The Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey: April 2012

Today, the Federal Reserve Bank of Dallas released their latest read on manufacturing in their region indicating that manufacturing activity worsened with the current general business activity index declining to a contraction level of -3.4 while assessments of future general business activity index declined to 15.17.

University of Michigan Survey of Consumers April 2012 (Final)

Today's final release of the Reuters/University of Michigan Survey of Consumers for April indicated a slight increase in consumer sentiment from the prior month with a reading of 76.4 with improvement on an annual basis with the level increasing 9.46% above a year ago while one year inflation expectations eased to 3.2%.

The Index of Consumer Expectations (a component of the Conference Board's Index of Leading Economic Indicators) climbed to 72.3, and the Current Economic Conditions Index declined to 82.9.

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.

Bull Trip!: GDP Report Q1 2012 (First Rough Estimate)

Today, the Bureau of Economic Analysis (BEA) released their first "estimate" of the Q1 2012 GDP report showing that the economy continued to expand with real GDP increasing at an annualized rate of 2.2% from Q4 2011.

On a year-over-year basis real GDP increased 2.08% while the quarter-to-quarter non-annualized percent change was 0.55%.

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 8.1% from Q4 2011 while other categories such as non-residential structures also saw notable weakness declining at a rate of 12% from Q4 2011 shaving 0.35% from real GDP. 

Fixed residential investment, on the other hand, expanded notably (supposedly) increasing at a rate of 19.1% while 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.

Pending Home Sales: March 2012

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for March showing that pending home sales improved notably with the seasonally adjusted national index climbing 4.1% since February while increasing 12.8% above the level seen in March 2011.

Meanwhile, the NARs chief economist Lawrence Yun suggests that, based on the current trends, 2012 could see the best selling 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 problem is though, the MBA Purchase Index is not currently capturing any significant rise in purchase contract activity which begs the question... how are the buyers that the NAR sees in the pending index financing their purchase? ... Cash?

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: March 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 -0.29 while the three month moving average also declined to 0.05.

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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims April 26 2012

Today’s jobless claims report showed a slight declined to initial unemployment claims and an increased to continued claims while seasonally adjusted initial claims continued to trend below the closely watched 400K level.

Seasonally adjusted “initial” declined to 388,000 claims from last week’s revised 389,000 claims while seasonally adjusted “continued” claims increased by 3,000 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 3.14 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.44 million people that are currently counted as receiving traditional continued unemployment benefits, there are 6.58 million people on state and federal unemployment rolls.

Reading Rates: MBA Application Survey – April 25 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 2 basis points to 3.92% since last week while the purchase application volume increased 2.7% and the refinance application declined 5.6% 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).

FHFA Monthly Home Prices: February 2012

Yesterday, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that, nationally, home prices increased 0.29% since January rising 0.45% above the level seen in February 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.

New Home Sales: March 2012

Yesterday, the U.S. Census Department released its monthly New Residential Home Sales Report for March showing a notable monthly decline with sales dropping 7.1% since February but rising 7.5% above the level seen in March 2011 and remaining at an historically low level of 328K SAAR units.

It's important to recognize that the inventory of new homes has now fallen to a new series low at 144K units, lowest level seen in in at least 47 years while the median number of months for sale increased to 7.8.

The monthly supply increased to 5.3 months while the median selling price increased 6.35% and the average selling price increased 11.66% from the year ago level.

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

S&P/Case-Shiller: February 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 February reported that the non-seasonally adjusted Composite-10 price index declined 0.78% since January while the Composite-20 index declined 0.76% over the same period resulting in the lowest level seen to on the Composite-10 since April 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 3.60% as compared to February 2011 while the 20-city composite declined 3.49% over the same period.

Topping the list of regional peak decliners was Las Vegas at -61.71%, Phoenix at -54.22%, Miami at -50.34%, Tampa at -47.96% and Detroit at -46.01%.

Additionally, both of the broad composite indices show significant peak declines slumping -35.08% for the 10-city national index and -35.02% 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.

More Pain, Less Gain: S&P/Case-Shiller Preview for February 2012

As I demonstrated in prior posts, given their strong correlation, the home price indices provided daily by Radar Logic, averaged monthly, can effectively be used as a preview of the monthly S&P/Case-Shiller home price indices.

The current Radar Logic 25 MSA Composite data reported on residential real estate transactions (condos, multi and single family homes) that settled as late as February 20 and averaged for the month indicates that with increasing spring transactions has come an increase of prices (the typical trend) with the national index increasing 0.71% since January but falling 3.76% below the level seen in February 2011.

The Radar Logic index will likely be capturing an increase in prices from now until late summer as transactions continue to mount.

Look for tomorrow's S&P/Case-Shiller home price report to reflect this declining trend though to a lesser degree due to its three month rolling-average nature with prices moderately higher.

Outstanding Contraction!: Commercial Paper Outstanding April 2012

The Commercial Paper (CP) market is essentially a private debt market used by corporations as a generally cheaper means of funding typical recurring operations than drawing on a line of bank credit.

Commercial paper, as financial instrument, is by no means a recent innovation and, in fact, you can read about how the CP market was affected by the many historic financial shocks experienced by the U.S. (read Panic on Wall Street: A History of America’s Financial Disasters)

Although the Federal Reserve was able to artificially bring CP rates down significantly since the shocking 615 basis point spread blowout (A2/P2 spread) of late 2008, they had not been successful in preventing an overall contraction in the CP market.

The Federal Reserve calculates and published the total amount of CP outstanding every week and as of mid-April commercial paper generally appears to be trending lower contracting at a rate of 15.23% on a year-over-year basis to $932.60 billion, a level that is still substantially lower than even the worst periods of the last two recessions.

The Philly Fed Business Outlook Survey: April 2012

Today's release of the Federal Reserve Bank of Philadelphia Business Outlook Survey (BOS) for April indicated a slowing of the regions manufacturing activity with the current activity index declining to a level of 8.5 while assessments the future activity index increased slightly to a level of 33.8.

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.

Existing Home Sales Report: March 2012

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for March  showing an decline in sales with total home sales falling 2.6% since February but climbing 5.2% above the level seen in March 2011.

Single family home sales declined 2.5% from February but rose 5.9% above the level seen in March 2011 while the median selling price increased 1.9% above the level seen in March 2011.

Inventory of single family homes increased 0.5% from February dropping 20.1% below the level seen in March 2011 which, along with the sales pace, resulted in a monthly supply of 6.3 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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims April 19 2012

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

Seasonally adjusted “initial” declined to 386,000 claims from last week’s revised 388,000 claims while seasonally adjusted “continued” claims increased by 26,000 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 3.20 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.47 million people that are currently counted as receiving traditional continued unemployment benefits, there are 6.67 million people on state and federal unemployment rolls.

Reading Rates: MBA Application Survey – April 18 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 4 basis points to 3.94% since last week while the purchase application volume declined a notable 11.2% and the refinance application umped 13.5% 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).

Production Pullback: Industrial Production March 2012

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing a flattening with total industrial production remaining nearly unchanged since February but rising 3.78% above the level seen in March 2011.

Capacity utilization declined 0.09% from February but still rose 2.72% above the level seen in March of 2011 to stand at 78.59%

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.