by Calculated Risk on 4/16/2014 09:15:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production increased 0.7 percent in March after having advanced 1.2 percent in February. The rise in February was higher than previously reported primarily because of stronger gains for durable goods manufacturing and for mining. For the first quarter as a whole, industrial production moved up at an annual rate of 4.4 percent, just slightly slower than in the fourth quarter of 2013. In March, the output of manufacturing rose 0.5 percent, the output of utilities increased 1.0 percent, and the output of mines gained 1.5 percent. At 103.2 percent of its 2007 average, total industrial production in March was 3.8 percent above its level of a year earlier. Capacity utilization for total industry increased in March to 79.2 percent, a rate that is 0.9 percentage point below its long-run (1972–2013) average but 1.2 percentage points higher than a year prior.
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Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 12.3 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 79.2% is still 0.9 percentage points below its average from 1972 to 2012 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production increased 0.7% in March to 103.2. This is 23% above the recession low, and 2.5% above the pre-recession peak.

The monthly change for both Industrial Production and Capacity Utilization were above expectations.

by Calculated Risk on 4/16/2014 08:30:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 946,000. This is 2.8 percent above the revised February estimate of 920,000, but is 5.9 percent below the March 2013 rate of 1,005,000.

Single-family housing starts in March were at a rate of 635,000; this is 6.0 percent above the revised February figure of 599,000. The March rate for units in buildings with five units or more was 292,000.
emphasis added

Building Permits:
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 990,000. This is 2.4 percent below the revised February rate of 1,014,000, but is 11.2 percent above the March 2013 estimate of 890,000.

Single-family authorizations in March were at a rate of 592,000; this is 0.5 percent above the revised February figure of 589,000. Authorizations of units in buildings with five units or more were at a rate of 370,000 in March.

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) decreased  in March (Multi-family is volatile month-to-month).

Single-family starts (blue) increased in March.

The second graph shows total and single unit starts since 1968.

 The second graph shows the huge collapse following the housing bubble, and that housing starts have been increasing after moving sideways for about two years and a half years.

This was below expectations of 965 thousand starts in March.  Note: Starts for February were revised up to 920 thousand from 907 thousand. I'll have more later.

by Calculated Risk on 4/16/2014 07:01:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 4.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 11, 2014. ...

The Refinance Index increased 7 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. ...

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.47 percent from 4.56 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
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Click on graph for larger image.


The first graph shows the refinance index.

The refinance index is down 73% from the levels in May 2013.

With the mortgage rate increases, refinance activity will be significantly lower in 2014 than in 2013.


The second graph shows the MBA mortgage purchase index.  

The 4-week average of the purchase index is now down about 18% from a year ago.

The purchase index is probably understating purchase activity because small lenders tend to focus on purchases, and those small lenders are underrepresented in the purchase index.

by Calculated Risk on 4/15/2014 08:04:00 PM

A reminder of a friendly bet I made with NDD on housing starts in 2014:

If starts or sales are up at least 20% YoY in any month in 2014, [NDD] will make a $100 donation to the charity of Bill's choice, which he has designated as the Memorial Fund in honor of his late co-blogger, Tanta. If housing permits or starts are down 100,000 YoY at least once in 2014, he make a $100 donation to the charity of my choice, which is the Alzheimer's Association.

Of course, with the terms of the bet, we could both "win" at some point during the year. (I expect to "win" in a few months, but not quite yet).

In March 2013, starts were at a 1.005 million seasonally adjusted annual rate (SAAR). For me to win, starts would have to be up 20% or at 1.206 million SAAR in March (not likely). For NDD to win, starts would have to fall to 905 thousand SAAR (possible). NDD could also "win" if permits fall to 790 thousand SAAR from 890 thousand SAAR in March 2013 (not likely).

Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, Housing Starts for March. Total housing starts were at 907 thousand (SAAR) in February. Single family starts were at 583 thousand SAAR in February. The consensus is for total housing starts to increase to 965 thousand (SAAR) in March.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for March. The consensus is for a 0.5% increase in Industrial Production, and for Capacity Utilization to increase to 78.8%.

• At 12:25 PM, Speech by Fed Chair Janet Yellen, Monetary Policy and the Economic Recovery, At the Economic Club of New York, New York, New York

• At 2:00 PM, the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

by Calculated Risk on 4/15/2014 04:39:00 PM

From housing economist Tom Lawler:

Based on realtor association/board/MLS reports from across the country, I estimate that US existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.64 million in March, up 0.9% from February’s preliminary pace, but down 6.5% from last March’s seasonally adjusted pace. If my estimate is correct, then first-quarter existing home sales this year would be down 6.3% from the comparable quarter of 2013. Depending on the area of the country, weather, lower distressed sales, lower investor purchases, and weak demand from primary-residence purchases (especially from first-time buyers), the latter partly reflecting lower inventories of affordably-priced homes (even though overall inventories of homes for sale were higher), contributed to the “surprisingly” weak pace of sales last quarter.

On the inventory front, I estimate (based on realtor/MLS reports, as well as reports from entities tracking listings) that the inventory of existing homes for sale as measured by the NAR increased by 4.0% from February to March to 2.080 million, which would be up 7.8% from last March’s level.

Finally, my “best guess” based on realtor reports is that the NAR’s estimate of the median existing SF home sales price in March will be up 8.7% from last March.

CR Note: The NAR is scheduled to report March existing home sales on Tuesday, April 22nd.   Based on Lawler's estimates, months-of-supply increased to around 5.4 months in March - the highest level since mid-2012.