Tuesday, November 24, 2015

Wednesday: New Home Sales, Unemployment Claims, Personal Income and Outlays, Durable Goods, and more

by Bill McBride on 11/24/2015 07:45:00 PM

From the WSJ: Real Home Prices Could Take 17 Years to Return to Peak

Most measures of home prices—including the S&P/Case-Shiller Home Price Index, the CoreLogic Home Price Index and the National Association of Realtors existing home sales report—don’t take inflation into account and show prices nearing or surpassing the peak hit in 2006 or early 2007.

But a new analysis by real-estate information firm CoreLogic finds that when adjusted for inflation, home prices are years away from hitting the lofty heights of the housing boom. Indeed, economists there say that prices are unlikely to surpass 2006 levels until 2023 or beyond, some 17 years past the peak.
As the article notes, the nominal Corelogic index is 7% below the peak, but 20% below the peak when adjusted for inflation. As I noted this morning, the nominal Case-Shiller index 6% below the bubble, but 19.7% below the peak when adjusted for inflation.

This is important. As I wrote in early 2005, "a bubble requires both overvaluation based on fundamentals and speculation", and currently we are seeing little speculation and valuations aren't anything like during the bubble. So no bubble.

The WSJ article quotes Corelogic chief economist Sam Khater:
“The market is overvalued but it’s not a bubble,” Mr. Khater said. “Unlike the last boom, which was heavily demand-driven, this boom [in] home prices is driven by the chronic lack of supply.”
Wednesday:
• 7:00 AM ET: the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, the initial weekly unemployment claims report will be released. The consensus is for 270 thousand initial claims, down from 271 thousand the previous week.

• Also at 8:30 AM,  Durable Goods Orders for October from the Census Bureau. The consensus is for a 1.5% decrease in durable goods orders.

• Also at 8:30 AM, Personal Income and Outlays for October. The consensus is for a 0.4% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.2%.

• At 9:00 AM, the FHFA House Price Index for September 2015. This was originally a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.4% month-to-month increase for this index.

• At 10:00 AM, New Home Sales for October from the Census Bureau. The consensus is for a increase in sales to 499 thousand Seasonally Adjusted Annual Rate (SAAR) in October from 468 thousand in September.

• Also at 10:00 AM, the University of Michigan's Consumer sentiment index (final for November). The consensus is for a reading of 93.1, unchanged from the preliminary reading.