by Calculated Risk on 4/25/2010 11:45:00 AM
Sunday, April 25, 2010
The key economic stories this week will be house prices, the FOMC meeting and the “advance estimate” for Q1 GDP to be released on Friday.
On Monday the LoanPerformance house price index (for February) will probably be released. Also on Monday, the Census Bureau report on Housing Vacancies and Homeownership for Q1 will be released at 10 AM. Although noisy quarter-to-quarter, this report has been showing a declining homeownership rate. The vacancy rates for homeowners and renters have probably peaked, but both will still be near record levels.
On Tuesday the February Case-Shiller Home Price Index will be released at 9 AM by S&P. This will be confused by the recent S&P release cautioning about the seasonal adjustment. Also on Tuesday the Conference Board will release consumer confidence at 10 AM, and Fed Chairman Bernanke, budget director Peter Orszag, and others will speak at President Obama’s debt-reduction commission.
The Federal Open Market Committee (FOMC) is meeting on Tuesday and Wednesday, and the FOMC statement will be released on Wednesday at around 2:15 PM . Although there will be no change to the Fed Funds rate, or to the “extended period” language, there might be a few minor changes to the statement – perhaps a little more upbeat on the economy, maybe some discussion of eventual asset sales to appease a few hawkish members (not going to happen any time soon), and perhaps a comment on disinflation or the weak housing market.
On Thursday the closely watched initial weekly unemployment claims will be released. The consensus is for a decline to 446K this week from 456K last week. Also on Thursday (or earlier in the week) the ATA Truck Tonnage Index for March will be released.
And on Friday, the Advance Q1 GDP report will be released by the BEA at 8:30 AM. The consensus is for an annualized increase of 3.4%. Also on Friday, the Chicago Purchasing Managers Index for April, and the March Restaurant Performance index will be released. And of course the FDIC will probably be busy Friday afternoon ...
And a summary of last week:
The Census Bureau reported New Home Sales in March were at a seasonally adjusted annual rate (SAAR) of 411 thousand. This was an increase from the revised rate of 324 thousand in February (revised from 308 thousand).
Click on graphs for larger image in new window.
The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted).
Note the Red columns for 2010. In March 2010, 38 thousand new homes were sold (NSA).
The record low for March was 31 thousand in 2009.
Months of supply declined to 6.7 in March from 8.6 in February. This is significantly below the all time record of 12.4 months of supply set in January 2009, but still higher than normal.
New home sales are counted when the contract is signed, so this pickup in activity is probably related to the tax credit. Note that that a few thousand extra sales NSA in March can make a huge difference in the SAAR.
The NAR reported: Existing-Home Sales Rise
Existing-home sales ... rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March.This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.
Sales in March 2010 (5.35 million SAAR) were 6.8% higher than last month, and were 16.1% higher than March 2009 (4.61 million SAAR).
Note: existing home sales are counted at closing, so even though contracts must be signed in April to qualify for the tax credit, buyers have until June 30th to close.
This graph shows the year-over-year change in reported existing home inventory and months-of-supply.
The YoY inventory has been decreasing for the last 20 months. However the YoY decline is getting smaller - only 1.8% in March.
This slow decline in the inventory is especially concerning with the large reported inventory and 8.0 months of supply in March - well above normal.
This graph shows NSA monthly existing home sales for 2005 through 2010 (see Red columns for 2010).
Sales (NSA) in March 2010 were 19.6% higher than in March 2009, and also higher than in March 2008.
We will probably see an increase in sales in May and June - perhaps to the levels of 2006 or 2007 - because of the tax credit, however I expect to see existing home sales below last year in the 2nd half of this year.
From the AIA: Billings Index Inches Up in March
Note: This index is a leading indicator for Commercial Real Estate (CRE) investment.
This graph shows the Architecture Billings Index since 1996. The index has remained below 50, indicating falling demand, since January 2008.
The Department of Transportation (DOT) reported that vehicle miles driven declined year-over-year in February.
This graph shows the percent change from the same month of the previous year as reported by the DOT.
Miles driven in February 2010 were down -2.9% compared to February 2009.
The Moody’s/REAL All Property Type Aggregate Index declined 2.6% in February. This is a repeat sales measure of commercial real estate prices.
CRE prices only go back to December 2000.
The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes).
Commercial real estate values are now down 25.8% over the last year, and down 41.8% from the peak in August 2007.
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Best wishes to all.