The Great Redoubt: New Home Sales

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Showing posts with label New Home Sales. Show all posts

Wednesday, February 23, 2011

Existing Home Sales

The news is out, and it looks good. Turning to the National Association of Realtors for the data, we learn that existing home sales for December were revised downward to 5.22 million. That's the bad news. The good news is that January existing home sales increased 2.7% to a seasonally adjusted annual rate of 5.36% - beating expectations and also beating both the preliminary and revised December figures. According to Lawrence Yun, chief economist for the NAR, "The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence. The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity."

What does he mean by "rising investor activity"? Well, first-time buyers represented 29% of January existing home purchases (down from 33% in December and 40% in January 2010), while investors represented 23% of the purchases (up from 20% in December and from 17% in January 2010). All cash sales constituted 32% of the January sales, the highest level since the NAR started tracking that data point in October 2008.

Wednesday, February 16, 2011

Morning Economic Data With 100% Less Showtunes

Let's start off with the Mortgage Bankers' Association Weekly Application Survey which, if you remember, wasn't all that great last week. The composite index fell 5.5%, the purchase index fell 1.4%, and the refinance index fell 7.7%. Now, this index isn't an eagerly awaited one - at best, it is a leading indicator for new home sales and existing home sales - so we have no particular analyst expectations for it. So I won't even attempt to keep you in suspense. The figures for the week ending February 11 were even worse. The composite index fell a seasonally adjusted 9.5%, the purchase index fell a seasonally adjusted 5.9%, and the refinance index fell a seasonally adjusted 11.4%. On the other hand, the average interest rate for 30-year fixed-rate mortgages fell. Granted, it fell a whopping 1 basis point to 5.12%, but you take your wins where you can.

Nevertheless, based on the results of this survey, we look to be on track for a decrease in new and existing home sales for February. And nobody likes that.

On the subject of home sales, let's turn to the US Census Bureau and the US Department of Housing and Urban Development, for New Residential Construction figures. December had a revised 520,000 housing starts (down from the original estimate of 529,000 starts), and the analysts are looking for 540,000 new homes to begin construction in January. And the survey says? Well, the survey says that January had a seasonally adjusted 596,000 new homes begin construction. Of that, 413,000 were single-family homes and 171,000 were buildings with five or more units. Additionally, 562,000 residential building permits were issued and 512,000 residential buildings were completed.

Next on the agenda? The Producer Price Index.December saw it increase 1.1% (or only 0.2% if you restrain yourself to the core PPI). For January, analysts are expecting a 0.7% increase (with the core holding firm at a 0.2% increase). Turning to the Bureau of Labor Statistics, we learn the following from the latest report:

December PPI was adjusted downward to 0.9%
January PPI for finished goods rose 0.8%, missing expectations but not by an enormous amount.
January core PPI for finished goods rose 0.3%, also missing expectation.
January PPI for intermediate goods rose 1.7%.
January PPI for crude goods rose 8.8%.

And what does this tell us? This tells us that the finished goods PPI will most likely be increasing substantially over the next few months. You can't have the cost to produce crude goods increase heavily without those costs getting passed along the production chain. Also, it implies that CPI will be increasing in the next few months. So while the Street may not be too concerned about the figures today, they will be looking towards future figures with concern.

Unless I'm missing something important, which is possible.

Thursday, December 23, 2010

Wrapping Up The Measures

Here's what I wrote earlier: "Consumer Sentiment, due at 9:55 AM EST, is expected to climb 80 bps to 75.0%. New Home Sales, due at 10 AM EST, are expected to climb 17k to 300k new units."

How did we actually do? Well, consumer confidence missed expectations, coming in at 74.5 for December. New home sales also missed expectations, with only 290k sales. Neither of these are considered major market movers, though, so they probably won't do much to shove the market down.

Probably.