by Bill McBride on 3/24/2012 08:01:00 AM
Saturday, March 24, 2012
Last week was mostly about housing, and all of the reports were a little disappointing. Housing starts were down slightly from January; new home sales were down 1.6% from January on a seasonally adjusted annual rate (SAAR) basis, and existing home sales declined 0.9% from the January rate.
However, if we take a little longer view, the picture improves. Housing starts are up almost 46% compared to the low in 2009 (mostly multi-family), and new home sales and existing home sales are up 13% and 39%, respectively, from the post-tax credit lows in 2010.
So the housing data was a little disappointing – especially given the nice weather in February – but the trend is still up. The spring selling season starts in March, and the next few months will be important for housing.
Other news was a little better. Initial weekly unemployment claims fell to 348,000, the lowest level in over 4 years. The architectural billings index remained positive for the fourth consecutive month, and the remodeling index was up sharply in January.
Overall a little disappointing, but still sluggish growth.
Here is a summary in graphs:
• New Home Sales declined in February to 313,000 Annual Rate
Click on graph for larger image in graph gallery.
The Census Bureau reported New Home Sales in February were at a seasonally adjusted annual rate (SAAR) of 313 thousand. This was down from a revised 318 thousand in January (revised down from 321 thousand). November and December of last year were revised up. This was below the consensus forecast of 325 thousand.
The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.
Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. This graph shows the three categories of inventory.
The inventory of completed homes for sale was at 54,000 units in February. The combined total of completed and under construction is at the lowest level since this series started.
The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).
In February 2012 (red column), 25 thousand new homes were sold (NSA). Last year only 22 thousand homes were sold in February (although 2012 is a leap year). This was the second weakest February since this data has been tracked - the third weakest was February 2010 with 27 thousand homes sold. The high for February was 109 thousand in 2005.
New home sales have averaged only 303 thousand SAAR over the 22 months since the expiration of the tax credit ... mostly moving sideways, although sales have been increasing a little lately (averaging 322 thousand rate over the last four months).
• Housing Starts declined slightly in February
Total housing starts were at 698 thousand (SAAR) in February, down 1.1% from the revised January rate of 706 thousand (SAAR). Note that January was revised up from 699 thousand.
Single-family starts declined 9.9% to 457 thousand in February. Permits moved higher, so single family starts will probably increase in March.
The second graph shows total and single unit starts since 1968. Total starts are up 34.7% from a year ago.
This was slightly below expectations of 700 thousand starts in February.
• Existing Home Sales in February: 4.59 million SAAR, 6.4 months of supply
This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.
Sales in February 2012 (4.59 million SAAR) were 0.9% lower than last month, and were 8.8% above the February 2011 rate.
The next graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.
Inventory decreased 19.3% year-over-year in February from February 2011. This is the twelfth consecutive month with a YoY decrease in inventory.
Months of supply increased to 6.4 months in February, up from 6.0 months in January.
This was close to expectations of sales of 4.61 million.
• AIA: Architecture Billings Index indicated expansion in February
Note: This index is a leading indicator for new Commercial Real Estate (CRE) investment.
This graph shows the Architecture Billings Index since 1996. The index was at 51.0 in February (slight expansion). Anything above 50 indicates expansion in demand for architects' services.
Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.
According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So this suggests further declines in CRE investment in early 2012, but perhaps stabilizing mid-year.
• Weekly Initial Unemployment Claims declined to 348,000
The DOL reports:
In the week ending March 17, the advance figure for seasonally adjusted initial claims was 348,000, a decrease of 5,000 from the previous week's revised figure of 353,000. The 4-week moving average was 355,000, a decrease of 1,250 from the previous week's revised average of 356,250.The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims was declined to 355,000.
The 4-week moving average is near the lowest level since early 2008.
• Other Economic Stories ...
• NAHB Builder Confidence index unchanged in March
• Residential Remodeling Index increases 11% year-over-year in January
• LPS: Percent of delinquent mortgage loans declined in February
• DOT: Vehicle Miles Driven increased 1.6% in January