New Home Sales: May 2013

Yesterday, the U.S. Census Department released its monthly New Residential Home Sales Report for May showing a improvement with sales climbing a notable 8.3% from April and rising 38.1% above the level seen in May 2012 but still remaining at an historically low level of 497K SAAR units.

It's important to recognize that the inventory of new homes appears to be mounting as unsold units totaled 161K, still though near the lowest level seen in in at least 47 years while the median number of months for sale decreased to 3.9.

The monthly supply declined to 3.9 months while the median selling price increased 7.35% and the average selling price increased 8.54% from the year ago level.

The following chart show the extent of sales decline to date (click for full-larger version).

Reading Rates: MBA Application Survey – July 24 2013

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) went declined notably dropping 10 basis points to 4.43% since last week while the purchase application volume declined 2% and the refinance application volume decreased 1% over the same period.

Rates now appear to possibly be trending down after weeks of explosive increases that saw a rise of over 100 basis points seemingly directly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.

It appears now though that Chairman Bernanke's latest comments might have worked to provide a bit more clarity surrounding the Feds plans for QE thereby working to halt the recent run-up in rates.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

FHFA Monthly Home Prices: May 2013

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that in May, nationally, home prices increased 0.68% from April and rose 7.24% above the level seen in May 2012.

The FHFA monthly HPI are formulated from home purchase information collected from mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.

Existing Home Sales Report: June 2013

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for June showing a decline in sales with total home sales sliding 1.2% since May but climbing 15.2% above the level seen in June 2012.

Single family home sales also declined falling 1.1% from May but still rising 14.5% above the level seen in June 2012 while the median selling price increased a notable 10.5% above the level seen a year earlier.

Inventory of single family homes increased from May to 1.96 million units but still remained 6.7% below the level seen in June 2012 which, along with the sales pace, resulted in a monthly supply of 5.2 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.

The Chicago Fed National Activity Index: June 2013

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that the national economy remained near contraction in June with the index improving to weak level of -0.13 from a level of -0.29 in May while the three month moving average improved to a level of -0.26.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

Reading Rates: MBA Application Survey – July 17 2013

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) went flat at 4.53% since last week while the purchase application volume increased 1% and the refinance application volume decreased 4% over the same period.

Rates have literally exploded rising a whopping 106 basis points over the past nine weeks seemingly directly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.

Clearly, steadily increasing rates is working to tamp down mortgage application activity but thus far, the spillover to home sales and price indicators appears minimal.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

New Residential Construction Report: June 2013

Today’s New Residential Construction Report showed mixed results in June with an 9.9% decline to total housing starts and a 7.5% decline to total housing permits while both single family housing permits and starts improved on the month.

Single family housing permits, the most leading of indicators, increased 0.6% from May to 624K single family units (SAAR), and  increased 24.6% above the level seen in June 2012 but still remained well below levels seen at the peak in September 2005.

Single family housing starts declined 0.8% from May to 591K units (SAAR), and rose 11.5% above the level seen in June 2012 but still remained well below the peak set in early 2006.