March 31, 2015
Home price gains across the nation remained steady in January, despite the unusually cold and wet weather that gripped many parts of the country. The Case Shiller 20-city Index rose by 4.6% from January 2014 to January 2015, and up from the 4.4% recorded in December year-over-year. There was a downside in the report … “home prices are rising faster than wages, which puts pressure on home buyers and heightening the risk that any uptick in interest rates could be a major setback,” said David M. Blitzer, Managing Director for the index.
Consumer Confidence surged in March, due to Americans feeling more positive regarding the U.S. economy in the next six months. The Conference Board’s Consumer Confidence Index rose to 101.3, the second highest level since August 2007. The report showed that those anticipating more jobs in the months ahead increased from 13.8% to 15.5%. Lynn Franco, Director of Economic Indicators at The Conference Board, said “Consumer confidence improved in March after retreating in February. This month’s increase was driven by an improved short-term outlook for both employment and income prospects; consumers were less upbeat about business conditions.”
The National Association for Business Economics reported on Monday that the U.S. economy should produce some solid numbers this year due to healthier consumer spending, housing investment and government spending growth. The survey revealed that Gross Domestic Product, a key measure of economic growth, should come in at 3.1% for all of 2015, up from the 2.4% recorded in 2014. The report went on to show that job growth in 2015 should average 250,000 per month and roughly 216,000 next year, while the Unemployment Rate should decline to 5% by the second half of 2016. There was on caveat in the survey–wage growth is seen rising by 2.5% this year, a bit lower than the 2.6% gain in the previous numbers.
March 30, 2015
Consumers across the U.S. hardly spent on good and services in February, while households increased savings to their highest level in more than two years. Personal Spending in February edged up just 0.1%, below the 0.2% expected after a decline in January. Incomes rose by 0.4%, above the .3% expected, while the savings rate hit 5.8%, the best level since December 2012. Within the report it showed that the Personal Consumption Expenditures, the Federal Reserve’s favorite gauge of inflation, rose 1.4%, well below the target rate of 2%.
In housing news, Pending Home Sales rose in February from January, despite the harsh weather around the country. The National Association of REALTORS® reported on Monday that Pending Home Sales rose by 3.1% last month, above the 0.4% expected to 106.9. This was the highest level since June 2013 and an increase for six the sixth consecutive month. On a year-over-year basis, sales were up 12%. A sale is listed as pending when the contract has been signed but the transaction has not yet closed, though the sale usually is finalized within one to two months of signing.
Black Knight Financial Services reported on Monday that home prices edged up 0.1% in January from December, according to its latest Home Price Index report. On a year-over-year basis, home prices rose by 4.6%. Here are a few highlights from the report: New York state home prices hit new high; NYC metro area still 9.4% off peak; Florida’s major metros see declines; many remain approximately 30% off peaks. San Jose, California hits new peak and leads U.S. metros with 11.3% year-over-year gain. Las Vegas sees second consecutive monthly decline after nearly two straight years of increases.
March 27, 2015
Economic growth eased in the fourth quarter of 2014 as a surge in consumer spending was offset by a big decline in both business inventory and equipment investment. The government reported that final reading for fourth quarter Gross Domestic Product (GDP) in 2014 fell to 2.2% from the 5.0% recorded in the third quarter and down from 4.6% in the second quarter. Many economists are now worrying over the results in the first quarter of 2015 for GDP, which could mirror the economy’s weak performance in the first quarter of 2014, when GDP contracted by 2.1% due to extreme cold temperatures and heavy snow in parts of the country.
Consumer optimism slipped in March as higher gas prices coupled with harsh winter weather put a damper on how lower-income Americans felt about the economy. The Consumer Sentiment Index fell to 93.0 in March, down from the 95.4 recorded in February, the lowest reading since November. By contrast, those in the higher income brackets registered gains in confidence. Despite the lower reading in March, Consumer Confidence remains broadly positive hitting a 10-year high in the first quarter of 2015 of 95.5.
Soda consumption in the U.S. continued to slow in 2014 as Americans turn more health conscious and opted for bottled water to quench their thirst. Bottled water consumption rose by 7.3% in 2014 from 2013, its fastest rate since 2006. Sales of soda fell by 1% in 2014, the tenth straight yearly decline. A recent study showed that soda consumption in 2014 totaled 12.76 billion gallons, with bottled water at 10.87 billion gallons. It is expected that by 2017, bottled water consumption could surpass soda as calorie counting Americans reach for water and other healthier soft drinks.
March 26, 2015
A report from RealtyTrac, a provider of comprehensive housing data and analytics for the real estate and financial services industries, said that home prices across the U.S. have been growing much faster than wages in 76% of the country. The report revealed that the national median wage grew by 1.3% from the second quarter of 2012 to the second quarter of 2014. In that same time period, home prices rose by 17%. However, RealtyTrac said that despite the surge in home prices, most housing markets are still affordable by traditional standards.
Home loan rates fell for the second straight week as reported by government sponsored entity Freddie Mac. The 30-year fixed home loan rate fell to 3.69% this week with 0.6 in points and fees. The 3.69% is down from the 3.78% in the previous week. The lower rates come just in time for the spring buying season, and that coupled with an improving job market should ignite a spark in the housing sector. Conventional loans are typically an amount of $417,000 or less. Freddie Mac surveys lenders each week on the rates, fees and points for the most popular mortgage products.
Americans filing for first time unemployment benefits fell to a five-week low as the labor market continues to improve. Weekly Initial Jobless Claims fell by 9,000 to 282,000, below the 290,000 that was expected. The four week moving average of claims, which irons out seasonal abnormalities, declined by 7,750 to 297,000. At the height of the recession in 2008, claims averaged 417,000 per week and fell to 308,500 per week in 2013. So far in 2015, the average has fallen to 295,000, according to the Labor department.
March 25, 2015
Government sponsored agency Fannie Mae released its March 2015 Economic and Housing Outlook this week. The report revealed that economic growth took a hit in the first quarter of 2015 due to the West Coast port strike along with severe weather in parts of the country. However, economic activity should pick up in the second quarter due to an upbeat labor market and positive consumer and business fundamentals. Fannie Mae expects Gross Domestic Product to hit 2.8% this year. In addition, with the pickup in the economy, the housing sector, which was somewhat a drag in the first quarter, should also gain momentum as the rest of the year unfolds. Fannie expects the housing sector in 2015 to be above the 2014 levels.
A big corporate merger was announced today as Heinz is buying Kraft Foods in what will become the world’s 5th largest food and beverage company. Kraft’s products include brands such as Jell-O, Maxwell House Coffee, Planters Peanuts and its famous Macaroni & Cheese. Heinz is known for ketchup along with Lea & Perrins and Ore-Ida. The deal will be partly financed by private equity firm 3G Capital and Warren Buffet’s Berkshire Hathaway. Annual revenues are expected to be about $28 billion.
The debate of whether or not the U.S. Federal Reserve should raise interest rates or not this year continued today. The president of the Federal Reserve Bank of Chicago, Charles Evans, said today overly weak inflation and a lack of evidence suggesting price pressures are about to heat up, meaning the Fed shouldn’t raise interest rates this year. “I think economic conditions are likely to evolve in a way such that it will be appropriate to hold off on raising short-term rates until 2016,” Mr. Evans said.
March 24, 2015
Despite harsh weather in February, prospective home buyers were not deterred from purchasing newly built single family homes. The Commerce Department reported that New Home Sales surged last month by 8% from January to an annual rate of 539,000, the best month for sales in seven years. The 539,000 was well above the 465,000 expected, while January was revised up to 500,000 from 481,000. There has not been back-to-back monthly sales of 500,000 since 2008. Within the report it showed that the median price was up 2.6% from a year ago to $275,500. New Home Sales are up nearly 25% from February 2014.
Americans shelled out more money for gas at the pumps, along with food and shelter in February. The Labor Department reported that the inflation reading Consumer Price Index (CPI) rose 0.2%, which was inline with estimates. The report revealed that gas prices rose 2.4%, food was up 0.2%, while rents increased 0.3% for the month. The 0.2% rise in the CPI was the first gain in four months. The so-called Core CPI, which strips out volatile food and energy, rose by 1.7% annually, up from the previous month, though inflation continues to remain subdued. The CPI reflects what consumers pay for everything from groceries to housing.
On the lighter side, a recent research report from German University Saarland said that power naps may help in boosting memory. The findings show that an hour nap can improve you memory performance up to five times greater than what is was. A group of 41 volunteers were given 41 words to read, then half were asked to take a nap, while the other half watched movies. After that, both groups were tested for memory; the memory’s of those who took a nap were just as sharp as before the snooze, while those who did not nap had difficulty remembering the words. Just try to tell your boss that you need a midday nap, and he or she may tell you where to go!
March 23, 2015
The National Association of REALTORS® reported on Monday that February Existing Home Sales rose by a modest 1.2% from January, to an annual rate of 4.88 million units; this was lower than the 4.90 million expected. Low inventories were said the be a key factor in price growth, which rose to the fastest pace in a year. Chief economist Lawrence Yun said although February sales showed modest improvement, there’s been some stagnation in the market in recent months. “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels.”
The foreclosure problems across the nation have been easing ever since the bottom fell out of the housing market back in 2008-2009. Black Knight Financial Services reported on Monday that foreclosure starts fell by 15% in February from January and was the third lowest point in at least seven years. In addition, foreclosure inventories fell below the 800,000 level for the first time since December 2007.
Gas prices at the pump hit multi-year lows in January before edging higher in late February and March. However, at a time of year that usually sees a continued rise in prices due to an uptick in demand ahead of the summer driving season, prices have leveled off in the past few weeks. The national average price for a regular gallon of gas is $2.42, the same as it was a week ago. Industry analyst Trilby Lundberg said Sunday that falling oil prices and strong production at U.S. refineries led to stabilizing numbers at the pump.
March 20, 2015
Rents are are on the rise across the country and the rates have grown more than the average paycheck. In the past five years, rents have gone up an average of 15%, while income growth of renters has only risen by 11%. The National Association of REALTORS® recently released a study, which evaluated income growth and housing costs, along with changes in the share of renter and owner occupied households across the nation in metropolitan areas.
In New York, rents have soared nearly 51% since 2009 and it doesn’t look like the higher trend will end anytime soon. “The gap has worsened in many areas as rents continue to climb and the accelerated pace of hiring has yet to give workers a meaningful bump in pay,” says Lawrence Yun, NAR’s chief economist. The key element to lower housing costs would be for builders to increase the supply of new home construction, which would lower the cost for first time home buyers.
Coming to a Starbucks near you … delivery! If you’re a Starbucks fan, you may have wished your favorite cup of joe could be delivered right to your door—and now, it’s a possibility. The coffee company briefly discussed a new delivery service for the brew maker at its latest annual meeting. The plan is to roll out two very different types of food and beverage delivery systems in two different cities. The new program will begin in the second half of this year. But it could come at a cost … a $4 latte could easily equal to $10 with the delivery charge and tip! But remember, there is still the old fashioned–and cheaper– way of opening your cupboard and brewing your own right in your home.
March 19, 2015
Federal Reserve members lowered forecasts for both economic growth and inflation in their monetary policy statement that was released yesterday. The March statement opened by saying that economic growth has somewhat moderated, which differs from the previously worded statement that economic activity is expanding at a solid pace. The Fed decreased projections on Gross Domestic Product, now to expand 2.3% to 2.7% this year, down from the of 2.6% to 3% in their December projections, while the core inflation forecast was lowered to a high of 1.4% from 1.8%. The Fed went on to say that “inflation is anticipated to decline further in the near term.”
Home loan rates continued to hover just above historic lows this week, as reported by Freddie Mac. The 30-year fixed conventional home loan rate edged lower to 3.78% with a 0.6 point added on top of the rate. The spring buying season is kicking off with low rates, which could lure in more buyers this year. If you are looking for a 15-year term, the rate is at 3.06, with a 0.6 point added on top. Mortgage rates continue to remain low due in part to support from the Federal reserve along with a soft patch of economic data in the past month.
Economic data as of late has hit a soft patch as the harsh weather in January, February and early March could have temporarily caused some problems across the country. The Philadelphia Fed Manufacturing Index fell to 5.0 from the 5.2 registered in February and below the 6.9 that was expected. Within the report it showed that the employees index is well below the average reading of around 14 over the second half of 2014. In addition, there was a sharp drop in shipments, which fell to -7.8 in March, from the +8.1 in February.
March 18, 2015
The big event for the week will take place on Capitol Hill in Washington D.C. today as the Federal Reserve members are meeting to discuss the current economic environment and monetary policy. The statement will be released at 2:00 p.m. ET with a press conference from Fed Chair Janet Yellen immediately following. So far in 2015, economic data has been on the light side and with inflation running at the lower end of the Fed’s target range of 2%, the Fed members will hold off on raising rates to later in the year.
Oil prices continue to trek lower as crude stockpiles rose to record levels last week. West Texas Intermediate crude fell to levels not seen since March 2009 hitting a low of $42/barrel this morning on the New York Mercantile Exchange in lower Manhattan. The supply of oil has reached levels that could prompt concerns that some areas could run out of space to store oil. The U.S. Energy Information Administration reported this week that a key storage hub in Cushing, Oklahoma is at the highest capacity levels in about 80 years.
Mortgage application activity continued to decline in the latest week due in part to higher home loan rates. The Mortgage Bankers Association reported on Wednesday that its Market Composite Index, a measure of total loan application volume, fell 3.9% last week after a decline in the prior week. Within the report it showed that the refinance index fell 5% as the refinance share of mortgage activity decreased to 59% of total applications, the lowest level since October 2014. Within the next week the spring buying season will be underway, though the purchase index fell 2% in the latest reading.