RSS Feed by Calculated Risk on 2/06/2015 03:41:00 PM
Friday, February 06, 2015
Lawler: Updated Estimates on the Size of the SF Rental Market
A long note from housing economist Tom Lawler:
While accurate and timely data on the size of the single-family rental market are not available, virtually all surveys suggest that the size of the single-family rental market surged from the end of 2007 through the end of last year. Below are some stats on the renter share of either the occupied single-family housing market (detached and attached, ACS and AHS) or the one-unit housing market (AHS, which includes manufactured housing, and is derived from detailed tables not shown in the press release).
While comparisons of these surveys with decennial Census results suggest that none of the surveys provide a particularly good “snapshot” of the overall US housing market, the fact that all surveys point to a sharp increase in the size of the SF rental market is quite consistent with anecdotal and other regional reports.
| Renter Share of Occupied One-Unit Properties | ||||
|---|---|---|---|---|
| Single Family (ex Mfg Housing) | One-Unit Structures (SF plus Mfg. Housing) | |||
| ACS | AHS | HVS | ||
| 2007 (avg) | 15.0% | 14.1% | Q4/2007 | 14.1% |
| 2010 (avg) | 16.8% | N/A | Q4/2010 | 16.5% |
| 2013 (avg) | 18.6% | 17.5% | Q4/2013 | 18.1% |
| Q4/2014 | 18.8% | |||
In terms of decennial Census data, in 2010 Census eliminated the “long form,” which in previous Censuses had supplied more detailed information on (among many things) the characteristics of the occupied and vacant housing stock. As such, tables on the “standard” Census website for housing tenure (owner/renter) by units in structure are not available.
In one of the reports from Census providing estimation results from the 2010 Census Coverage Measurement program (#2010-G-02), however, Census does provide estimates of occupied units by tenure and units in structure. Below are two tables: the first shows “official” decennial Census results for total, occupied, and vacant single-family units (attached and detached) by tenure from Census 2000 and Census 2010, and the second shows “updated” single-family estimates for these two years based on post-Census research results.
| Occupied and Vacant Single-Family Housing Units by Tenure (millions) | |||||
|---|---|---|---|---|---|
| Total | Owner-Occupied | Renter-Occupied | Vacant | Renter Share of Occupied SF Units | |
| 4/1/2000 | 76.3 | 60.1 | 10.6 | 5.6 | 15.0% |
| 4/1/2010 | 89.0 | 65.6 | 15.2 | 8.1 | 18.8% |
| Change | 12.7 | 5.5 | 4.6 | 2.5 | 3.8% |
| "Adjusted" Results Based on Post-Census Research | |||||
| Total | Owner-Occupied | Renter-Occupied | Vacant | Renter Share of Occupied SF Units | |
| 4/1/2000 | 77.0 | 60.5 | 10.7 | 5.8 | 15.0% |
| 4/1/2010 | 90.0 | 65.9 | 15.3 | 8.6 | 18.8% |
| Change | 13.0 | 5.4 | 4.6 | 2.8 | 3.8% |
Focusing on the bottom table (which probably reflect the “most accurate” aggregate statistics), adjusted decennial results suggest that from April 2000 to April 2010 the total single-family housing stock increased by about 13.0 million units, but the number of owner-occupied SF housing units rose by just 5.4 million units; the number of renter-occupied SF housing units increased by 4.6 million units; and the number of vacant SF housing units increased by 2.8 million units. As a result, the renter share of occupied SF housing units jumped to 18.8% in 2010 from 15.0% in 2000.
Note that the Census 2010 data indicate that the renter share of the occupied SF housing stock was higher than other surveys (ACS and especially HVS) suggest.
If one to believe that the CHANGE in the renter share of the occupied SF housing stock since April 1, 2000 were similar to the change in that share as derived from the HVS, then (using other assumptions) the SF housing stock in the fourth quarter of 2014 would look something like that shown below.
| Official Census Results | |||||
|---|---|---|---|---|---|
| Total | Owner-Occupied | Renter-Occupied | Vacant | Renter Share of Occupied SF Units | |
| 4/1/2000 | 76.3 | 60.1 | 10.6 | 5.6 | 15.0% |
| 4/1/2010 | 89.0 | 65.6 | 15.2 | 8.1 | 18.8% |
| Change | 12.7 | 5.5 | 4.6 | 2.5 | 3.8% |
| "Adjusted" Results Based on Post-Census Research | |||||
| Total | Owner-Occupied | Renter-Occupied | Vacant | Renter Share of Occupied SF Units | |
| 4/1/2000 | 77.0 | 60.5 | 10.7 | 5.8 | 15.0% |
| 4/1/2010 | 90.0 | 65.9 | 15.3 | 8.6 | 18.8% |
| Change | 13.0 | 5.4 | 4.6 | 2.8 | 3.8% |
| Q4/2014 Estimates based on Changes in HVS Results from Q2/2010 to Q4/2014 | |||||
| Total | Owner-Occupied | Renter-Occupied | Vacant | Renter Share of Occupied SF Units | |
| Q4/2014 (est) | 91.2 | 65.6 | 17.9 | 7.7 | 21.4% |
| Change from 4/1/2010) | 1.2 | -0.4 | 2.5 | -0.7 | 2.5% |
| Change from 4/1/2000 | 14.9 | 5.4 | 7.2 | 2.3 | 6.4% |
There are two “issues” with the numbers at the bottom of this table. First, of course, they use HVS results, which are not the most reliable. Second, in April 2014 the HVS began “phasing in” a new sample based on the Master Address File compiled during Census 2010, with the “phase-in” beginning in April 2014 and ending in July 2015. Since a comparison between decennial Census results and the HVS for 2010 indicated that the HVS was overstating homeownership rates and vacancy rates, a comparison between Q4/2014 results and earlier periods may not be “appropriate.” Specifically, as the new sample is phased in, one would expect the HVS quarterly data to show larger increases in the number of renters than could have been the case using the old sample.
Even if one used the change in the HVS renter share of the one-unit market from Q2/2010 to Q1/2014, however, the data would suggest that there was a considerable increase in number of renter-occupied single-family homes since 2010.
Here are what might be considered “best guess” estimates of the single-family housing stock (detached and attached) for 2000, 2010, and the last quarter of 2014.
| Occupied and Vacant Single-Family Housing Units by Tenure (millions) | |||||
|---|---|---|---|---|---|
| Total | Owner-Occupied | Renter-Occupied | Vacant | Renter Share of Occupied SF Units | |
| 4/1/2000 | 77.0 | 60.5 | 10.7 | 5.8 | 15.0% |
| 4/1/2010 | 90.0 | 65.9 | 15.3 | 8.6 | 18.8% |
| Q4/2014 (est) | 91.2 | 66.0 | 17.5 | 7.7 | 21.0% |
Much of the discussion on the sharp increase in the size of the SF rental market over the past several years has focused on “institutional” investor purchases of “distressed” SF properties, though it is quite clear that the size of the SF rental market was increasing well before most institutional investors entered the market.
There has been much less talk, however, about the demand for SF rentals, and specifically why so many households have decided to rent SF homes. E.g., how many householders are renting SF homes not because they “want” to rent, but because (1) mortgage credit has been “tight;” (2) the householders’ credit is “impaired,” in many cases because they lost their previous home to foreclosure and/or a short sale; and/or (3) they were consistently outbid by “investors” and now have been priced out of the market? On the other hand, how many householders are renting because they don’t want to purchase a home, either because they don’t like the “investment” prospects – especially those who believe they may want to move over those next few years, given the high costs of buying and selling a home – or because they don’t like the “hassle” of or potential but unknown costs associated with homeownership, but who want the “lifestyle” associated with owning a SF home? During much of the last decades householders wanting to live in a SF home in many markets faced extremely limited supplies of SF homes for rent. That is much less true today in many markets across the country.
Whatever the reasons, the surge in the size of the SF rental market has helped “sop up” much of the “excess building” during the first seven years of the previous decade, with the vast bulk of that “excess being in the built-for-sale SF market.
If for various reasons – e.g., an easing in mortgage credit, improved prospects for better-paying jobs and/or changes in potential mobility, shifts in home price expectations, etc. – an increasing number of current renters decided they wanted to own a home, then what might happen is (1) vacancy rates on existing SF rentals might increase and rents soften; (2) an increasing number of SF rental properties might be put up for sale; and (3) the resulting rise in the demand to purchase homes would not fully need to be met with an increase in the construction of new SF homes. (Just sumpin’ to think about.)
On the next page is a table showing the renter-occupied share of SF detached homes as measured by the ACS for 2006 and for 2013 by state. (Note: previous tables showed the renter share of SF detached and attached homes, which is higher. I just had already constructed this table.) This share increased from 2006 to 2013 in every state save for North Dakota, and the share jumped by more than three percentage points in 24 states.
| Renter Share of Occupied SF Detached Homes, ACS | |||
|---|---|---|---|
| 2006 | 2013 | Chg | |
| Alabama | 14.7% | 18.1% | 3.4% |
| Alaska | 14.0% | 16.0% | 1.9% |
| Arizona | 14.7% | 22.8% | 8.1% |
| Arkansas | 18.6% | 20.6% | 2.0% |
| California | 18.9% | 24.1% | 5.3% |
| Colorado | 13.1% | 16.9% | 3.8% |
| Connecticut | 6.6% | 8.9% | 2.3% |
| Delaware | 7.4% | 10.1% | 2.7% |
| District of Columbia | 12.7% | 14.6% | 1.9% |
| Florida | 13.0% | 18.4% | 5.5% |
| Georgia | 15.2% | 20.5% | 5.3% |
| Hawaii | 23.4% | 25.7% | 2.3% |
| Idaho | 15.0% | 18.2% | 3.2% |
| Illinois | 9.8% | 13.0% | 3.3% |
| Indiana | 12.3% | 15.7% | 3.4% |
| Iowa | 12.1% | 14.2% | 2.0% |
| Kansas | 15.1% | 17.9% | 2.8% |
| Kentucky | 14.3% | 17.6% | 3.3% |
| Louisiana | 17.1% | 18.7% | 1.6% |
| Maine | 8.8% | 11.8% | 3.1% |
| Maryland | 8.5% | 10.5% | 2.0% |
| Massachusetts | 6.2% | 7.4% | 1.3% |
| Michigan | 9.6% | 14.1% | 4.5% |
| Minnesota | 6.2% | 9.0% | 2.8% |
| Mississippi | 17.1% | 20.5% | 3.4% |
| Missouri | 13.5% | 16.9% | 3.4% |
| Montana | 15.9% | 19.0% | 3.2% |
| Nebraska | 15.6% | 17.1% | 1.4% |
| Nevada | 17.3% | 27.4% | 10.1% |
| New Hampshire | 7.0% | 8.6% | 1.6% |
| New Jersey | 6.6% | 8.5% | 1.9% |
| New Mexico | 16.8% | 19.3% | 2.5% |
| New York | 8.9% | 10.4% | 1.5% |
| North Carolina | 17.0% | 20.0% | 3.0% |
| North Dakota | 12.7% | 11.1% | -1.6% |
| Ohio | 11.8% | 16.0% | 4.2% |
| Oklahoma | 18.6% | 21.9% | 3.3% |
| Oregon | 15.6% | 20.1% | 4.5% |
| Pennsylvania | 8.9% | 10.9% | 2.1% |
| Rhode Island | 8.5% | 10.4% | 1.9% |
| South Carolina | 16.1% | 17.0% | 0.9% |
| South Dakota | 14.7% | 15.6% | 0.9% |
| Tennessee | 14.6% | 18.1% | 3.5% |
| Texas | 14.8% | 18.0% | 3.2% |
| Utah | 9.8% | 14.1% | 4.3% |
| Vermont | 10.0% | 10.3% | 0.3% |
| Virginia | 12.9% | 15.8% | 2.9% |
| Washington | 14.1% | 17.9% | 3.8% |
| West Virginia | 14.4% | 16.4% | 2.0% |
| Wisconsin | 8.2% | 11.0% | 2.7% |
| Wyoming | 15.4% | 16.4% | 1.0% |
| US | 13.1% | 16.7% | 3.6% |
Click on graph for larger image.Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama
by Calculated Risk on 2/06/2015 02:02:00 PM
By request, here is an update on an earlier post through the January employment report.
NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I'll just stick to the beginning of each term.
Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now. But these graphs give an overview of employment changes.
First, here is a table for private sector jobs. The top two private sector terms were both under President Clinton. Reagan's 2nd term saw about the same job growth as during Carter's term. Note: There was a severe recession at the beginning of Reagan's first term (when Volcker raised rates to slow inflation) and a recession near the end of Carter's term (gas prices increased sharply and there was an oil embargo).
| Term | Private Sector Jobs Added (000s) |
|---|---|
| Carter | 9,041 |
| Reagan 1 | 5,360 |
| Reagan 2 | 9,357 |
| GHW Bush | 1,510 |
| Clinton 1 | 10,885 |
| Clinton 2 | 10,070 |
| GW Bush 1 | -844 |
| GW Bush 2 | 381 |
| Obama 1 | 2,018 |
| Obama 2 | 5,5421 |
| 124 months into 2nd term: 11,084 pace. | |
1Currently Obama's 2nd term is on pace to be the best ever.
The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). President George H.W. Bush only served one term, and President Obama is in the second year of his second term.
Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.
There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.
Click on graph for larger image.The first graph is for private employment only.
The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 844,000 jobs at the end of his first term. At the end of Mr. Bush's second term, private employment was collapsing, and there were net 463,000 private sector jobs lost during Mr. Bush's two terms.
Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.
Private sector employment increased by 20,955,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).
There were only 2,018,000 more private sector jobs at the end of Mr. Obama's first term. Twenty four months into Mr. Obama's second term, there are now 7,560,000 more private sector jobs than when he initially took office.
A big difference between the presidencies has been public sector employment. Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).
However the public sector has declined significantly since Mr. Obama took office (down 688,000 jobs). These job losses have mostly been at the state and local level, but more recently at the Federal level. This has been a significant drag on overall employment.
And a table for public sector jobs. Public sector jobs declined the most during Obama's first term, and increased the most during Reagan's 2nd term.
| Term | Public Sector Jobs Added (000s) |
|---|---|
| Carter | 1,304 |
| Reagan 1 | -24 |
| Reagan 2 | 1,438 |
| GHW Bush | 1,127 |
| Clinton 1 | 692 |
| Clinton 2 | 1,242 |
| GW Bush 1 | 900 |
| GW Bush 2 | 844 |
| Obama 1 | -702 |
| Obama 2 | 141 |
| 124 months into 2nd term, 28 pace | |
Looking forward, I expect the economy to continue to expand for the next two years (at least), so I don't expect a sharp decline in private employment as happened at the end of Mr. Bush's 2nd term (In 2005 and 2006 I was warning of a coming recession due to the bursting of the housing bubble).
For the public sector, the cutbacks are clearly over at the state and local levels, and it appears cutbacks at the Federal level have slowed. Right now I'm expecting some increase in public employment during Obama's 2nd term, but nothing like what happened during Reagan's second term.
Employment Report Comments and Graphs
by Calculated Risk on 2/06/2015 11:00:00 AM
Earlier: January Employment Report: 257,000 Jobs, 5.7% Unemployment Rate
This was a very solid employment report with 257,000 jobs added, and job gains for November and December were revised up significantly.
There was even a little good news on wage growth, from the BLS: "In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $24.75, following a decrease of 5 cents in December. Over the year, average hourly earnings have risen by 2.2 percent."
Hopefully wages will be a positive 2015 story!
A few more numbers: Total employment increased 257,000 from December to January and is now 2.5 million above the previous peak. Total employment is up 11.2 million from the employment recession low.
Private payroll employment increased 267,000 from December to January, and private employment is now 3.0 million above the previous peak. Private employment is up 11.8 million from the recession low.
In January, the year-over-year change was 3.21 million jobs. This was the highest year-over-year gain since the '90s.
Employment-Population Ratio, 25 to 54 years old
Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.
In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.
The 25 to 54 participation rate increased in January to 81.1%, and the 25 to 54 employment population ratio increased to 77.2%. As the recovery continues, I expect the participation rate for this group to increase a little more (or at least stabilize for a couple of years) - although the participation rate has been trending down for this group since the late '90s.
Average Hourly Earnings
This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.
The blue line shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth has been running close to 2% since 2010 and might be picking up a little.
Note: CPI has been running under 2%, so there has been some real wage growth.
Part Time for Economic Reasons
From the BLS report:
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged in January at 6.8 million.The number of persons working part time for economic reasons increased slightly in January to 6.810 million from 6.790 million in December. This suggests slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that increased to 11.3% in January from 11.2% in December.
Unemployed over 26 Weeks
This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 2.800 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 2.785 in December. This is trending down, but is still very high.
State and Local Government
This graph shows total state and government payroll employment since January 2007. State and local governments lost jobs for four straight years. (Note: Scale doesn't start at zero to better show the change.) In January 2014, state and local governments lost 4,000 jobs. State and local government employment is now up 123,000 from the bottom, but still 635,000 below the peak.
State and local employment is now generally increasing. And Federal government layoffs have slowed, but are ongoing (Federal payrolls decreased by 6 thousand in January).
Overall this was a very solid employment report.
January Employment Report: 257,000 Jobs, 5.7% Unemployment Rate
by Calculated Risk on 2/06/2015 08:48:00 AM
From the BLS:
Total nonfarm payroll employment rose by 257,000 in January, and the unemployment rate was little changed at 5.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in retail trade, construction, health care, financial activities, and manufacturing.
...
The change in total nonfarm payroll employment for November was revised from +353,000 to +423,000, and the change for December was revised from +252,000 to +329,000. With these revisions, employment gains in November and December were 147,000 higher than previously reported. Monthly revisions result from additional reports received from businesses since the last published estimates and the monthly recalculation of seasonal factors. The annual benchmark process also contributed to these revisions.
...
[Benchmark revision] The total nonfarm employment level for March 2014 was revised upward by 91,000.
emphasis added
Click on graph for larger image.The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes).
Total payrolls increased by 257 thousand in January (private payrolls increased 267 thousand).
Payrolls for November and December were revised up by a combined 147 thousand, putting November over 400 thousand!
This graph shows the year-over-year change in total non-farm employment since 1968.In January, the year-over-year change was 3.21 million jobs.
This was the highest year-over-year gain since the '90s.
And improved earnings: "In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $24.75, following a decrease of 5 cents in December. Over the year, average hourly earnings have risen by 2.2 percent."
The third graph shows the employment population ratio and the participation rate.The Labor Force Participation Rate increased in January to 62.9%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics.
The Employment-Population ratio was increased to 59.3% (black line).
I'll post the 25 to 54 age group employment-population ratio graph later.
The fourth graph shows the unemployment rate. The unemployment rate increased in January to 5.7%.
This was above expectations of 230,000, and with the upward revisions to prior months, this was another strong report.
I'll have much more later ...
Thursday, February 05, 2015
Friday: Jobs, Jobs, Jobs
by Calculated Risk on 2/05/2015 08:39:00 PM
Here was an employment preview I posted earlier: Preview for January Employment Report: Taking the Under
Friday:
• At 8:30 AM ET, the Employment Report for January. The consensus is for an increase of 230,000 non-farm payroll jobs added in January, down from the 252,000 non-farm payroll jobs added in December. The consensus is for the unemployment rate to be unchanged at 5.6% in January from 5.6% the previous month.
Notes: The annual benchmark revision will be released with the January report. The preliminary estimate was an additional 7,000 jobs as of March 2014.
Also, the new population controls will be used in the Current Population Survey (CPS) estimation process. It is important to note that "household survey data for January 2015 will not be directly comparable with data for December 2014 or earlier periods".
• At 3:00 PM, Consumer Credit for December from the Federal Reserve. The consensus is for credit to increase $15.0 billion.
Duy: Fed Updates
by Calculated Risk on 2/05/2015 05:17:00 PM
Tim Duy provides a number of thoughts, and I'd like to highlight one: Fed Updates
3.) Fed ready to lower NAIRU? I have argued in the past that if the Fed is faced with ongoing slow wage growth, they would need to reassess their estimates of NAIRU. Cardiff Garcia reminded me:There is much more in Duy's post.
@TheStalwart @TimDuy Whether/extent to which Fed reverts nat-rate estimates to pre-2010 range is one of 2015's big Qs pic.twitter.com/CKieHx2zRCWhile David Wessel adds today:
— Cardiff Garcia (@CardiffGarcia) February 4, 2015
JPMorgan run the Fed's statistical model of the economy and says the NAIRU (which was 5.6%+ through 2013 data) is now down to 5%.Jim O'Sullivan from High Frequency Economics says not yet:
— David Wessel (@davidmwessel) February 5, 2015
"Hard-to-fill" @NFIB jobs series up to 26 in Jan (+1). Corroborates unempl decline, with no sign of lower #NAIRU pic.twitter.com/DVYGyGV4e6A reduction in the Fed's estimate of the natural rate of unemployment would likely mean a delayed and more gradual path of policy tightening, should of course the Fed ever get the chance to pull off the zero bound. Keep an eye on this issue!
— Jim O'Sullivan (@osullivanEcon) February 5, 2015
NAHB: Builder Confidence improves Year-over-year for the 55+ Housing Market in Q4
by Calculated Risk on 2/05/2015 02:20:00 PM
This is a quarterly index from the the National Association of Home Builders (NAHB) and is similar to the overall housing market index (HMI). The NAHB started this index in Q4 2008 (during the housing bust), so the readings were initially very low. Note that this index is Not Seasonally Adjusted (NSA) and usually dips in Q4 compared to Q3 (just seasonal).
From the NAHB: Builder Confidence in the 55+ Housing Market Ends Fourth Quarter on a Record High
The fourth quarter results of the National Association of Home Builders’ (NAHB) latest 55+ Housing Market Index (HMI) released today show that builders are feeling quite positive about the market. All segments of the market—single-family homes, condominiums and multifamily rental—registered increases compared to the same quarter a year ago. The single-family index increased six points to a level of 54, which is the highest fourth-quarter reading since the inception of the index in 2008 and the 13th consecutive quarter of year over year improvements.
...
All components of the 55+ single-family HMI posted increases from a year ago: present sales increased five points to 58, expected sales for the next six months rose two points to 64 and traffic of prospective buyers increased six points to 39.
“The strength of the 55+ segment of the housing industry has been fueled in part by rising home values,” said NAHB Chief Economist David Crowe. “Older home owners are finding it easier to sell their existing homes at a favorable price, allowing them to rent or buy a new home in a 55+ community.”
emphasis added
Click on graph for larger image.This graph shows the NAHB 55+ HMI through Q4 2014. The index increased in Q4 to 54 from 48 in Q4 2013. This indicates that more builders view conditions as good than as poor.
There are two key drivers in addition to the improved economy: 1) there is a large cohort moving into the 55+ group, and 2) the homeownership rate typically increases for people in the 55 to 70 year old age group. So demographics should be favorable for the 55+ market.
Goldman Sachs Employment Forecast: 210,000 jobs added, Unemployment Rate decline to 5.5%
by Calculated Risk on 2/05/2015 12:40:00 PM
Note: Yesterday I wrote: Preview for January Employment Report: Taking the Under
From Goldman Sachs economist David Mericle: January Payrolls Preview
We forecast nonfarm payroll job growth of 210k in January, below the consensus forecast of 230k. Payroll employment growth exceeded 250k in each of the last four months and averaged 246k over the 12 months of 2014, a substantial pick-up from the 194k average gain in 2013. On balance, labor market indicators were softer in January, with the decline in the ISM non-manufacturing employment index the most notable sign of slower hiring. We also expect a moderately positive two-month back-revision. The January report will also include annual benchmark revisions to payroll employment, but the preliminary revisions released in September indicated very little change.
...
We expect employment gains to push the unemployment rate down to 5.5% in January from an unrounded 5.565% in December, though new population controls that will be included with the January report create some uncertainty.
...
The two-tenths decline in average hourly earnings was the major surprise of the December payrolls report. But as we argued last month, calendar distortions and an unusual pattern of holiday retail hiring likely accounted for most of the downside surprise. We therefore expect average hourly earnings to rebound this month, growing an above-trend +0.4% in January, although we see some risk of a softer January gain coupled with an upward revision to December. Average hourly earnings rose just 1.7% over the year ending in December, contributing to the soft 2.1% year-on-year increase in our wage tracker. We expect an acceleration to around 2.75% by year-end, still well below the 3-4% rate of wage growth that Fed Chair Janet Yellen has identified as normal.
emphasis added
Trade Deficit increases in December to $46.6 Billion
by Calculated Risk on 2/05/2015 08:55:00 AM
The Department of Commerce reported:
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $46.6 billion in December, up $6.8 billion from $39.8 billion in November, revised. December exports were $194.9 billion, down $1.5 billion from November. December imports were $241.4 billion, up $5.3 billion from November.The trade deficit was much larger than the consensus forecast of $38.0 billion.
The first graph shows the monthly U.S. exports and imports in dollars through December 2014.
Click on graph for larger image.Imports increased and exports decreased in December.
Exports are 17% above the pre-recession peak and up 1% compared to December 2013; imports are 4% above the pre-recession peak, and up about 5% compared to December 2013.
The second graph shows the U.S. trade deficit, with and without petroleum, through December.
The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.Oil imports averaged $73.64 in December, down from $82.95 in November, and down from $91.33 in December 2013. The petroleum deficit has generally been declining and is the major reason the overall deficit has declined since early 2012.
Note: There is a lag due to shipping and long term contracts, but oil prices will really decline over the next several months - and the oil deficit will get much smaller.
The trade deficit with China increased to $28.3 billion in December, from $24.5 billion in December 2013. The deficit with China is a large portion of the overall deficit.
The increase in the trade deficit was due to a higher volume of oil imports (volatile month-to-month), a larger deficit with China, and a larger deficit with the Euro Area ($11.7 billion in Dec 2014 compared to $8.8 billion in Dec 2013).
Weekly Initial Unemployment Claims increased to 278,000
by Calculated Risk on 2/05/2015 08:33:00 AM
The DOL reported:
In the week ending January 31, the advance figure for seasonally adjusted initial claims was 278,000, an increase of 11,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 265,000 to 267,000. The 4-week moving average was 292,750, a decrease of 6,500 from the previous week's revised average. The previous week's average was revised up by 750 from 298,500 to 299,250.The previous week was revised up to 267,000.
There were no special factors impacting this week's initial claims.
The following graph shows the 4-week moving average of weekly claims since January 2000.
Click on graph for larger image.The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 292,750.
This was lower than the consensus forecast of 290,000, and the low level of the 4-week average suggests few layoffs.
