November 26, 2014
There was a cornucopia of economic data that hit the wires this morning that covered a broad base of the U.S. economy. The Commerce Department reported that New Home Sales in October rose by 0.7% from September to an annual rate of 458,000 units. September was revised lower to 455,000 from 467,000 signaling that the housing recovery remains gradual. Despite the big positive turnaround in the job growth, wages have not kept pace this year, which is an obstacle for the housing sector. The median sales price rose by nearly 16% from a year ago to $305,000.
The final reading for Consumer Sentiment in November hit its highest level in more than seven years due to an improving economic environment, a rosier job market along with lower prices at the gas pumps. The Index rose to 88.8 from the 86.9 recorded in October, but just below the 90.0 that was expected. Americans’ view of their personal finances also rose during the month.
Americans filing for first time unemployment benefits unexpectedly rose in the latest week to 313,000, up from the 292,000 in the previous week and above the 288,000 that was expected. It was the highest level since September, though the trend supports a firming jobs market. The four week moving average of claims, which irons out seasonal abnormalities, rose by 6,250 to 294,000. However, there are still 18 million people who want a full time job, but say they can’t find one.
November 25, 2014
The lofty home price gains seen in 2013 are quickly fading to more sustainable levels in 2014. The September Case Shiller 20-city Home Price Index rose by 4.6% from September 2013, the slowest gain in two years. The 4.6% is down from the August annual rate of 5.6%, but above 4.6% expected. September saw a 0.3% gain, which was the first positive reading since April. A spokesman for Case Shiller said “the overall trend in home price increases continues to slow down.”
Consumer Confidence unexpectedly slipped in November after a strong reading the month before declining to 88.7 from 94.1 in October. The 88.7 was below the 96.0 expected. Lynn Franco, Director of Economic Indicators at the Conference Board said, “Consumer confidence retreated in November, primarily due to reduced optimism in the short-term outlook.” Within the report it showed that consumer assessment of the job market was slightly less favorable than the October reading.
Economic growth across the nation continued to be solid in the third quarter of 2014 led by stronger consumer and business spending. The second estimate for third quarter 2014 Gross Domestic Product (GDP) rose by 3.9%, up from the initial reading of 3.5%, which was above the 3.2% expected. The weak gains seen earlier this year, due to the harsh winter weather, have quickly faded. For the past six months GDP rose by 4.2%, the strongest stretch since the middle of 2003. Combining all three quarters this year, GDP is running at a 2.1% pace, not a real good number, but has been improving. GDP measures goods and services produced across the economy.
November 24, 2014
This week’s market action is holiday shortened given the Thanksgiving holiday on Thursday. The Stock and Bond markets will be closed on Thursday, while Friday will see the Bond markets closing early at 2:00 p.m. ET and Stocks closing at 1:00 p.m. ET. The U.S. Post Office will not deliver mail on Thursday, while most banks will also be closed in observance of Thanksgiving. Federal and state offices are closed Thursday.
In the absence of any economic data to begin the week, here are a few facts regarding the Thanksgiving Day holiday. Surprisingly, the average gathering of 10 people for dinner only costs about $54.18. That seems low, but it does not account for alcohol or running out last minute for items. The total amount spent across the nation for Thanksgiving, $2,375,000,000. The total number of turkeys that will be consumed is 51 million. The average households’ spending on Thanksgiving weekend, $302. An average turkey per pound is $1.15. Lastly, the number of families that will travel for Thanksgiving, 39,000,000.
A report from financial data firm Markit showed today that the U.S. services sector expanded in November at a slower rate than in October as growth in new business eased. Markit reported that its flash services Purchasing Managers Index hit 56.3 in November, the slowest rate since April and below the October reading of 57.1. A spokesman at Markit said that slowing growth in the service sector for the fifth straight month signals that the economic recovery has lost some steam, but that the pace of expansion “remains robust by historical standards.”
November 21, 2014
October mortgage data revealed that the mortgage delinquency rate in October fell to a seven-year low as the housing market continues to recover. Black Knight Financial Services reported on Friday that the total delinquency rate fell to 5.44% in October, down 4.14% from September and lower by 13.43% from October 2013. The analytics company went on to say that foreclosure inventory fell 33% from last year’s total to the lowest level in six years.
U.S. Stock markets hit all-time high closing records on Thursday led by strong corporate earnings, an improving economy and a recovering job market. The closely watched S&P 500 Stock Index closed at 2,052.75 yesterday, up 11% percent this year after rising by 30% in 2013. In addition, the S&P is up a whopping 208% from the low of 666 seen on March 9, 2009, when the nation was gripped in the depths of the Great Recession.
With Thanksgiving quickly approaching next week, motorists are getting ready to take to the roads to visit friends and relatives. Thanksgiving holiday travel volume is expected to reach the highest level since 2007, with 46.3 million Americans taking a trip, reports AAA Motor Club. The 46.3 million is up 4.2% from the 44.4 Americans who traveled last year. Almost 90% of travelers (41.3 million) will celebrate the holiday with a road trip and likely will enjoy the lowest Thanksgiving gas prices in five years. The cost to fuel their cars is currently at $2.83 for a regular gallon of gas, which is 45 cents lower than this time last year. The Thanksgiving holiday travel period is defined as Wednesday, November 26 through Sunday, November 30.
November 20, 2014
The housing market received good news this morning as the National Association of REALTORS® reported that Existing Home Sales in October rose by 1.5% from September. Sales came in at an annual rate of 5.26 million units, which was above the 5.17 million expected. Buyers have been encouraged by the low interest rate environment and an improving job market. The 5.26 million units are at their highest annual rate since September 2013. Existing Home Sales measures sales and prices of existing single family homes for the nation overall and gives breakdowns for the West, Midwest, South and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.
Inflation at the consumer level remained on the tame side in October, mainly due to declining gas prices at the pumps, which offset a rise in housing and healthcare. The Consumer Price Index (CPI) was unchanged in October from September, which was just above the -0.1% expected. The so-called Core CPI, which strips out volatile food and energy, rose by 0.2%, above the 0.1% expected. The CPI measures changes in the prices paid by urban consumers for a representative basket of goods and services.
Business activity surged in the Philadelphia region soared this month to levels not seen in 21 years, signaling that the economy continues to recover. The Philly Fed Index rose to 40.8 this month, a level not seen since late 1993, which is well above the 18.3 expected, and up from the 20.7 recorded in October. The index has now been positive for nine straight months. Both the new orders and shipment indexes rose from the readings seen in October, while the employment index rose 10 points to 22.4, a 3 1/2 year high.
November 19, 2014
The government reported mixed housing news on Wednesday stating that October Housing Starts declined by 2.8% from September to an annual rate of 1.01 million units. That was below the 1.025 million expected. Single-family starts rose by 4.2%, while multi-family dwellings fell by nearly 16%. Building Permits, a sign of future construction, rose by nearly 5% to 1.080 units, a six-year high, signaling that new construction will bolster the economy in early 2015.
In mortgage news, the Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of total loan application volume, rose by almost 5% in the latest week, snapping a three-week decline. Home loan rates continue to hover near 18-month lows, but lending standards still remain tight. The purchase index surged by 12%, while the refinance gauge was up 1% from the previous week. The MBA reported that the average rate for a 30-year fixed mortgage fell to 4.18% from 4.19%.
With the holiday shopping season underway and Black Friday quickly approaching, a few facts for the shopping season. There are 26 days between Black Friday and Christmas, one more than 2013, but five less than 2012. It is expected that the average consumer will spend a bit more than $2,000 this season. It is estimated that mobile commerce will account for 33% of U.S. online shopping. Lastly, 70% of U.S. commerce shipments during this season will include free shipping.
November 18, 2014
News from the housing sector showed that confidence among home builders is on the rise, after some weak readings earlier in the year. Rising consumer confidence has been a key reason for the turnaround. The National Association of Home Builders (NAHB) reported on Tuesday that its Housing Market Index rose to 58 in November from October and above the 55 that was expected. An NAHB spokesman said “low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery.”
Inflation at the wholesale level unexpectedly increased in October, despite the decline in gas prices at the pumps. Lower gas prices were offset by rising prices for meat, electric power, pharmaceuticals and passenger cars. The Producer Price Index (PPI) rose by 0.2% last month, above the -0.2% expected and up from the -0.1% in September. When stripping out volatile food and energy, the so-called Core PPI rose by 0.4%, above the 0.1% expected. The index measures the cost of goods and services before they reach the consumer.
Early season snowstorms are blanketing half of the U.S. with even Amarillo, Texas receiving nearly three inches of snow a few days ago. Upstate New York, which is a big snow state, is currently receiving three or four feet of snow, which is not typical this early in the season. The National Operational Hydrologic Remote Sensing Center reported that there was snow cover on 50.1% of the lower 48 U.S. states as of today, which is the earliest that the halfway mark has been passed since it began measuring this method in 2008. It also beats a similar method that dates back to 2003 that included parts of Canada.
November 17, 2014
News from abroad read that Japan has fallen into a recession after the country’s Gross Domestic Product (GDP) declined for two consecutive quarters. A recession is defined as a significant decline in economic activity, which includes industrial production, employment, real income and wholesale retail trade. A recession is measured by two consecutive negative quarters of GDP data. Japan’s GDP fell by 1.6% in the third quarter after falling 7.3% in the second quarter.
The New York State Manufacturing Index bounced back in November after a somewhat weak reading in October. The index rose by 10.2 this month, up from the 6.2 registered in October, but lower than the 12.0 expected. The general business index signaled that business condition activity continued to expand in November, though at a slower pace from the May to September period. Within the report it showed that the employment component edged lower.
A recent study reveals that first-time homebuyers are faced with many challenges with the mortgage process, according the J.D. Power 2014 Primary Mortgage Origination Satisfaction study. The big issues facing first time homebuyers is growing student loan debt and affordability. Recent data shows that among the respondents purchasing a home, 58% are first timers. In addition, lack of experience and uncertainty regarding the process is also a barrier when it comes to first time buyers.
November 14, 2014
The Mortgage Bankers Association (MBA) reported today that its Builder Application Survey for October showed that mortgage applications for new home purchases rose by 8% from September. Within the release it showed that new single-family homes were running at a seasonal adjusted annual rate of 461,000 units in October, which is up 8.5% from the September number of 425,000. In October it is estimated that there were 36,000 new home sales, up from the 32,000 in September, a 12.5% gain.
The mortgage delinquency rate in the U.S. continued to decline in the third quarter as the rate has now returned to the levels last seen before the housing market downturn. Late payments on mortgages declined to 5.85% in the third quarter and has now fallen six straight quarters as the economy and the job market recovers. It is the the lowest level since the fourth quarter of 2007 according to the Mortgage Bankers Association’s latest National Delinquency Survey.
The ongoing story of lower gas prices at the pumps continues to dominate the headlines. The current national average price for a regular gallon of gasoline is at $2.91, down from $3.18 a month ago. The U.S. Energy Department reports that the average price of gasoline will be below $3 a gallon in 2015, with consumers saving $61 billion on gas compared to 2014. The average price motorists can expect to pay at the pumps for a regular gallon of gas in 2015 is expected at $2.94, predicts the Department of Energy.
November 13, 2014
The Labor Department reported this morning that Americans filing for first time unemployment benefits rose in the latest week, but continue to remain near multi-year lows. Weekly Initial Jobless Claims were up 12,000 in the latest week to 290,000, which was above the 280,000 expected. Claims have remained below the 300,000 level for nine straight weeks, a feat that has not occurred since 2000. However, there are 18.2 million Americans that they can’t find a full-time job, which is not a good sign five years into an economic recovery.
In the foreclosure arena, RealtyTrac reported that foreclosure filings, including default notices, scheduled auctions and bank repossessions, rose for the second straight month in October. Filings were up 15% from September to October, but are lower by 8% from year ago levels. The 15% was the largest month-over-month increase since foreclosure activity topped out back in March 2010. Properties scheduled for foreclosure totaled nearly 60,000 in October, up 24% from the previous month and up 7% from last year this time.
The Bureau of Labor Statistics reported today that U.S. employers hired workers at a rapid pace in September, as evidenced by the Job Openings and Labor Turnover Survey (JOLTS). There were 5 million employees added to the staffs in September, which was the strongest pace since the last recession began back in 2008. In addition, the rate at which employees quit their jobs rose to a six-year high, a sign that Americans are confident that they can seek employment elsewhere.