Thursday, September 22, 2016

Low Inventories and High Prices Suppressed Existing Home Sales in August

Existing-home sales fell 0.9% to a seasonally adjusted annual rate of 5.33 million in August, according to the National Association of Realtors (NAR). High prices and low inventories appear to have suppressed sales.

“It is very concerning to see that inventory conditions not only show no signs of improving but have actually worsened in recent months from their already suppressed levels a year ago,” says NAR Chief Economist Lawrence Yun. “While recent data from the U.S. Census Bureau shows that household incomes rose strongly last year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale.”

Total housing inventory fell 3.3% to 2.04 million homes available for sales, while the median existing-home price moved up 5.1% to $240,200.

Year-over-year sales were 0.8% higher. The annual sales rate rose 6.1% in the Northeast, but fell 0.8% in the Midwest, 2.7% in the South and 1.6% in the West.

Distressed sales comprised 5% of sales in August, the lowest share since the NAR began tracking them in 2008. Four percent of August sales were foreclosures and 1% were short sales. On average, foreclosures and short sales sold for discounts of 12% and 14% respectively.

Read the NAR release.
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Wednesday, September 21, 2016

No Fed Hike in September

The Federal Open Market Committee (FOMC) maintained the current target for the federal funds rate at 25-50 basis points in September. In a post-meeting statement, the Committee noted that the case for an increase in rates “has strengthened,” but decided to “wait for further evidence of continued progress toward its objectives.”

“Our decision does not reflect a lack of confidence in the economy,” said Federal Reserve Chair Janet Yellen during a post-meeting press conference. “Conditions in the labor market are strengthening, and we expect that to continue.”

“Near-term risks to the economic outlook appear roughly balanced,” said the FOMC in their written statement following the meeting. “The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further.”

The decision to maintain accommodative monetary policy was not unanimous. Kansas City President Esther George, Cleveland President Loretta Mester, and Boston Federal Reserve President Eric Rosengren dissented from today’s meeting action; each of whom expressed a preference to raise the target range to 50-75 bps.

Read the FOMC statement.
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Tuesday, September 20, 2016

Housing Starts Down in August Following Three Monthly Gains

Housing starts fell to a seasonally adjusted annual rate of 1.142 million in August, 5.8% below the revised July rate of 1.212 million, but 0.9% above the August 2015 rate.

Housing activity increased in most regions, rising 7.6% in the Northeast, 5.6% in the Midwest, and 1.8% in the West. These increases were more than offset by a 14.8% decline in the South, however.

New building permits also slipped during the month, falling 0.4% to 1.139 million. Permits were down 2.3% from the August 2015 rate.

Housing completions were at a seasonally adjusted annual rate of 1.043 million, down 3.4% from the revised July estimate, but 8.3% above the August 2015 rate.

Read the Census release.
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Monday, September 19, 2016

Builder Confidence Surged in September

The National Association of Home Builders/Wells Fargo Housing Market Index increased 6 points to 65 in September, up from a downwardly revised reading of 59 in August. September’s reading marked the highest HMI since October 2015.

“With the inventory of new and existing homes remaining tight, builders are confident that if they can build more homes they can sell them,” said NAHB Chief Economist Robert Dietz. “Though solid job creation and low interest rates are also fueling demand, builders continue to be hampered by supply-side constraints that include shortages of labor and lots.”

All three index components posted gains in September. The component measuring current sales conditions increased 6 points to 71, and the index measuring sales expectations increased 5 points to 71. The buyer traffic component rose 4 points to 48.

The regional three-month moving averages varied. The Northeast and South both rose 1 point to 42 and 64 respectively. The West rose 4 points to 73, while the Midwest was unchanged at 55.

Read the NAHB release.
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Friday, September 16, 2016

Household Net Worth Up, Savings Rate Down, in Second Quarter

Household net worth rose in the second quarter of 2016 to $89.1 trillion, a 1.2% increase from the previous quarter and a 3.1% increase from a year earlier.

Household nonfinancial assets increased 1.7% during the second quarter, Most of this increase came from real estate holdings, which grew by $473.9 billion. Growth in wealth derived from consumer goods increased by $45.5 billion, compared to a $65.1 billion increase in the first quarter.

Household and non-profit holdings of financial assets increased 1.0% from the previous quarter. The increase was largely due to an increase in corporate equities, which increased 2.3% ($328.0 billion). Household debt increased at an annual rate of 4.4% in the second quarter, as consumer credit increased 6.4%. Mortgage debt grew at a 2.5% annual rate. The household savings rate slipped to 5.7% in the second quarter, down from 6.1% in the first quarter.

Federal government debt increased at a rate of 5.0% in the second quarter of 2016. State and local government debt rose at a rate of 2.2% in the second quarter, up from 0.8% in the previous quarter.

Read the Federal Reserve release.
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CPI Up 0.2% in August

The Consumer Price Index increased 0.2% while the “core CPI” index jumped 0.35 in August on a seasonally adjusted basis. Over the last 12 months, the all-items index rose 1.1%.

The energy index was unchanged in August. Major energy component indexes were mixed however, as increases in the indexes for natural gas and electricity offset declines in the indexes for gas and fuel oil.

The food index was also unchanged. The food-at-home index fell for the fourth consecutive month, which offset an increase in the food-away-from-home index.

Prices for all items less food and energy, the “core CPI,” increased 0.3% in August, the largest rise since February 2016. Prices for medical care commodities rose sharply during the month, increasing by 1.1%. Over the past year, the index for all items less food and energy increased 2.3%.

Read the BLS release.
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Thursday, September 15, 2016

Producer Prices Unchanged in August

Producer prices were unchanged in August, according to the U.S. Bureau of Labor Statistics, as an increase in the index for final demand services offset a decrease in the index for final demand goods. Year-over-year producer prices were also unchanged.

Prices for final demand services rose 0.1% in August, after a 0.3% July decrease. Much of the advance was due to prices for final demand services less trade, transportation, and warehousing, which increased 0.5%. In contrast, the index for final demand trade services fell 0.6%.

The index for final demand goods fell 0.4% in August, the same as in July. Eighty percent of the decrease was due to a decline in the index for final demand foods which fell by 1.6%. The index for final demand energy also fell, declining by 0.8%.

Read the BLS release.
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