HI-TRANSFER

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.

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).

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.

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.

Today's early release of the Reuters/University of Michigan Survey of Consumers for March indicated a decline in consumer sentiment with a reading of 74.3 but climbing 10.07% above the level seen last year while one year inflation expectations jumped to 4.0%.

The Index of Consumer Expectations (a component of the Conference Board's Index of Leading Economic Indicators) declined to 68, and the Current Economic Conditions Index climbed to 84.2.

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.

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing a flattening with total industrial production increasing just 0.02% from January and rising 4.03% above the level seen in February 2011.

Capacity utilization declined 0.06% from January climbing 2.83% above the level seen in February of 2011 to stand at 78.70%

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.

Today's release of the Federal Reserve Bank of Philadelphia Business Outlook Survey (BOS) for March indicated a improvement in the regions manufacturing activity with the current activity index climbing to a level of 12.5 while the future activity index declined slightly to a level of 32.9.

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.

The Empire State Manufacturing Survey consists of a series of diffusion indices distilled from a monthly survey of New York regional manufacturing executives and seeks to identify trends across 22 different current and future manufacturing related activities.

Today’s report showed a notable improvement for current assessments of manufacturing activity and a continued decline to future assessments with the current activity index climbing to 20.21 while future activity declined to 47.5.

Current prices paid jumped to 50.62 while current new orders weakened to 6.84 and assessments of future new orders weakened slightly to 41.98.

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 351,000 claims from last week’s revised 365,000 claims while seasonally adjusted “continued” claims declined by 81,000 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 3.33 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.98 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.32 million people on state and federal unemployment rolls.

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 3 basis points to 3.94% since last week while the purchase application volume increased 4.4% and the refinance application declined 4.10% 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).

Today, the U.S. Census Bureau released its latest nominal read of retail sales showing a notable 1.1% increase from January and an increase of 6.5% 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 increased 1.03% from January and increased 3.90% above the level seen in February 2011 while, adjusting for inflation, “real” discretionary retail sales increased 3.90% over the same period.

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.

As I have noted in the past, since the home price index data provided by Radar Logic is more timely, unadjusted and un-smoothed it is particularly useful for gaining deeper visibility over our housing markets.

As for the latest trends, it’s important to note that the 25-MSA Composite is continuing to show significant year-over-year declines with prices breaking to new lows with each passing day.

The latest data shows that as of early-January, prices have declined 6.08% below the level seen in January 2011 while appearing to continue it's seasonal slump through the winter months in a similar manner to past years.

Today’s Employment Situation Report indicated that in February, net nonfarm payrolls increased with private nonfarm payrolls adding 233,000 jobs and the unemployment rate going flat at 8.3% over the same period.

Net private sector jobs increased 0.21% since last month climbing 2.07% above the level seen a year ago but but remained a whopping 4.23% below the peak level of employment seen in December 2007.

Today’s employment situation report showed that in February the full time unemployment rate went flat at 8.8% of the civilian workforce but remains near the highest rate seen in 41 years.

The Bureau of Labor Statistics considers full time workers to be those “who have expressed a desire to work full time (35 hours or more per week) or are on layoff from full-time jobs”.

Full time jobless workers currently account for roughly 88.5% of all unemployed workers.

Be sure to bookmark the "Scary Unemployment Dashboard"... it's live.

Today's employment situation report showed that conditions for the long term unemployed improved slightly in February but remained epically distressed by historic standards.

Workers unemployed 27 weeks or more declined to 5.426 million or 42.6% of all unemployed workers while the median number of weeks unemployed increased to 20.3 weeks and the average stay on unemployment declined to 40.0 weeks, the highest level ever recorded.

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.

Today’s Employment Situation report showed that in February “total unemployment” including all marginally attached workers declined to 14.9% from the prior month's level of 15.1% while the traditionally reported unemployment rate went flat at 8.3%.

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.