.8 percent in the month of September after a 4.4 rise in the month of August. On a year-over-year basis, pending sales are down close to twenty five percent.
First claims for unemployment benefits increased by 20,000 to 457,000 for the week that ended on October 30, while continuing claims for the week that ended on October 23 decreased by 42,000 to 4.34 million, which is the lowest level since the recovery began. Non-farm payroll employment rose by 151,000 in the month of October, which is quite a bit higher than the anticipated, which was 60,000.
Economic Calendar reports upcoming
Pending Homes Sales Increased
October 30, 2010
The pending home sales increased 4.3 percent in the month of August according to the National Association of Realtors after an increase in the month of July of 4.5 percent. Looking at the year over year basis, however, pending sales are at a low of 18.4 percent.
According to the Mortgage Bankers Association the seasonally adjusted composite index of mortgage applications decreased the week that ended on October 0.2 percent while refinancing applications decreased 2.5 percent and purchase volume rose 9.3 percent which is the highest seen since the beginning of May.
Factory orders decreased in the month of August to hit a seasonally adjusted $408.9 billion. There was an increase of 0.5 percent in the month of July. The decrease is blamed on a 40.2 decrease in demand for commercial aircraft but excludes volatile transportation, which increased 0.9 percent.
The monthly composite index of non-manufacturing activity according to the Institute for Supply Management increased to 53.2 in the month of September from 51.5 in the month of August. Any reading above 50 shows expansion. This was the ninth consecutive month of seeing growth.
Increased inventory of 0.8 percent was seen with wholesalers in the month of August after an increase of 1.5 percent in the month of July. At the wholesale level, sales increased 0.5 percent in the month of August after seeing a 0.8 percent rise in the month of July. Economists had expected a rise of 0.5 percent for the month of August.
First claims for unemployment benefits decreased by 11,000 to 445,000 for the week that ended on October 2, while continuing claims for the week that ended on September 25 decreased by 48,000 to 4.45 million. The unemployment rate remained the same at 9.6 percent in the month of September.
What to look for on the economic calendar – International trade on October 14 and on October 15 retail sales.
A Glimpse Into The Housing Market
October 9, 2010
The National Association of Realtors reported that pending homes sales are back after declining for two months straight. The forward-looking indicator is based on contracts signed, which increased in July by 5.2 percent after a decline in June of 2.8 percent and in May a whopping 30 percent decrease.
A seasonally adjusted annual rate for new homes sales are on average around 300,000 units per month. This figure is down around 70 percent from the high levels we saw in the middle of 2005. Existing homes sales are making up over 90 percent of the real estate market and at this time is down around 30 percent from high levels seen in the middle of 2005.
It is believed that annual sales will reach five million during 2010 due to the strong activity seen during the first half of 2010.
Standard & Poor’s/Case-Shiller housing price index reported home prices are now six percent above the bottom seen in April of 2009m but they are still lower than the peak seen in July of 2006.
The Housing Affordability Index showed 72.3 percent of homes sold during the second quarter of 2010 were for affordable for families with an average income of $64,000.
Since April 2010, interest rates have been dropping due to investors seeking the safety net of Treasury bonds. This alone has lowered the yields and makes mortgages rates tend to track. The low rates have caused an influx of refinancing loans. In the latter part of August, 82.9 percent of total loan applications were refinancing loans which is the highest seen since January of 2009.
The low interest rates have not done anything to boost home sales. Home sales are still low more than likely due to unemployment. In 2008 and 2009, 8.4 million jobs were lost, which is around 7 percent of all jobs at the beginning of the recession. This figure compares to a loss of 3.1 percent of jobs lost during the 2001 recession and 1.9 percent of jobs lost during the 1990-1991 recession.
Home Sales lowest in 15 years
September 3, 2010
In the month of July, occupied home sales fell to the lowest seen in fifteen years, even with the mortgage rates being the lowest seen in years and homes for sale below market value in several areas.
The sales in July decreased over 27% to a seasonally adjusted annual rate of 3.83 million according to the latest report from the National Association of Realtors. This was the largest decrease on records since 1968 with declines recorded all across America.
This drop is adding fuel to the fire when it comes to the economy.
Paul Dales, U.S. economist with Capital Economics, stated, “The housing market is undermining the already faltering wider economic recovery,” and went on to say, “With the increasingly inevitable double-dip in prices yet to come, things could yet get a lot worse.”
The weakest area for home sales was in the lower to middle price ranges. The Midwest homes priced from $100,000 to $250,000 saw sales drop close to 47%.
The slow selling market has now increased the inventory of homes on the market to around 4 million for the month of July. This is a whopping 12 ½-month supply at the selling rate we are seeing which is the highest levels seen in over ten years. This supply would be for a healthy level a supply of around 6 months.
The main reason this market is in trouble is that homebuyers and home sellers are not getting together on the prices of the homes. Many home sellers are not happy to lower their prices and home buyers are a bit hesitate to buy as they believe home prices have not hit the lowest levels yet.
Aaron Zapata, a real estate agent in Brea, California stated, “It really is a self-fulfilling prophecy,” and “if all buyers perceive that home prices are coming down, then they will stop making offers — and home prices will come down.”
Foreclosures are another reason prices have fallen which is around ten times higher than just before the bust in the housing market. The average rate of a 30-year fixed mortgage dropped to 4.42%, some families are unable to qualify for a home loan as banks have strengthened their lending standards.
During the government tax credits in the spring, home sales were up, however, the tax credits expired the end of April and the market is still a bit wobbly from that time until now.
The July sales drop came after a 35% drop in the Midwest. In the northeast sales were down 30%, in the south 23%, and in the west 25%.
The median sale price was up 0.7% from a year ago and down 0.2% from June at $182,600.
Mortgage Applications Rose Week of June 25th
July 9, 2010
The Mortgage Bankers Association reported its seasonally adjusted composite index of mortgage applications for the week of June 25 rose 8.8%. Refinancing applications increased 12.6% while purchase volume declined 3.3%.
An increase of 0.8% was seen in April with a 0.1% decrease in March on The Standard & Poor’s/Case-Shiller 20-city housing price index.
The National Association of Realtors accounted that the pending home sales index, which is a forward-looking indicator based on signed contracts, decreased 30% in May while a revision was made in April with a 6% increase.
Spending for total construction declined 0.2% to $841.9 billion in May, after a revised 2.3% rise in April. Economists had predicted a larger drop of 0.5% in May.
Consumer confidence index declined to 52.9 in the month of June while the revised number for May was 62.7. Economist believed the reading was going to be 62.8. The index was benchmarked in 1985 at 100; this year was chosen, as it was neither a peak nor a low in consumer confidence.
The Institute for Supply Management stated that the monthly composite index of manufacturing activity was 56.2 in June while in May it was at 59.7. Any reading above 50 is a sign of expansion. This made 11th months of expansion in a row.
In May, factory orders declined 1.4%, which was more than the 0.5% decrease from what economists had anticipated. This was the largest drop since March 2009, which ended 8 straight monthly gains.
Initial claims for unemployment benefits increased by 13,000 to 472,000 for the week that ended on June 26. Continuing claims for the week that ended on June 19 increased by 43,000 to 4.62 million. The unemployment rate decreased in June to 9.5% from a 9.7% in the month of May.
Economic calendar upcoming include reports on wholesale trade on July 9 and chain store sales on July 7.
Tulsa Home Sales Up Over Last year
May 30, 2010
Many believe the huge amount of home buyers in the Tulsa area were prompted to purchase in order to take advantage of expiring tax credits at the end of April, which surpassed the homes sold in April 2009 in the Tulsa area.
The Greater Tulsa Association of Realtors stated that the 1,107 homes that were sold in April are up from the 18% seen in March and the close to 21% seen in April of 2009.
From the beginning of the year through the end of April a total of 3,127 homes were sold which puts sales at 3% above the same period of 2009. However, 2010 was behind 5% at the end of March.
Greater Tulsa Association of Realtors president, Jack Hodgson is happy about these number but also stated, “The results pretty much reflect what was expected because of the tax stimulus.”
The numbers may have been increased due to the federal homebuyer tax credit with a requirement to have homes under contract by April 30, but the low interest rates and a strong local economy were also very large contributors.
“We’re lucky to be in our market,” Hodgson said. “Things are good here.”
The median home price increased just a bit up the scale with April’s median of $129,225, which in April of 2009 was $1,275 ahead of April 2009. This is up 1%. On the other hand, the average sale price fell $2,211 short of the average price of last year. The current sales prices do indicate a solid market.
The median home sales prices nationally were at $173,400 in April, which is up 4.5% from a year ago, according to National Association of Realtors. “Home sales across the nation rose 7.4% to a seasonally adjusted annual rate of 5.05 million in April from a pace of 4.70 million in March and were 20.5 percent above the 4.19 million level in April 2009,” the NAR said.
The number of pending contracts was at 1.595 in April. This is a good indicator of the coming months closing, according to the Greater Tulsa Association of Realtors. Hodgson explained the rush to get in before the federal tax credit deadline pushed that ahead as well, since quite a few of contracts that made it before the deadline still have weeks of paperwork ahead of them.
Home Sales Rise Again In March
May 11, 2010
The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 5.3% in March, after a revised 8.3% increase in February. On a year-over-year basis, pending home sales are up 21.1%.
Factory orders rose 1.3% in March, much better than the 0.1% decline economists had anticipated. It was the seventh straight gain and follows an upwardly revised 1.3% increase in February.
The Institute for Supply Management reported that the monthly index of manufacturing activity was 60.4 in April, after reaching 59.6 in March. It was the ninth straight month of expansion and the best reading since June 2004. A reading above 50 signals expansion.
Total construction spending rose 0.2% to $847.3 billion in March, following a revised 2.1% drop in February. The increase was largely due to a 2.3% surge in public construction spending.
The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 5.3% in March, after a revised 8.3% increase in February. On a year-over-year basis, pending home sales are up 21.1%.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending April 30 rose 4%. Purchase volume increased 13%. Refinancing applications fell 2.1%.
The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity was 55.4 in April, unchanged from 55.4 in March. A reading above 50 signals expansion. Economists had anticipated a reading of 56.
Employers added 290,000 jobs in April, following a revised 230,000 advance in March. The April increase was the most since March 2006. The improving economy is encouraging more people to seek employment. This pushed the unemployment rate from 9.7% in March to 9.9% in April.
Upcoming on the economic calendar are reports on wholesale trade on May 11, international trade on May 12 and retail sales on May 14.
Pending Home Sales Index Rises
April 14, 2010
The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 8.2% in February after a revised 7.8% decrease in January. The February reading was the largest gain since October 2001.
The Institute for Supply Management reported the monthly index of non-manufacturing activity rose to 55.4 during March from 53 in February. A reading above 50 typically signals expansion. Economists had anticipated a reading of 53.3. The reading was the highest since May 2006.
According to the Federal Reserve, consumer credit debt fell in February by $11.5 billion, an annual rate of 5.6%. Economists had forecast that the consumer debt would rise by $500 million. Consumer credit rose in January by $10.6 billion, ending a record 11 consecutive months of decline.
Sales at U.S. retail chains rose 9.1% in March. It was the largest monthly jump since recordkeeping began in 2000. Economists had anticipated an aproximate increase of 6.3%.
Initial claims for unemployment benefits unexpectedly rose by 18,000 to 460,000 during the week ending April 3. Continuing claims for the week ending March 27 fell by 131,000 to 4.55 million.
The Mortgage Bankers Association reported its seasonally adjusted index of mortgage applications for the week ending April 2 fell 11%. Purchase volume did increase at 0.2%. Refinancing applications fell 16.9%.
The Commerce Department said wholesalers increased their inventories by 0.6% in February following a revised 0.1% rise in January. Sales on the wholesale level rose 0.8% in February, marking the 11th straight monthly gain.
Upcoming on the economic calendar are the reports on retail sales on April 14, the housing market index on April 15 and housing starts on April 16.
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