The Housing Chronicles Blog: 2017

Friday, October 20, 2017

September existing home sales up 0.7 percent from August but down 1.5 percent year-on-year

After three straight monthly declines, existing-home sales slightly reversed course in September and rose by 0.7 percent, but ongoing supply shortages and recent hurricanes muted overall activity and caused sales to fall back on an annual basis, falling by 1.5 percent.

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Thursday, October 19, 2017

Less than one week left to register for the 8th annual Inland Empire Economic and Forecast Conference on 10/25/17


It's less than one week away!

The Housing Chronicles Blog and MetroIntelligence are pleased to partner as a sponsor with the UC Riverside School of Business' Center for Economic Forecasting & Development for their next economic conference on October 25, 2017 in Riverside, CA.

Entitled "Urban Inland Empire: California's Next Metropolis? Re-Imagining Economic Growth in the IE," this afternoon-long program will bring together economists, elected officials and academics.

Click here to register and save $25! You can also key in the code mrea17 at check-out to receive this discount.

What you can expect from this conference:

The Inland Empire is different from similarly sized markets like Atlanta and Houston in a critical way. It has no central downtown or 'urban core' where jobs are densely located.
  • What does this dynamic mean for business creation and economic development in the region?
  • Is the creation of an urban core the way to develop and grow the local economy?
  • Would an urban core appeal more to new businesses and do more to expand current ones?

Join some of the state's leading experts for a new economic forecast and a data-driven discussion about the region's urban future. 


Click here to register and save $25! You can also key in the code mrea17 at check-out to receive this discount.

Initial unemployment claims fall to lowest level since March 1973 in most recent report

In the week ending October 14, initial unemployment claims were 222,000, a decrease of 22,000 from the previous week's revised level. This is the lowest level for initial claims since March 31, 1973 when it was 222,000. The 4-week moving average was 248,250, a decrease of 9,500 from the previous week's revised average.

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Mortgage applications rise 3.6 percent in latest survey

The Market Composite Index increased 3.6 percent on a seasonally adjusted basis from one week earlier, with purchase loans up 4 percent and refinances up 3 percent. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.14 percent.

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October Philadephia Fed's Manufacturing Business Outlook Survey rises to highest level since May

The index for current manufacturing activity in the region increased 4 points to a reading of 27.9 and is now at its highest reading since May. The indexes assessing the six-month outlook suggest that firms remained optimistic about future growth.

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October Empire State Manufacturing Survey index rises to highest level in three years

The headline general business conditions index climbed six points to 30.2, its highest level in three years.Indexes assessing the six-month outlook suggested that firms remained optimistic about future conditions.

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Fed's September Beige Book: Continued overall growth even with hurricane impacts

Reports from all 12 Federal Reserve Districts indicated that economic activity increased in September through early October, with the pace of growth split between modest and moderate. Residential construction continued to increase, and growth in commercial construction was up slightly on balance. Low home inventory levels continued to constrain residential sales in many areas, while nonresidential real estate activity increased slightly overall.

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Leading Economic Index dipped slightly in September, partly due to hurricanes

The US LEI declined slightly in September for the first time in the last twelve months, partly a result of the temporary impact of the recent hurricanes. The source of weakness was concentrated in labor markets and residential construction, while the majority of the LEI components continued to contribute positively.

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Wednesday, October 18, 2017

September building permits down 4.5 percent from August and 4.3 percent year-on-year

Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,215,000. This is 4.5 percent below the revised August rate of 1,272,000 (down 5.6 percent in the South) and is 4.3 percent below the September 2016 rate of 1,270,000 (down 5.3 percent in the South).

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September housing starts dipped for third month to lowest level in a year

Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,127,000. This is 4.7 percent below the revised August estimate of 1,183,000, but is 6.1 percent above the September 2016 rate of 1,062,000. This was the lowest level since September 2016 and marked the third monthly decline in starts.

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Tuesday, October 17, 2017

CoreLogic: July serious mortgage delinquency rate at 10-year low of 4.6 percent

According to CoreLogic, 4.6 percent of mortgages were in some stage of delinquency nationally (30 days or more past due including those in foreclosure) in July 2017. This represents a 0.9 percentage point year-over-year decline in the overall delinquency rate compared with July 2016 when it was 5.5 percent.

As of July 2017, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.7 percent, down from 0.9 percent in July 2016 and the lowest since the rate was also 0.7 percent in July 2007.

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September industrial production rebounded in spite of hurricane impacts

September industrial production in the U.S. rebounded by 0.3 percent in September after two straight declines. Capacity utilization rose to 76% from 75.8% but remained below summer levels.

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Builder confidence rises to 68 in October, highest level since May

Builder confidence in the market for newly-built single-family homes rose four points to a level of 68 in October on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This was the highest reading since May.

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Monday, October 16, 2017

October Empire State Manufacturing Survey climbs to highest level in 3 years

Business activity grew at a robust pace in New York State, according to firms responding to the October 2017 Empire State Manufacturing Survey. The headline general business conditions index climbed six points to 30.2, its highest level in three years.

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Friday, October 13, 2017

August business inventories rose 0.7 percent, largest increase in 9 months

U.S. business inventories recorded their biggest increase in nine months in August, suggesting that inventory investment could boost economic growth in the third quarter.

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October consumer sentiment surges to highest level since early 2004

Consumer sentiment surged in early October, reaching its highest level since the start of 2004. The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints. The data indicate a robust outlook for consumer spending that extends the current expansion to at least mid 2018, which would mark the 2nd longest expansion since the mid 1800s.

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September retail sales jumped by 1.6 percent, highest jump since March 2015

September retail sales jumped by 1.6 percent, or the most in more than two years as motor vehicles lost to hurricanes were quickly replaced and higher prices lifted receipts at gasoline stations.

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September CPI up 0.5 percent from August and 2.2 percent year-on-year

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.5 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.2 percent.

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Thursday, October 12, 2017

Study: Productivity Gains in Construction Could Dramatically Increase Outcomes and Profits

It’s easy to state the importance of the construction industry, as it provides the foundation which makes most economic trade even possible. Globally, this industry behemoth of about $10 trillion accounts for 13 percent of worldwide GDP, and employs seven percent of its workforce.  As countries continue to urbanize, the further development of megacities (and maintenance of existing buildings) is expected to boost this total spending to $15 trillion annually by 2025.

Yet according to a recent study done by the McKinsey Global Institute, due to poor productivity gains relative to other industries, there is still $1.6 trillion left on the table each year, one-third of which is in the U.S.  If captured, this productivity loss is the equivalent of meeting half of the planet’s infrastructure needs, or boosting global GDP by two percent per year.

While the productivity challenge is global in nature, it’s even worse in the United States.  While most economic sectors in the country improved their productivity by 10 to 15 times since the 1950s, McKinsey’s analysis shows construction labor productivity remaining stuck of that in the 1930s, and has steadily declined since the 1960s.  Given that the construction sector’s share of U.S. GDP ranks close to both wholesale trade and information services, any productivity gains could have an outsized impact on the overall economy.

To be sure, not all construction projects are the same, and greater efficiencies are much easier for larger industrial and infrastructure projects than they are for housing developments or subcontractors.  Yet even for infill builders in which obtaining permits often requires making unique adjustments to garner community support, productivity gains are still possible.

McKinsey identifies 10 root causes of productivity misses, including external forces such as regulation and corruption, industry dynamics including high fragmentation and misaligned incentives, and operational factors including inadequate design processes, poor project management, under-skilled labor and under-investments in digitization, innovation and capital.

From the perspective of the builder or the subcontractor, it certainly makes business sense to be planning for the next downturn, and it’s much cheaper and easier to issue layoff notices than mothball capital-intensive investments in technology and machinery.  According to the NAHB’s 2016 Cost of Doing Business Survey, responding home builders reported an average of $16.2 million in revenue and net profit margins of $1.0 million (6.4 percent) in fiscal year 2014, so expensive investments are often unrealistic.  But it’s also that industry-wide protective mindset which has contributed to annual productivity gains of just 1.0 percent over the past 20 years, versus 2.8 percent for the global economy and 3.6 percent in manufacturing.

So what are the solutions?  McKinsey has identified seven distinct areas which could benefit from embracing various best practices, which combined could increase productivity by 48 to 60 percent while also saving costs of 27 to 38 percent.  These include (1) Reshaping regulations (something now being attempted in California to boost more housing production) and increasing transparency; (2) Awarding contracts more collaboratively; (3) Rethinking design and engineering processes while encouraging more off-site manufacturing; (4) Centralizing and digitizing supply chains and purchasing departments; (5) Improving on-site construction by moving from process-based to more holistic operating systems; (6) Infusing digital technology, new materials and appropriate automation into the process; and (7) Retraining a workforce that is aging, depends largely on immigrant labor and suffers from both seasonality and cyclicality.

Here in the U.S., larger players – especially those in the public sector -- will generally be the first to strategically decide what’s best for them, but everyone should be ready for four types of disruption:  (1) Rising requirements from clients in terms of volume, time, cost, quality and sustainability; (2) More industry consolidation, greater transparency and disruptive new competitors; (3) More new technologies, materials and processes; and (4) Rising wages and potential limits on immigrant labor. 

As these trends roll out and eventually put pressure on the building industry, there are some reasonable steps suggested to make it easier.  These include a greater use of digital Building Information Modeling (BIM) to enhance transparency and collaboration; reshaping regulations in support of higher productivity; more transparency on costs across the industry; publishing performance metrics on contractors; and considering regular skills development of the existing labor force versus the reliance on low-cost, transient immigrants.

The Harvard Center for Joint Housing Studies currently projects 1.36 million new U.S. households per year between 2015 and 2025.  While the industry is projected to approach that level of starts by 2018, in August of 2017 the annualized starts rate was 1.18 million, leaving a theoretical shortfall of 180,000.  

Initial unemployment claims decline 15,000 in latest report

In the week ending October 7, initial unemployment claims were 243,000, a decrease of 15,000 from the previous week's revised level. The 4-week moving average was 257,500, a decrease of 9,500 from the previous week's revised average.

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Federal Reserve meeting minutes indicates December interest rate hike is likely

Federal Reserve officials see the economy expanding at a steady clip and indicate that an interest rate hike later this year is a near lock, despite some divisions over where inflation is headed.

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September Producer Price Index up 0.4 percent from August and 2.6 percent year-on-year

The Producer Price Index for final demand advanced 0.4 percent in September. On an unadjusted basis, the final demand index increased 2.6 percent for the 12 months ended in September, the largest rise since an advance of 2.8 percent for the 12 months ended February 2012.

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September Fannie Mae Home Purchase Sentiment Index rose 0.3 points, matching previous record high

The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 0.3 points in September to 88.3, matching the all-time high set in June. Renter respondents, in particular, buoyed the net good time to buy component, showing a substantial upward change in optimism in September.

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Wednesday, October 11, 2017

2 weeks left to register for the 8th annual Inland Empire Economic and Forecast Conference on 10/25/17


It's only 2 weeks away!

The Housing Chronicles Blog and MetroIntelligence are pleased to partner as a sponsor with the UC Riverside School of Business' Center for Economic Forecasting & Development for their next economic conference on October 25, 2017 in Riverside, CA.

Entitled "Urban Inland Empire: California's Next Metropolis? Re-Imagining Economic Growth in the IE," this afternoon-long program will bring together economists, elected officials and academics.

Click here to register and save $25! You can also key in the code mrea17 at check-out to receive this discount.

What you can expect from this conference:

The Inland Empire is different from similarly sized markets like Atlanta and Houston in a critical way: It has no central downtown or 'urban core' where jobs are densely located.
  • What does this dynamic mean for business creation and economic development in the region?
  • Is the creation of an urban core the way to develop and grow the local economy?
  • Would an urban core appeal more to new businesses and do more to expand current ones?

Join some of the state's leading experts for a new economic forecast and a data-driven discussion about the region's urban future.


Click here to register and save $25! You can also key in the code mrea17 at check-out to receive this discount.

Job openings dipped 0.9 percent in August, larger declines in both hires and separations

The number of job openings dipped 0.9 percent from July to 6.1 million on the last business day of August. Over the month, hires and separations fell by 1.6 and 2.5 percent to 5.4 million and 5.2 million, respectively.

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Small Business Optimism Index fell by 2.3 points in September to 103

The NFIB Index of Small Business Optimism tumbled in September from 105.3 to 103 led by a steep drop in sales expectations, not just in hurricane-affected states, but across the country.

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Mortgage applications fall 2.1 percent in latest survey

The Market Composite Index decreased 2.1 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 0.1 percent and refinances falling 4.0 percent. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.16 percent.

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Monday, October 9, 2017

August wholesale inventories rose by fastest pace since November 2016

Wholesale inventories increased a seasonally adjusted 0.9% in August from the prior month, the fastest pace since November 2016. Sales in August were up 1.7% from the revised July level.

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Friday, October 6, 2017

Job growth dipped into negative territory in September due to storm impacts

The unemployment rate declined to 4.2 percent in September, and total nonfarm payroll employment fell by 33,000 jobs.  A sharp employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey.

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August consumer credit use slowed from July, but YTD borrowing up 6.7 percent

Total consumer credit slowed to a gain of $13.1 billion, after a $17.7 billion jump in the prior month, Credit growth was up at a 4.2% annual pace in the month, down from a 5.7% pace in July. For all of 2016, consumer borrowing rose at a 6.7% rate.

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Thursday, October 5, 2017

Initial unemployment claims fall by 12,000 in latest report

In the week ending September 30, initial unemployment claims were 260,000, a decrease of 12,000 from the previous week's unrevised level of 272,000. The 4-week moving average was 268,250, a decrease of 9,500 from the previous week's unrevised average of 277,750. Hurricanes Harvey, Irma, and Maria impacted this week's claims.

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Mortgage loan applications dip 0.4 percent in latest survey, rates rise slightly

The Market Composite Index decreased 0.4 percent on a seasonally adjusted basis from one week earlier, with purchase loans up 1 percent and refinances down 2 percent. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.12 percent.

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3Q 2017 GDP growth at 2.8 percent in latest estimate

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.8 percent on October 5, up from 2.7 percent on October 2.

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Factory orders up 1.2 percent in August as business spending surges

New orders for U.S.-made goods rose 1.2 percent in August and orders for core capital goods were stronger than previously reported, suggesting robust business spending could help offset some of the economic drag of Hurricanes Harvey and Irma.

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August planned job cuts down 4.4 percent from July and 27 percent year-on-year

Job cuts announced by U.S.-based employers fell 4.4 percent in August from July, and are also down by 27 percent year-on-year. So far this year, planned job cuts are down 26.2 percent from the same period of 2016.

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Wednesday, October 4, 2017

September ISM Non-Manufacturing Sector Index rose 4.5 points from August, highest reading since mid-2005

The NMI® registered 59.8 percent, which is 4.5 percentage points higher than the August reading of 55.3 percent. This is the highest reading since August 2005 when the index registered 61.3 percent. The non-manufacturing sector has reflected strong growth in the month of September despite the impact on the supply chain from the recent hurricanes.

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September ISM Manufacturing Sector Index rose 2.0 points from August

The September PMI® registered 60.8 percent, an increase of 2 percentage points from the August reading of 58.8 percent. Comments from the panel reflect expanding business conditions, with new orders, production, employment, order backlogs and export orders all growing in September.

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ADP: Private sector jobs grew by a lesser 135,000 in September, partly due to storm impacts

Private sector employment increased by 135,000 jobs from August to September according to the September ADP Employment Report.  This compares to 228,000 jobs in August (down 41 percent) and 217,000 jobs (down 38 percent) in September of 2016. This is in part due to Hurricane's Harvey and Irma which significantly impacted smaller retailers.

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Redfin Housing Demand Index mostly flat in August but up nearly 28 percent year-on-year

The Redfin Housing Demand Index remained virtually flat, up slightly from 126 in July to 127 in August.

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Corelogic: August home prices up 0.9 percent from July and 6.9 percent year-on-year

Home prices nationally increased year over year by 6.9 percent from August 2016 to August 2017, and on a month-over-month basis, home prices increased by 0.9 percent in August 2017 compared with July 2017, according to the CoreLogic HPI.

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Tuesday, October 3, 2017

Gallup Economic Confidence Index dipped to +4 in September

Confidence in the economy declined slightly to plus 4 in September, down from August's plus 6. While the ECI climbed past the plus 10 mark in January, September's score of plus 4 represents a continuation of economic attitudes that have held since May, apart from a brief increase in early August after the Dow hit 22,000.

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Monday, October 2, 2017

August construction spending rebounded 0.5 percent from July, up 2.5 percent year-on-year

August construction spending rose 0.5 percent to $1.21 trillion after two months of declines, and was up 2.5 percent year-on-year.  Hurricanes Harvey and Irma did not appear to have impacted the construction spending data,  as the responses from the Texas and Florida areas affected by the storms were "not significantly lower than normal."

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Friday, September 29, 2017

September Chicago Business Barometer rose to second-highest level in over three years

The MNI Chicago Business Barometer rose to 65.2 in September, hitting the highest level in three months and the second highest level in over three years.

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Personal income, spending and prices all rose slightly in August

Personal income increased 0.2 percent in August and personal consumption expenditures (PCE) increased 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

September consumer sentiment dipped 1.8 points from August but up 4.3 points year-on-year

Consumer sentiment remained largely unchanged from the slightly lower level recorded at mid-month. The resilience of consumers has again been demonstrated as concerns about the impact of the hurricanes on the national economy have quickly faded. Given that the survey was able to reach most households in Florida and Texas in late September, it should be no surprise that small declines were recorded in the current financial situation of households.

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Thursday, September 28, 2017

Initial unemployment claims rise by 12,000 in latest report, impacted by hurricanes

In the week ending September 23, initial unemployment claims were 272,000, an increase of 12,000 from the previous week's revised level. The 4-week moving average was 277,750, an increase of 9,000 from the previous week's unrevised average of 268,750. This is the highest level for this average since February 6, 2016 when it was 277,750.

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Mortgage applications dip 0.5 percent in latest survey as rates rise 7 basis points

The Market Composite Index decreased 0.5 percent on a seasonally adjusted basis from one week earlier, with purchase loans up 3 percent and refinancing down 4 percent. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.11 percent from 4.04 percent.

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2Q 2017 GDP growth at 3.1 percent in third and final estimate

Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the second quarter of 2017, according to the third and final estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent-line.

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Bloomberg Consumer Comfort Index rises for first time in a month

Americans' confidence rose for the first time in four weeks as households grew more upbeat about their finances amid higher stock prices, with the index rising from 50.6 to 51.6.

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Wednesday, September 27, 2017

August durable goods orders rose more than expected, shaking off storm impacts

New orders for key U.S.-made capital goods increased by 1.7 percent in August and shipments maintained their upward trend. The data pointed to underlying strength in the economy despite an anticipated drag to growth from Hurricanes Harvey and Irma. Business investment has been buoyed by the energy sector, where oil and gas drilling has rebounded after declining in the wake of a collapse in crude oil prices.

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Richmond Fed: Regional manufacturing index rose sharply in September

The Richmond Fed's composite manufacturing index rose from 14 to 19, supported by a sizable increase in the index for shipments — which, at a reading of 22, is the highest it has been since December 2010 — and a smaller rise in the index for new orders. The third component of the composite index, the employment index, fell slightly.

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August Pending Home Sales Index fell to lowest level since January 2016

The Pending Home Sales Index retreated 2.6 percent to 106.3 in August. The index is now at its lowest reading since January 2016 (106.1), is 2.6 percent below a year ago, and has fallen on an annual basis in four of the past five months.

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Tuesday, September 26, 2017

State Street Investor Confidence Index dips 2.4 points in September

The Global Investor Confidence Index decreased to 104.4, down 2.4 points from August’s revised reading of 106.8. The decline in sentiment was driven by a 6.3 point drop in the North American ICI to 105.6. By contrast, the European ICI rose by 4.7 points to 93.7 along with the 3.7 increase in the Asian ICI to 102.8.

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July Case-Shiller index up 0.7 percent from June and 5.8 percent year-on-year

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.9% annual gain in July, up from 5.8% the previous month. Before seasonal adjustment, the National Index posted a month-over-month gain of 0.7% in July.

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Consumer confidence dips in September, largely due to hurricane impacts

Consumer confidence decreased slightly in September after a marginal improvement in August. Confidence in Texas and Florida, however, decreased considerably, as these two states were the most severely impacted by Hurricanes Harvey and Irma.

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August new home sales dropped to 8-month low

Sales of new single-family houses in August 2017 were at a seasonally adjusted annual rate of 560,000, the lowest level in eight months. This is also 3.4 percent below the revised July rate of 580,000 and is 1.2 percent below the August 2016 estimate of 567,000.

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Monday, September 25, 2017

30 days left to register for the 8th annual Inland Empire Economic and Forecast Conference on 10/25/17


It's only one month away!

The Housing Chronicles Blog and MetroIntelligence are pleased to partner as a sponsor with the UC Riverside School of Business' Center for Economic Forecasting & Development for their next economic conference on October 25, 2017 in Riverside, CA.

Entitled "Urban Inland Empire: California's Next Metropolis? Re-Imagining Economic Growth in the IE," this afternoon-long program will bring together economists, elected officials and academics.

Click here to register and save $25! You can also key in the code mrea17 at check-out to receive this discount.

What you can expect from this conference:

The Inland Empire is different from similarly sized markets like Atlanta and Houston in a critical way: It has no central downtown or 'urban core' where jobs are densely located.

  • What does this dynamic mean for business creation and economic development in the region?
  • Is the creation of an urban core the way to develop and grow the local economy?
  • Would an urban core appeal more to new businesses and do more to expand current ones?

Join some of the state's leading experts for a new economic forecast and a data-driven discussion about the region's urban future.

Click here to register and save $25! You can also key in the code mrea17 at check-out to receive this discount.

Chicago Fed National Activity Index declined in August

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to -0.31 in August from +0.03 in July.

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Friday, September 22, 2017

September business inflation expectations index remained the same at 1.9 percent

Firms' inflation expectations were unchanged at 1.9 percent over the year ahead. Sales levels improved somewhat, and profit margins declined further over the month.

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IHS Markit Flash U.S. Composite PMI Output Index rose further in September

September data revealed a strong increase in U.S. private sector business activity, with the rate of growth close to August's seven-month peak.

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Thursday, September 21, 2017

Initial unemployment claims fall 23,000 in latest report, but 4-week average up 6,000

In the week ending September 16, initial unemployment claims were 259,000, a decrease of 23,000 from the previous week's revised level.  The 4-week moving average was 268,750, an increase of 6,000 from the previous week's revised average. This is the highest level for this average since June 4, 2016 when it was 269,500.

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Mortgage applications fall 9.7 percent in latest survey, likely due to storm impacts

The Market Composite Index decreased 9.7 percent on a seasonally adjusted basis from one week earlier, with purchase loans falling 11 percent and refinances down 9 percent. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.04 percent.

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August FHFA House Price Index up 0.2 percent from July and 6.3 percent year-on-year

The FHFA House Price Index (HPI) reported a 0.2 percent increase in U.S. house prices in July from the previous month.  From July 2016 to July 2017, house prices were up 6.3 percent.

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Leading Economic Index rose 0.4 percent in August

The August gain is consistent with continuing growth in the U.S. economy for the second half of the year, which may even see a moderate pick up. While the economic impact of recent hurricanes is not fully reflected in the leading indicators yet, the underlying trends suggest that the current solid pace of growth should continue in the near term.

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Wednesday, September 20, 2017

Federal Reserve leaves interest rates unchanged for now, forecasts another raise this year

The Fed will start cutting its $4.5 trillion balance sheet in October, initially by just $10bn per month. The FOMC also left US interest rates unchanged, at 1.25% to 1.5%, but expects to raise them one more time this year, followed by three raises in 2018.

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August existing home sales dipped 1.7 percent from July, up 0.2 percent year-on-year

Existing-home sales stumbled in August for the fourth time in five months as strained supply levels continue to subdue overall according to the National Association of Realtors®. Sales gains in the Northeast and Midwest were outpaced by declines in the South and West.

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Tuesday, September 19, 2017

August building permits up 5.7 percent from July and 8.3 percent year-on-year

Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,300,000. This is 5.7 percent above the revised July rate of 1,230,000 and is 8.3 percent above the August 2016 rate of 1,200,000.

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August housing starts down 0.8 percent from July but up 1.4 percent year-on-year

Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,180,000. This is 0.8 percent below the revised July estimate of 1,190,000, but is 1.4 percent above the August 2016 rate of 1,164,000.

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Monday, September 18, 2017

Builder confidence drops three points in August to 64, largely due to twin hurricane impact

Builder confidence in the market for newly-built single-family homes fell three points to a level of 64 in September from a downwardly revised August reading of 67 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), due mostly to concerns about the availability of labor and the cost of building materials.

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Saturday, September 16, 2017

Economic Impact from Hurricanes: Short-Term Pain and Long-Term Lessons Abound

Just before Hurricanes Harvey and Irma landed on the shores of Texas and Florida, the U.S. economy had been gradually picking up steam, with estimates of third-quarter GDP growth rising to nearly 3.0 percent.  However, given the destruction to the Houston area and throughout parts of Florida, a variety of economists and Wall Street analysts have downgraded this estimate by as much as 0.8 percentage points, and the economic impact from the twin hurricanes could exceed $150 billion, including $20 to $40 billion in lost economic output alone.

Given the unique economies of these two areas, the impacts will be national, regional, and/or local in scope.  Nationally, besides the temporary reduction in GDP growth, prices for gas and other petroleum products (such as aviation fuel and heating oil) are expected to remain elevated until Texas’ refining facilities – responsible for nearly 25 percent of the nation’s output – are back online. Auto sales, already weakening this year after years of rising demand, could decline by 100,000 to 200,000 vehicles as potential buyers focus on other issues.  It will also take months for insurers to deal with up to 500,000 claims for flooded cars, many of which were unsold units on dealer lots.

As of mid-September, we’re already seeing some of the impacts from Hurricane Harvey on retail sales and industrial production, both of which dipped after months of increases.  Yet such dips are transitory, and likely to be made up in the fourth quarter and into 2018.  Similarly, initial applications for unemployment insurance, spiking in the first week of September to the highest level since early 2015, will provide a temporary safety net while most companies survey their damage and gradually re-open for business.

As for the housing market, given that the combined areas of the Houston MSA and the State of Florida had accounted for nearly 14 percent of building permits from January through July of 2017, there will certainly be an impact filtering throughout the building industry.  Prices for lumber – already elevated due to the Trump Administration's 20 percent excise tax on Canadian timber – are likely to rise even further given the scale of homes in need of immediate repair.

National spending on remodeling and repair could rise by nearly 10 percent, while also siphoning off labor and materials from new home construction.  Overall inflation, which has been recently bouncing around the two-percent level, could rise in the short term depending on the demand to rebuild and refurnish households.

In Houston, the floods which had inundated as much as 30 percent of Harris County meant that 100,000 homes or more would have to be partially or totally rebuilt, which has created a surge in demand for temporary lodging and suitable rentals.  For now, look for both new home incentives and apartment rent concessions to wane as excess supply disappears.

Given experiences with previous hurricanes, it will likely take up to five years for the hardest-hit areas along the Texas coast to rebuild.  Still, boosters are already saying that the resilience of Houston’s building industry – the largest market in the country with nearly 45,000 permits in 2016 -- could sharply reduce that timeline.

In Florida, because Hurricane Irma impacted almost the entire state, there was more damage to power and water infrastructure as well as homes and businesses.  In terms of economic loss, although the state’s industrial economy is much less built-up than in Houston, other sectors including tourism,  agriculture, health care and business services are expected to take the biggest hit.

In the long run, there will also be a national discussion about re-building in areas prone to natural disasters such Harvey and Irma.  Although many Houstonians can simply elevate their homes to avoid local flooding, the region’s rapid growth (and related ability to provide affordable housing) will be intently studied.  In Florida -- the lowest-lying state with an average elevation of 100 feet – potential homebuyers may have second thoughts about living close to its 1,200 miles of coastline.

For now, Congress will have to shore up and fix the National Flood Insurance Program, already in debt by $25 billion prior to these most recent storms due to premiums not matching payouts for past disasters including Hurricane Katrina and Superstorm Sandy. Some changes might include reducing the 30 percent commission paid to commercial insurers, streamlining the claims process, or even transferring the flood insurance business entirely to the private sector.

Given that lenders will not issue mortgages on homes in flood plains without the required insurance available, the long-term impact to the building industry could be substantial.

Friday, September 15, 2017

Business inventories up 0.2 percent in July

U.S. business inventories rose 0.2% in July, manufacturing inventories were up 0.2% and wholesaler inventories increased 0.6% from a month earlier. Retailers decreased stockpiles by 0.1% in July from June.

READ MORE

Consumer sentiment dips in early September due to twin hurricanes, but impact likely short-lived

Consumer confidence edged downward in early September due to concerns over the outlook for the national economy. Consumers' assessments of current economic conditions improved, however, with the Current Conditions Index reaching the highest level since November of 2000.

Across all interviews in early September, 9% spontaneously mentioned concerns that Harvey, Irma, or both, would have a negative impact on the overall economy. Renewed gains in incomes as well as rising home and equity values have acted to counterbalance the negative impacts from the hurricanes. Given the current resilience of consumers, recent events are unlikely to derail confidence.

READ MORE

Industrial production reported August dip, partially due to Hurricane Harvey

Industrial production declined 0.9 percent in August following six consecutive monthly gains. Hurricane Harvey, which hit the Gulf Coast of Texas in late August, is estimated to have reduced the rate of change in total output by roughly 3/4 percentage point.

READ MORE

August retail sales post largest decline in six months, partly due to Hurricane Harvey

Retail sales dropped 0.2 percent in August, the biggest decline in six months as motor vehicle sales tumbled 1.6 percent. Sales of building materials, electronics and appliances as well as clothing also fell.

READ MORE

Thursday, September 14, 2017

Initial unemployment claims dip 14,000 in latest survey, but 4-week average up 13,000

In the week ending September 9, initial unemployment claims were 284,000, a decrease of 14,000 from the previous week. The 4-week moving average was 263,250, an increase of 13,000 from the previous week. This is the highest level for this average since August 13, 2016 when it was 263,250.

READ MORE


Mortgage applications rose 9.9 percent in latest weekly survey

The Market Composite Index increased 9.9 percent on a seasonally adjusted basis from one week earlier, with purchase loans up 11 percent and refinances up 9 percent.  The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.03 percent.

READ MORE


August new home mortgage applications up 7.0 percent from July and 6.8 percent year-on-year

Mortgage applications for new home purchases increased 6.8 percent compared to August 2016. Compared to July 2017, applications increased by 7 percent relative to the previous month.

READ MORE

August CPI up 0.4 percent during the month and 1.9 percent year-on-year

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.9 percent.

READ MORE

Wednesday, September 13, 2017

Producer Price Index up 0.2 percent in August and 2.4 percent over previous 12 months

The Producer Price Index for final demand advanced 0.2 percent in August. On an unadjusted basis, the final demand index increased 2.4 percent for the 12 months ended in August.

READ MORE

Small Business Optimism Index rose another 0.1 points, maintaining high levels since last November

The NFIB Index rose 0.1 points to 105.3. Five of the components increased, while five declined. The lofty reading keeps intact a string of historically high performances extending back to last November.

READ MORE

Tuesday, September 12, 2017

July job openings rose to record high of 6.2 million, while hires rose to 1.5-year high

The number of job openings rose to 6.2 million on the last business day of July, up 0.9 percent from June and the highest level since December 2000. Over the month, hires rose 1.3 percent to a 1.5-year high of 5.5 million, while separations rose 0.4 percent to 5.3 million.

READ MORE

Monday, September 11, 2017

July wholesale trade dipped 0.1 percent from June but up 5.9 percent year-on-year

July 2017 sales of merchant wholesalers were down 0.1 percent from June, but were up 5.9 percent from the July 2016 level.

READ MORE

Consumer credit use rose 5.9 percent in July

Consumer credit increased at a seasonally adjusted annual rate of 5.9% in July. Total outstanding credit increased $18.5 billion during the month (compared with $11.9 billion in June) to $3.75 trillion.

READ MORE


Thursday, September 7, 2017

Initial unemployment claims rise 62,000 in latest report

In the week ending September 2, initial claims were 298,000, an increase of 62,000 from the previous week's unrevised level of 236,000. The 4-week moving average was 250,250, an increase of 13,500 from the previous week's unrevised average of 236,750.

READ MORE

Mortgage loan applications rise 3.3 percent in latest survey as rates dip again

The Market Composite Index increased 3.3 percent on a seasonally adjusted basis from one week earlier, with purchase loans falling 1.0 percent and refinances 5.0 percent. The average contract interest rate for 30-year fixed-rate mortgages decreased to its lowest level since November 2016, 4.06 percent.

READ MORE

Service sector revenue rose 3.2 percent in 2Q 2017, up 6.2 percent year-on-year

U.S. selected services total revenue for the second quarter of 2017, rose by 3.2 percent from the first quarter of 2017 and up 6.2 percent from the second quarter of 2016.

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Labor productivity rose 1.5 percent in 2Q 2017, up 1.3 percent year-on-year

Nonfarm business sector labor productivity increased 1.5 percent during the second quarter of 2017 as output increased 4.0 percent and hours worked increased 2.5 percent. From the second quarter of 2016 to the second quarter of 2017, productivity increased 1.3 percent, reflecting a 2.8-percent increase in output and a 1.5-percent increase in hours worked.

READ MORE

Beige Book: Moderate economic expansion in July and August, but low for-sale home inventory

Economic activity expanded at a modest to moderate pace across all twelve Federal Reserve Districts in July and August. Both residential and commercial construction increased slightly overall. Low inventories of homes for sale continued to weigh on residential real estate activity across the country, while commercial real estate activity increased slightly.

READ MORE


Wednesday, September 6, 2017

Service sector index rose 1.4 points in July

The NMI® registered 55.3 percent, which is 1.4 percentage points higher than the July reading of 53.9 percent. The non-manufacturing sector has rebounded from the prior month's cooling-off period. The majority of respondents are optimistic about business conditions going forward.

READ MORE

Manufacturing sector index rose 2.5 percentage points in July

The August PMI® registered 58.8 percent, an increase of 2.5 percentage points from the July reading of 56.3 percent. Comments from the panel reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in August.

READ MORE

Factory goods orders slipped 3.3 percent in July

Factory goods orders tumbled 3.3 percent amid a slump in demand for transportation equipment. That was the biggest drop since August 2014 and followed a 3.2 percent surge in June.

READ MORE

Gallup: U.S. Confidence Index rose by two points to +6 in August

Americans' confidence in the U.S. economy varied in August but was not remarkably different from economic attitudes in July. Gallup's U.S. Economic Confidence Index was +6 in August, just slightly higher than the +4 recorded in July.

READ MORE

Friday, September 1, 2017

Consumer confidence remains at highest level so far in 2017 since 2000

Consumer confidence has remained at a very favorable level, although slipping somewhat from mid-month. The Sentiment Index has been higher during the first eight months of 2017 than in any year since 2000, which was the peak year of the longest expansion in U.S. history. Given the current resilience of consumers, temporary increases in gas prices as well as a brief period of weakness in economic growth and employment are unlikely to derail confidence.

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Construction spending fell 0.6 percent in July to nine-month low

U.S. construction spending unexpectedly fell 0.6 percent in July, hitting a nine-month low to $1.21 trillion amid a steep decline in investment in private structures.

READ MORE

Job growth slowed to 156,000 in August

Total nonfarm payroll employment increased by 156,000 in August, and the unemployment rate rose to 4.4 percent. Job gains occurred in manufacturing, construction, professional and technical services, health care, and mining. Job growth for June and July also declined by a total of 41,000.

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Thursday, August 31, 2017

Initial unemployment claims rise 1,000 in latest report

In the week ending August 26, initial unemployment claims were 236,000, an increase of 1,000 from the previous week's revised level. The 4-week moving average was 236,750, a decrease of 1,250 from the previous week's revised average.

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Mortgage applications fall 2.3 percent in latest survey; rates down to lowest level since Nov. 2016

The Market Composite Index decreased 2.3 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 3 percent and refinances falling 2 percent. The average contract interest rate for 30-year fixed-rate mortgages decreased to its lowest level since November 2016, 4.11 percent.

READ MORE

Personal income and spending both rose faster than inflation in July

Personal income increased 0.4 percent in July and personal consumption expenditures (PCE) increased 0.3 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

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Corporate profits rebounded to $26.8 billion during 2Q 2017 in initial estimate

Profits from current production increased $26.8 billion in the second quarter, in contrast to a decrease of $46.2 billion in the first quarter.

READ MORE

Pending Home Sales Index fell again in July as inventory remained tight

The Pending Home Sales Index decreased 0.8 percent to 109.1 in July. After last month's decline, the index is now 1.3 percent below a year ago and has fallen on an annual basis in three of the past four months.

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August planned job cuts up 19.4 percent from July, but YTD cuts down 26 percent from 2016

U.S.-based employers announced plans to cut payrolls by 33,825 in August, up 19.4 percent from July and 5 percent year-on-year. So far this year, planned job cuts are down 26.1 percent from the same period of 2016.

READ MORE


Wednesday, August 30, 2017

Second quarter GDP growth rises to 3.0 percent in second estimate

Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2017 according to the "second" estimate released by the Bureau of Economic Analysis. The second GDP estimate is based on more complete source data than were available for the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.6 percent.

READ MORE

Private sector employment rose by 237,000 jobs in August, up 18 percent from July

Private sector employment increased by 237,000 jobs from July to August according to the August ADP National Employment Report.  This compares to 201,000 new jobs in July and 141,000 in August 2016.

READ MORE

Registration now open for the 8th annual Inland Empire Economic and Forecast Conference on 10/25/17


The Housing Chronicles Blog and MetroIntelligence is pleased to partner as a sponsor with the UC Riverside School of Business' Center for Economic Forecasting & Development for their next economic conference on October 25, 2017 in Riverside, CA.

Entitled "Urban Inland Empire:  California's Next Metropolis?  Re-Imagining Economic Growth in the IE," this afternoon-long program will bring together economists, elected officials and academics.

Click here to register and save $25!  You can also key in the code mrea17 at check-out to receive this discount.

What you can expect from this conference:

The Inland Empire is different from similarly sized markets like Atlanta and Houston in a critical way: It has no central downtown or 'urban core' where jobs are densely located.

  • What does this dynamic mean for business creation and economic development in the region?
  • Is the creation of an urban core the way to develop and grow the local economy?
  • Would an urban core appeal more to new businesses and do more to expand current ones?

Join some of the state's leading experts for a new economic forecast and a data-driven discussion about the region's urban future.

Click here to register and save $25!  You can also key in the code mrea17 at check-out to receive this discount.

Tuesday, August 29, 2017

State Street Investor Confidence Index dips 2.1 points in August

The Global Investor Confidence Index decreased to 106.8, down 2.1 points from July’s revised reading of 108.9. The decline in sentiment was driven by a 4.9 point drop in the European ICI to 89.3 along with the 0.3 point decrease in the North American ICI to 111.8. By contrast, the Asian ICI rose by 3.3 points to 99.3.

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Consumer confidence increases in August to 16-year high

Consumer confidence increased in August following a moderate improvement in July. Consumers’ more buoyant assessment of present-day conditions was the primary driver of the boost in confidence, with the Present Situation Index continuing to hover at a 16-year high (July 2001, 151.3). Consumers’ short-term expectations were relatively flat, though still optimistic, suggesting that they do not anticipate an acceleration in the pace of economic activity in the months ahead.

READ MORE

Case-Shiller Index up 0.9 percent in June and 5.8 percent year-on-year

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.8% annual gain in June, up from 5.7% the previous month. Before seasonal adjustment, the National Index posted a month-over-month gain of 0.9% in June.

READ MORE

Monday, August 28, 2017

Durable goods orders fell sharply in July, due mostly to volatile aircraft sector

Orders for long-lasting manufactured goods sank 6.8% in July, the biggest fall in nearly three years, led by a drop in the volatile category of civilian aircraft. But a measure of future business investment advanced 0.4%.

READ MORE


Thursday, August 24, 2017

Initial unemployment claims fall 2,000 in latest report

In the week ending August 19, initial unemployment claims were 234,000, an increase of 2,000 from the previous week's unrevised level of 232,000. The 4-week moving average was 237,750, a decrease of 2,750 from the previous week's unrevised average of 240,500.

READ MORE

Mortgage loan applications dip 0.5 percent in most recent survey

The Market Composite Index decreased 0.5 percent on a seasonally adjusted basis from one week earlier, with purchase loans falling 2.0 percent and refinance activity rising 0.3 percent. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged from the week prior at 4.12 percent.

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July existing home sales slipped 1.3 percent to lowest rate of year as prices rose 6.2 percent year-on-year

Total existing-home sales slipped 1.3 percent to a seasonally adjusted annual rate of 5.44 million in July. July's sales pace is still 2.1 percent above a year ago, but is the lowest of 2017. The median existing-home price for all housing types in July was $258,300, up 6.2 percent from July 2016 ($243,200). July's price increase marks the 65th straight month of year-over-year gains.

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Wednesday, August 23, 2017

Markit Flash shows sharp increase in U.S. business activity for August

US private sector companies signalled a sharp and accelerated increase in business activity during August. This was shown by the seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index rising from July's reading of 54.6 to 56.0, to indicate the fastest growth of overall activity since May 2015.

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July new home sales down 9.4 percent from June and 8.9 percent year-on-year

Sales of new single-family houses in July 2017 were at a seasonally adjusted annual rate of 571,000. This is 9.4 percent below the revised June rate of 630,000 and is 8.9 percent below the July 2016 estimate of 627,000.

READ MORE

Tuesday, August 22, 2017

Richmond Fed: Regional manufacturing activity unchanged in August

Reports on Fifth District manufacturing activity were largely unchanged in August, according to the latest survey by the Federal Reserve Bank of Richmond. The composite index remained at 14 in August, with an increase in the employment index offsetting a decrease in the shipments index and a very slight decline in the new orders metric. Although the employment index rose from 10 to 17 in August, other measures of labor market activity — wages and average workweek — were largely unchanged.

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FHFA: House prices up 1.6 percent in 2Q 2017 and 6.6 percent year-on-year

U.S. house prices rose 1.6 percent in the second quarter of 2017 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 6.6 percent from the second quarter of 2016 to the second quarter of 2017.

READ MORE

Monday, August 21, 2017

Chicago Fed National Activity Index declined in July, but growth still within historical trend

The Chicago Fed National Activity Index (CFNAI) moved down to -0.01 in July from +0.16 in June. The index's three-month moving average moved down to -0.05 in July from +0.09 in June.

READ MORE

Friday, August 18, 2017

2Q 2017 service sector revenue up 3.2 percent from 1Q and 6.2 percent year-on-year

The estimate of U.S. selected services total revenue for the second calendar quarter of 2017 was $3,685.1 billion, an increase of 3.2 percent from the first quarter of 2017 and up 6.2 percent from the second quarter of 2016.

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Consumer confidence rises in first half of August

Consumer confidence rose in the first half of August to its highest level since January due to a more positive outlook for the overall economy as well as more favorable personal financial prospects. Too few interviews were conducted following Charlottesville to assess how much it will weaken consumers' economic assessments.

The fallout is likely to reverse the improvement in economic expectations recorded across all political affiliations in early August. Moreover, the Charlottesville aftermath is more likely to weaken the economic expectations of Republicans, since prospects for Trump's economic policy agenda have diminished. Nonetheless, the partisan difference between the optimism of Republicans and the pessimism of Democrats is still likely to persist, with Independents remaining as the bellwether group.

READ MORE

Thursday, August 17, 2017

Initial unemployment claims fall by 12,000 in latest report

In the week ending August 12, initial unemployment claims were 232,000, a decrease of 12,000 from the previous week's unrevised level of 244,000. The 4-week moving average was 240,500, a decrease of 500 from the previous week's unrevised average of 241,000.

READ MORE

Mortgage applications rise 0.1 percent in weekly survey, rates dip

The Market Composite Index increased 0.1 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 2 percent and refinances rising 2 percent. The average contract interest rate for 30-year fixed-rate mortgages decreased to its lowest level since November 2016, 4.12 percent.

READ MORE

Industrial production up 0.2 percent in July and 2.2 percent year-on-year

Industrial production rose 0.2 percent in July following an increase of 0.4 percent in June. At 105.5 percent of its 2012 average, total industrial production was 2.2 percent above its year-earlier level. Capacity utilization for the industrial sector was unchanged in July at 76.7 percent, a rate that is 3.2 percentage points below its long-run (1972-2016) average.

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E-commerce retail sales rose 4.8 percent in 2Q 2017, with market share rising to 8.9 percent

Accounting for 8.9 percent of the total, U.S. retail e-commerce sales for the second quarter of 2017 were $111.5 billion, an increase of 4.8 percent from the first quarter of 2017. Total retail sales for the second quarter of 2017 were estimated at $1,256.2 billion, an increase of 0.5 percent from the first quarter of 2017.

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Fed meeting minutes reveal concern about weak inflation and possible halt to interest rate hikes

Federal Reserve policymakers appeared increasingly wary about recent weak inflation and some called for halting interest rate hikes until it was clear the trend was transitory.  The minutes also indicated the Fed was poised to begin reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities.

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July Leading Economic Indicators rose another 0.3 percent

The U.S. LEI improved in July, suggesting the U.S. economy may experience further improvements in economic activity in the second half of the year. The decline in building permits, a reversal from June, was more than offset by gains in the financial indicators, new orders and sentiment.

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Wednesday, August 16, 2017

Year-ahead business inflation expectations rose to 1.9 percent in August

Inflation expectations: Firms' inflation expectations increased to 1.9 percent over the year ahead.

Current economic environment: Sales levels were virtually unchanged, and profit margins declined somewhat over the month.

Quarterly question: Overall, firms expect margin adjustments to exert more upward pressure on prices over the next 12 months. The year-ahead influence of labor and non-labor costs on prices remained roughly unchanged, as did the influence of sales levels and productivity.

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July building permits dipped 4.1 percent from June but still up 4.1 percent year-on-year

Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,223,000. This is 4.1 percent below the revised June rate of 1,275,000, but is 4.1 percent above the July 2016 rate of 1,175,000.

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July housing starts down 4.8 percent from June and 5.6 percent year-on-year

Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,155,000. This is 4.8 percent below the revised June estimate of 1,213,000 and is 5.6 percent below the July 2016 rate of 1,223,000.

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Tuesday, August 15, 2017

CoreLogic: Delinquent mortgages fell to 4.5 percent in May

Nationally, 4.5 percent of mortgages were in some stage of delinquency (30 days or more past due including those in foreclosure) in May 2017. This represents a 0.8 percentage point decline in the overall delinquency rate compared with May 2016 when it was 5.3 percent.


As of May 2017, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.7 percent compared with 1 percent in May 2016. The serious delinquency rate, defined as 90 days or more past due including loans in foreclosure, was 2 percent, unchanged from April 2017 and down from 2.6 percent in May 2016. The 2 percent serious delinquency rate in April and May this year was the lowest since November 2007 when it was also 2 percent.

June business inventories rose by largest amount in seven months

U.S. businesses increased their stockpiles in June by the largest amount in seven months – rising by 0.5 percent -- while sales also rose by 0.3 percent.  It was the best showing since inventories had risen 0.9% in November.

August Empire State Manufacturing Survey jumps to highest level in 15 years

Business activity grew strongly in New York State, according to firms responding to the August 2017 Empire State Manufacturing Survey. The headline general business conditions index climbed fifteen points to 25.2, its highest level in nearly three years. Indexes assessing the six-month outlook suggested that firms were very optimistic about future conditions.

July retail sales post largest increase in seven months

U.S. retail sales recorded their biggest increase in seven months in July – rising by 0.65 percent -- as consumers boosted purchases of motor vehicles as well as discretionary spending. The data suggested the economy continued to gain momentum early in the third quarter.

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Builder confidence rebounds four points in August to 68

Builder confidence in the market for newly built single-family homes rose four points in August to 68 on the NAHB/Wells Fargo Housing Market Index (HMI).

All three HMI components posted gains in August. The component gauging current sales conditions rose four points to 74 while the index charting sales expectations in the next six months jumped five points to 78. Meanwhile, the component measuring buyer traffic increased a single point to 49.


Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 48. The West, South and Midwest all remained unchanged at 75, 67 and 66, respectively.

Monday, August 14, 2017

Non-Employment Index edged down slightly to 7.9 percent of all workers in July

The Hornstein-Kudlyak-Lange Non-Employment Index (NEI) was 7.9 percent in July 2017, edging down from 8 percent in June. It has declined by 0.4 percentage points since July 2016. The NEI including workers who are part time for economic reasons (PTER) was 9 percent in July 2017, edging down from 9.1 percent the previous month. That index has declined by 0.5 percentage points since July 2016.

READ MORE

Friday, August 11, 2017

July CPI up 0.1 percent from June and 1.7 percent year-on-year

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in July on a seasonally adjusted basis. Over the last 12 months, the all items index rose 1.7 percent.

The index for all items less food and energy rose 0.1 percent, the fourth month in a row it increased by that amount and up 1.7 percent over the previous 12 months.



Thursday, August 10, 2017

Initial unemployment claims rise by 3,000 in latest report

In the week ending August 5, initial unemployment claims were 244,000, an increase of 3,000 from the previous week's revised level. The 4-week moving average was 241,000, a decrease of 1,000 from the previous week's revised average.

READ MORE


Mortgage applications rise three percent in latest survey as rates dip

The Market Composite Index increased 3.0 percent on a seasonally adjusted basis from one week earlier, with purchase loans up one percent and refinances rising five percent. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.14 percent from 4.17 percent.

READ MORE


July applications for new home mortgages rose 5.1 percent year-on-year

The Mortgage Bankers Association (MBA) Builder Applications Survey (BAS) data for July 2017 shows mortgage applications for new home purchases increased 5.1 percent compared to July 2016. Compared to June 2017, applications decreased by 12 percent. This change does not include any adjustment for typical seasonal patterns.

READ MORE


Producer Price Index fell 0.1 percent in July, for the largest fall in 11 months

The Producer Price Index for final demand declined 0.1 percent in July. On an unadjusted basis, the final demand index increased 1.9 percent for the 12 months ended in July.

READ MORE


Wednesday, August 9, 2017

Labor productivity up 0.9 percent during 2Q 2017 and 1.2 percent year-on-year

Nonfarm business sector labor productivity increased 0.9 percent during the second quarter of 2017, as output increased 3.4 percent and hours worked increased 2.5 percent. From the second quarter of 2016 to the second quarter of 2017, productivity increased 1.2 percent, reflecting a 2.7-percent increase in output and a 1.5-percent increase in hours worked.

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Job openings rose 8.1 percent in June as both hires and separations slipped

The number of job openings increased 8.1 percent to 6.2 million on the last business day of June. Over the month, hires and separations slipped 1.9 and 0.4 percent to 5.4 million and 5.2 million, respectively.

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Small Business Optimism Index rose 1.6 points in July

The Index of Small Business Optimism rose 1.6 points to 105.2 in July, preserving the surge in optimism that started the day after the election. Seven of the 10 Index components posted a gain, two declined, and one was unchanged.


Tuesday, August 8, 2017

Consumer debt rose in June at a slower pace to record level

American consumers increased their borrowing at a slower pace in June, as the category that includes auto and student loans posted the smallest gain in a year.

Still, the June increase brought overall consumer credit -- not including mortgages or other debt secured by real estate, including home-equity loans -- to a fresh record of $3.86 trillion.

In addition, the total for the category of "revolving debt," primarily credit card balances also hit a new record high of $1.027 trillion.

Small Business Optimism Index rose 1.6 points in July

The Index of Small Business Optimism rose 1.6 points to 105.2 in July, preserving the surge in optimism that started the day after the election. Seven of the 10 Index components posted a gain, two declined, and one was unchanged.

Job openings rose 8.1 percent in June as both hires and separations slipped

The number of job openings increased 8.1 percent to 6.2 million on the last business day of June. Over the month, hires and separations slipped 1.9 and 0.4 percent to 5.4 million and 5.2 million, respectively.

Friday, August 4, 2017

IHS Markit: July services sector index grew at fastest pace since January

The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.7 in July, up from 54.2 in June. The latest reading signalled the largest expansion of business activity since January and the fourth consecutive month of accelerated growth.

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Durable goods orders jumped 3.0 percent in July, largest gain in 8 months

Factory goods orders jumped 3.0 percent in July.  This was the largest gain since October 2016 and followed two straight monthly declines.

READ MORE

July jobs grew by 209,000 as unemployment ticked down to 4.3 percent

Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, professional and business services, and health care. 

The labor force participation rate, at 62.9 percent, changed little in July and has shown little movement on net over the past year. The employment-population ratio (60.2 percent) was also little changed in July but is up by 0.4 percentage point over the year.

READ MORE

Thursday, August 3, 2017

Initial unemployment claims fall 5,000 in most recent report

In the week ending July 29, initial unemployment claims were 240,000, a decrease of 5,000 from the previous week's revised level. The 4-week moving average was 241,750, a decrease of 2,500 from the previous week's revised average.

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Service sector index dipped 3.5 points in July to 53.9

The NMI® registered 53.9 percent, which is 3.5 percentage points lower than the June reading of 57.4 percent. The majority of respondents’ comments were mostly positive about business conditions and the state of the economy.

Manufacturing sector index dipped 1.5 points in July to 56.3

The July PMI® registered 56.3 percent, a decrease of 1.5 percentage points from the June reading of 57.8 percent. Comments from the panel generally reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in July compared to June.

Gallup: July Good Jobs rate rose to 47.0 percent, tie for highest point since 2010

The Gallup Good Jobs (GGJ) rate rose nearly a percentage point to 47.0% in July, from 46.3% in June. The GGJ rate now ties the highest point for the measure since 2010, 47.1% in July of last year.

Mortgage loan applications fall 2.8 percent in latest survey

The Market Composite Index decreased 2.8 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 2.0 percent and refinances falling 4.0 percent. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.17 percent.

July planned job cuts dropped to lowest level since last November; hiring announcements surged

U.S.-based employers announced plans to cut payrolls by 28,307 jobs in July, the lowest monthly total since November 2016. Meanwhile, over 88,000 hiring announcements were recorded last month, the third-highest hiring month of the year and highest July total on record.

The July job-cut total is 9 percent lower than the 31,105 cuts recorded in June, and 37.6 percent lower than the same month last year, when 45,346 cuts were recorded. Last month’s job cuts were the lowest monthly total since November 2016, when 26,936 cuts were announced.


So far this year, employers announced 255,307 planned job cuts, down 28.9 percent from the 359,100 cuts announced through the first seven months of 2016.

Wednesday, August 2, 2017

Conference Board: Online Job Vacancies fell 3.3 percent in July

Online advertised vacancies decreased 157,700 (3.3 percent) to 4,605,700 in July, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The June Supply/Demand rate stands at 1.46 unemployed for each advertised vacancy, with a total of 2.2 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7.0 million in June.

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Gallup: Economic Confidence Index steady in July at +4, in positive territory for nine straight months

Americans' confidence in the economy was steady last month, with Gallup's U.S. Economic Confidence Index averaging +4 in July. This score is nearly identical to the 2017 low of +3 registered in May and June. Still, July marked the ninth consecutive month that Americans rated the economy more positively than negatively -- the longest such streak since Gallup began tracking economic confidence in 2008.

Gallup: Job Creation Index rebounded to record high in July

Gallup's U.S. Job Creation Index returned to its all-time high of +37 in July, a sign that the job market remains strong relative to the past decade. This is one point higher than the index score in June and the third time it has been at +37 in 2017.

ADP: Private sector jobs grew 178,000 in July

Private sector employment increased by 178,000 jobs from June to July according to the July ADP National Employment Report.  This compares to 191,000 jobs the previous month and 229,000 jobs a year ago.

Tuesday, August 1, 2017

CoreLogic: June home prices up 6.7 percent year-on-year, some markets becoming over-valued

According to CoreLogic, June home prices nationally increased year over year by 6.7 percent and by 1.1 percent from May.   Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 5.2 percent on a year-over-year basis from June 2017 to June 2018.

As of Q2 2017, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years.

Of the nation’s 10 largest metropolitan areas measured by population, four were overvalued in June according to CoreLogic Market Conditions Indicators (MCI) data. These four metros include Denver-Aurora-Lakewood, CO, Houston-The Woodlands-Sugar Land, TX, Miami-Miami Beach-Kendall, FL and Washington-Arlington-Alexandria, DC-VA-MD-WV.

Personal income, spending and price index all remained fairly flat in June

Personal income fell less than -0.1 percent in June while personal consumption expenditures (PCE) increased by 0.1 percent.  The PCE price index increased less than 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

June construction spending dipped slightly from May, but YTD is up 4.8 percent over 2016

Construction spending during June 2017 was estimated at a seasonally adjusted annual rate of $1,205.8 billion, 1.3 percent below the revised May estimate of $1,221.6 billion. The June figure is 1.6 percent above the June 2016 estimate of $1,186.4 billion. During the first 6 months of this year, construction spending amounted to $577.0 billion, 4.8 percent above the $550.5 billion for the same period in 2016.

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Gearing Up for the 2020 Census: Lack of Funding and Leadership Vacancies Imperil Crucial Update

It’s hard to over-state the importance of the decennial census, which has been undertaken every decade since 1790.

Indeed, this key accounting of the American population was deemed important enough to be listed in Article 1 of the U.S. Constitution.

Today, however, with the departure of the Census Bureau’s director in June and a refusal by Congress to adequately fund important tests of the first Internet-based count in advance of 2020, alarm bells are going off at The Census Project, which counts among its 200 members the NAHB, the NAR and the U.S. Chamber of Commerce.

They certainly have reason to be worried. Several months before the departure of former director John Thompson, the Government Accountability Office had added the Census Bureau to its ‘high-risk list’ of imperiled agencies and programs.  If there is any economic sector which would be negatively impacted by the Bureau being under-funded and rudderless, it would be the building industry.

That’s because, besides the decennial census, the Bureau also collects monthly data critical for homebuilders such as building permits, starts, completions and new single-family home sales at various geographical levels.

Each quarter, the Bureau releases data on homeownership and residential vacancy rates by state and many MSAs.  The Bureau’s data can even move the stock market in either direction because it’s regularly tracking the health of retail stores, wholesale trade, manufacturing, domestic and international trade and even construction spending by sector.

Because a country as large and vibrant as the U.S. can change a lot between decades, the Bureau also conducts the American Community Survey (ACS), which provides annual information to better determine how over $400 billion in federal and state funds are spent based on local jobs, education levels and homeownership levels.

For demographers and market researchers looking at development opportunities, the Bureau’s data allows them to cobble together datasets to compare the risk profile of one city or town versus another.  If a small city is seeing a boom in new jobs that isn’t being met with new population or housing growth, that’s an opportunity the Bureau can help unearth. The Census Bureau may be one of the most important federal government agencies we have.

Although various state agencies also gather their own data on population, employment and housing trends – and have served as official State Census Data Centers since 1978 – they still must ‘benchmark’ their estimates against the latest decennial census data when it is released.  Sometimes this process can unveil a large discrepancy, which can deprive a large state of its share of numerous federal programs and even cost it a Congressional seat.  In some cases, the loss of a seat could potentially swing an election.

The private sector is also impacted, because when you order a demographic report from a company such as ESRI or Claritas, their analysts are basing their current-year estimates and projections on the most recent decennial census.  Consequently, if the 2020 update is under-funded, that could lead to another decade of bad guesses based on incomplete data.  Given the impact that under-building housing is having on home prices in many areas of the country, ensuring an accurate update in 2020 should be a rallying cry for our industry.

There are two reasons for this Census Bureau under-funding: (1) Because the budget is set at the same level as the 2010 Census, it is not accounting for either a decades’ worth of inflation or another estimated 25 million people to count by 2020; and (2) Because the Bureau is attempting to harness the Internet and new technology for the first time to reduce the need for door-to-door counting, it needs additional funds for tests originally scheduled to start in 2018.

According to The Census Project, the Bureau needs an additional $300 million in 2018 to extensively test this new technology for an accurate count, but the White House and Congress have approved just over 10 percent of that amount.  This puts the 2020 Census in danger of a botched count, which could lead to undercounts of rural and minority populations while over-counting whites, especially those with multiple homes.

There are fears that the 2020 Census could be the victim of politics, and be used as a means to shift federal spending from blue to red states – or vice versa if such a myopic precedent is set.  At a time when just agreeing on facts is a challenge, there’s a reason the Founding Fathers inscribed the decennial census into the Constitution.

Let’s at least honor their wishes by fully funding it.