Wednesday, June 21, 2017

Existing-Home Sales Rebounded in May; Median Sales Price at New High

Existing-home sales increased 1.1% to a seasonally adjusted annual rate of 5.62 million in May, according to the National Association of Realtors (NAR). Sales are 2.7% above a year ago and the third highest pace over the last year.
“The job market in most of the country is healthy, and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level," said Lawrence Yun, NAR chief economist. “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher."

The total housing inventory rose 2.1% to 1.96 million homes available for sale, while the median existing home price climbed to $252,800, surpassing last June ($247,600) as the new peak median sales price. This marks the 63rd straight month of year-over-year gains.

Distressed sales were 5% of the total in May, which are down from 6% a year ago. Four percent of sales were foreclosures and 1% were short sales. On average, foreclosures and short sales sold for discounts of 20% and 16%, respectively.

Read the NAR release.
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Friday, June 16, 2017

Housing Starts Declined in May

Housing starts fell to a seasonally adjusted annual rate of 1.092 million in May, 5.5% below the revised April rate of 1.156 million and 2.4% below the May 2016 rate. 
Housing activity increased 1.3% in the West and remained at the same level in the Northeast. The Midwest and South experienced declines of 9.2% and 8.8%, respectively. 
New building permits decreased during the month, falling 4.9% to 1.168 million. Permits were down 0.8% from the May 2016 rate.

Housing completions were at a seasonally adjusted annual rate of 1.164 million, up 5.6% from the revised April estimate and 14.6% above the May 2016 rate.

Read the Census release.

Thursday, June 15, 2017

Builder Confidence Decreases Slightly in June

The National Association of Home Builders/Wells Fargo Housing Market Index weakened slightly to 67 in June, a two point decrease from May’s downwardly revised reading of 69.

“Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

All three HMI components posted losses in June but remained at historically high levels. The component measuring current sales conditions fell two points to 73; the component measuring sales expectations in the next six months decreased two points to 76, and the component measuring buyer traffic moved down two points to 49.

The regional three-month moving averages for HMI scores showed gains in two of the four regions. The Midwest and South both edged one point to 67 and 70, respectively, while the Northeast and West each dropped two points to 46 and 76, respectively.

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Industrial Production Unchanged in May

Industrial production remained unchanged in May after a revised 1.1% April increase, according to the Federal Reserve. April’s jump was the largest since February 2014. A drop in manufacturing output was offset by increases in mining and utilities output to keep the index flat in May.
Manufacturing output fell 0.4% in May after a revised 1.1% increase in April. Production of durable goods fell 0.8%, while nondurables both edged up 0.1% during the month. Capacity utilization for manufacturing decreased by 0.3 percentage point to 75.5%, a rate that is 2.0 percentage points below its long-run average.

The output of mining continued to rise, increasing 1.6% in May, following a 1.5% April jump. The index in May was 8.3% higher than its year-earlier level.

Utilities output rose 0.4% in May, as higher output for gas utilities outweighed a small decrease for electric utilities.

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Wednesday, June 14, 2017

Fed Raises Rates for Third Time in Six Months

The Federal Reserve Open Market Committee (FOMC) voted to raise the target range for the federal funds rate by 25 basis points to 1 to 1.25 percent. Like in March, the vote was near unanimous, with Minneapolis Fed President Neel Kashkari once again casting the only dissenting vote, wanting to hold rates steady.
The projected policy path for the federal funds rate was similar to March, with the Fed’s dot plot showing one more rate hike this year. Participants estimated a target rate of 1.4 percent for 2017, a 2.1 percent rate for 2018, and a 2.9 percent rate for 2019 (a 10 basis point decrease).

In their decision to move the target rate, the Committee noted that the labor market has “continued to strengthen and that economic activity has been rising moderately so far this year.” Monetary policy remains accommodative, supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

The Committee included a statement about how it will begin to unwind its $4.5 trillion balance sheet, noting that it “currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.” The program would gradually reduce the Fed’s holdings by allowing a fixed amount of assets- $6 billion of Treasuries and $4 billion of mortgage-backed securities- to roll off on a monthly basis. These amounts will increase on a quarterly basis by $6 billion for Treasuries and $4 billion for mortgage-backed securities until they reach $30 billion and $20 billion, respectively.

Read the FOMC statement.
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Retail Sales Slipped in May

There were $473.8 billion in retail and food service sales in May, down 0.3% from the previous month and up 3.8% from May 2016, according to the U.S. Census Bureau.
Core retail sales – excluding automobiles and parts – also fell 0.3%. Year-over-year core sales increased 3.8%.

Retail trade sales decreased 0.3% from April and are up 4.0% from last year. Sales at nonstore retailers increased 0.8% from April, while increasing 10.2% year-over-year.

Sales at gasoline stations decreased 2.4% during the month, but are up 6.2% from a year ago.

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Consumer Prices Decreased 0.1% in May

The Consumer Price Index increased 0.1% in May on a seasonally adjusted basis, according to U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index rose 1.9%.
Prices for all items less food and energy, the “core CPI,” increased 0.1% in May, the same as in April. The index rose 1.7% for the 12 months ending in May.

The food index increased 0.2%, its fifth consecutive increase. Prices for food at home rose 0.1%, while prices for food away from home increased 0.2%. Over the past 12 months, food prices are up 0.9%.

The energy index decreased 2.7% in May, led by the gasoline index falling 6.4%.

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