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Updated: 2017-06-23T10:15:27.133-04:00

 



New Home Sales increase to 610,000 Annual Rate in May

2017-06-23T10:15:27.149-04:00

The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 610 thousand. The previous three months combined were revised up."Sales of new single-family houses in May 2017 were at a seasonally adjusted annual rate of 610,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.9 percent above the revised April rate of 593,000 and is 8.9 percent above the May 2016 estimate of 560,000."emphasis addedClick on graph for larger image.The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.Even with the increase in sales over the last several years, new home sales are still somewhat low historically.The second graph shows New Home Months of Supply.The months of supply was unchanged in May at 5.3 months. The all time record was 12.1 months of supply in January 2009.This is in the normal range (less than 6 months supply is normal)."The seasonally-adjusted estimate of new houses for sale at the end of May was 268,000. This represents a supply of 5.3 months at the current sales rate."On inventory, according to the Census Bureau: "A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.The third graph shows the three categories of inventory starting in 1973.The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).In May 2017 (red column), 58 thousand new homes were sold (NSA). Last year, 53 thousand homes were sold in May. The all time high for May was 120 thousand in 2005, and the all time low for May was 26 thousand in 2010.This was above expectations of 590,000 sales SAAR, and the previous months were revised up.   A solid report.  I'll have more later today.[...]



Friday: New Home Sales

2017-06-22T18:50:03.687-04:00

From Matthew Graham at Mortgage News Daily: Mortgage Rates Sideways to Slightly Lower
Mortgage rates have been so little-changed in recent days that yesterday's coverage wouldn't need to be changed in order to apply perfectly today.
...
The absence of change continues to be a good thing given that rates remain very close to their lowest levels in more than 8 months.  Only a handful of recent days have been any better.  4.0% is the most prevalently-quoted conventional 30yr fixed rate on top tier scenarios, though a few of the aggressive lenders remain at 3.875%.  
Friday:
• At 8:30 AM ET: New Home Sales for May from the Census Bureau. The consensus is for an increase in sales to 590 thousand Seasonally Adjusted Annual Rate (SAAR) in May from 569 thousand in April.(image)



U.S. Demographics: The Millennials Take Over

2017-06-22T14:29:09.329-04:00

From the Census Bureau The Nation’s Older Population Is Still Growing, Census Bureau Reports
New detailed estimates show the nation’s median age — the age where half of the population is younger and the other half older — rose from 35.3 years on April 1, 2000, to 37.9 years on July 1, 2016.

“The baby-boom generation is largely responsible for this trend,” said Peter Borsella, a demographer in the Population Division. “Baby boomers began turning 65 in 2011 and will continue to do so for many years to come.”

Residents age 65 and over grew from 35.0 million in 2000, to 49.2 million in 2016, accounting for 12.4 percent and 15.2 percent of the total population, respectively.
(image) Click on graph for larger image.

This graph uses the data in the July 1, 2016 estimate released today.

Using the Census data, here is a table showing the ten most common ages in 2010 and 2016.

Note the younger baby boom generation dominated in 2010.  By 2016 the millennials have taken over.  The six largest groups, by age, are in their 20s - and eight of the top ten are in their 20s. 

My view is this is positive for both housing and the economy.

Population: Most Common Ages by Year
  20102016
15025
24926
32024
41923
54727
64622
74855
85128
91821
105255
(image)



Kansas City Fed: Regional Manufacturing Activity "Expanded Further" in June

2017-06-22T11:00:43.377-04:00

From the Kansas City Fed: Tenth District Manufacturing Activity Expanded Further
The Federal Reserve Bank of Kansas City released the June Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity expanded further with strong expectations for future activity.

“Firms reported faster growth in June than earlier in the second quarter,” said Wilkerson.  “The share of factories planning to add workers over the next six months also rose solidly.”
...
The month-over-month composite index was 11 in June, up from 8 in May and 7 in April. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. ...
emphasis added
The Kansas City region was hit hard by the sharp decline in oil prices, but activity has been expanding as oil prices increased. It is too early to tell if the recent decline in oil prices will impact the Kansas City region again. (image)



Black Knight: Mortgage Delinquencies Decreased in May, Foreclosures at 10-Year Lows

2017-06-22T09:30:17.004-04:00

From Black Knight: Prepayments (historically a good indicator of refinance activity) jumped 23 percent month-over-month, reaching their highest point so far in 2017
• Prepayments (historically a good indicator of refinance activity) jumped 23 percent month-over-month, reaching their highest point so far in 2017

• Delinquencies reversed course after calendar driven increase in April, falling 7.13 percent month-over-month

• April’s delinquency rate increase was primarily calendar-driven (due to both the month ending on a Sunday and March being the typical calendar-year low) and largely isolated to early-stage delinquencies

• Inventory of loans either seriously delinquent (90 or more days past due) or in active foreclosure continues to improve, with both hitting 10-year lows in May
According to Black Knight's First Look report for May, the percent of loans delinquent decreased 7.1% in May compared to April, and declined 10.8% year-over-year.

The percent of loans in the foreclosure process declined 3.0% in May and were down 26.9% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.79% in May, down from 4.08% in April.

The percent of loans in the foreclosure process declined in May to 0.83%.

The number of delinquent properties, but not in foreclosure, is down 226,000 properties year-over-year, and the number of properties in the foreclosure process is down 153,000 properties year-over-year.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
  May
2017
Apr
2017
May
2016
May
2015
Delinquent3.79%4.08%4.25%4.91%
In Foreclosure0.83%0.85%1.13%1.59%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:1,927,0002,072,0002,153,0002,478,000
Number of properties in foreclosure pre-sale inventory:421,000433,000574,000803,000
Total Properties2,348,0002,505,0002,727,0003,280,000
(image)



Weekly Initial Unemployment Claims increase to 241,000

2017-06-22T08:34:07.391-04:00

The DOL reported:
In the week ending June 17, the advance figure for seasonally adjusted initial claims was 241,000, an increase of 3,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 237,000 to 238,000. The 4-week moving average was 244,750, an increase of 1,500 from the previous week's revised average. The previous week's average was revised up by 250 from 243,000 to 243,250.
emphasis added
The previous week was revised up.

The following graph shows the 4-week moving average of weekly claims since 1971.

(image) Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 244,750.

This was close to the consensus forecast.

The low level of claims suggests relatively few layoffs.(image)



Thursday: Unemployment Claims

2017-06-21T20:58:13.077-04:00

Thursday:
• At 8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 240 thousand initial claims, up from 237 thousand the previous week.

• At 9:00 AM, FHFA House Price Index for April 2017. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 11:00 AM, the Kansas City Fed manufacturing survey for June.(image)



Philly Fed: State Coincident Indexes increased in 36 states in May

2017-06-21T15:55:34.508-04:00

From the Philly Fed:
The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for May 2017. Over the past three months, the indexes increased in 44 states, decreased in five, and remained stable in one, for a three-month diffusion index of 78. In the past month, the indexes increased in 36 states, decreased in seven, and remained stable in seven, for a one-month diffusion index of 58.
Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
(image) Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In May, 43 states had increasing activity (including minor increases).

The downturn in 2015 and 2016, in the number of states increasing, was mostly related to the decline in oil prices.   The reason for the recent decrease in the number of states with increasing activity is unclear - and might be revised away.

(image) Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and almost all green now.

Source: Philly Fed. Note: For complaints about red / green issues, please contact the Philly Fed.(image)



A Few Comments on May Existing Home Sales

2017-06-21T12:42:17.725-04:00

Earlier: NAR: "Existing-Home Sales Rise 1.1 Percent in May"

Two key points:

1) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus.  The NAR reported sales of  5.62 million SAAR, Lawler projected 5.65 million SAAR, and the consensus was 5.55 million SAAR.  See: Lawler: Early Read on Existing Home Sales in May
"I project that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.65 million in May, up 1.4% from April’s preliminary pace and up 3.3% from last May’s seasonally adjusted pace."
2) Inventory is still very low and falling year-over-year (down 8.4% year-over-year in May).

I started the year expecting inventory would be increasing year-over-year by the end of 2017. That now seems unlikely, but still possible.

More inventory would probably mean smaller price increases, and less inventory somewhat larger price increases.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

(image) Click on graph for larger image.

Sales NSA in May (red column) were above May2016. (NSA) - and the highest for May since 2006.

Note that sales NSA are now in the seasonally strong period (March through September).(image)



NAR: "Existing-Home Sales Rise 1.1 Percent in May"

2017-06-21T10:11:33.755-04:00

From the NAR: Existing-Home Sales Rise 1.1 Percent in May; Median Sales Price Ascends to New HighExisting-home sales rebounded in May following a notable decline in April, and low inventory levels helped propel the median sales price to a new high while pushing down the median days a home is on the market to a new low, according to the National Association of Realtors®. All major regions except for the Midwest saw an increase in sales last month.Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1 percent to a seasonally adjusted annual rate of 5.62 million in May from a downwardly revised 5.56 million in April. Last month's sales pace is 2.7 percent above a year ago and is the third highest over the past year.   ...Total housing inventory at the end of May rose 2.1 percent to 1.96 million existing homes available for sale, but is still 8.4 percent lower than a year ago (2.14 million) and has fallen year-over-year for 24 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.7 months a year ago. emphasis addedClick on graph for larger image.This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in May (5.63 million SAAR) were 1.1% higher than last month, and were 2.7% above the May 2016 rate.The second graph shows nationwide inventory for existing homes.According to the NAR, inventory increased to 1.96 million in May from 1.92 million in April.   Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory. Inventory decreased 8.4% year-over-year in May compared to May 2016.   Months of supply was at 4.2 months in May. This was above the consensus expectations. For existing home sales, a key number is inventory - and inventory is still low. I'll have more later ...[...]



AIA: Architecture Billings Index positive in May

2017-06-21T09:15:11.855-04:00

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Design billings maintain solid footing, with strong momentum reflected in both project inquiries and design contracts
Design services at architecture firms continue to project a healthy disposition on the construction industry as the Architecture Billings Index (ABI) recorded the fourth consecutive month of growth. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the May ABI score was 53.0, up from a score of 50.9 in the previous month. This score reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 62.4, up from a reading of 60.2 the previous month, while the new design contracts index increased from 53.2 to 54.8.

“The fact that the data surrounding both new project inquiries and design contracts have remained positive every month this year, while reaching their highest scores for the year, is a good indication that both the architecture and construction sectors will remain healthy for the foreseeable future,” AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “This growth hasn’t been an overnight escalation, but rather a steady, stable increase.”
...
• Regional averages: South (56.1), West (52.3), Midwest (50.4), Northeast (46.5)

• Sector index breakdown: mixed practice (55.8), multi-family residential (51.3), commercial / industrial (51.2), institutional (51.2)
emphasis added
(image) Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 53.0 in May, up from 50.9 the previous month. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction.  This index was positive in 9 of the last 12 months, suggesting a further increase in CRE investment in 2017 and early 2018.(image)



MBA: Mortgage Applications Increase in Latest Weekly Survey

2017-06-21T07:00:11.054-04:00

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey
Mortgage applications increased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 16, 2017.

... The Refinance Index increased 2 percent from the previous week to its highest level since November 2016. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 9 percent higher than the same week one year ago. ...

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.13 percent from 4.14 percent, with points increasing to 0.35 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
(image) Click on graph for larger image.


The first graph shows the refinance index since 1990.

Refinance activity increased recently as rates declined, but will not increase significantly unless rates fall well below 4%.


(image) The second graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 9% year-over-year.(image)



Wednesday: Existing Home Sales

2017-06-20T20:20:11.671-04:00

From Matthew Graham at Mortgage News Daily: Rates Fall Slightly to Remain Near 8-Month Lows
Mortgage rates were steady to slightly lower today, with underlying bond markets essentially erasing the damage seen yesterday.  This was neither here nor there for the mortgage world as most lenders didn't adjust rates much higher yesterday (despite bond weakness).  Thus, they didn't have much to do today when bonds strengthened.  In general "bond market strength" = lower rates and vice versa.
...
The absence of change continues to be a good thing given that rates remain very close to their lowest levels in more than 8 months.  Only a handful of recent days have been any better.  4.0% is the most prevalently-quoted conventional 30yr fixed rate on top tier scenarios, though a few of the aggressive lenders remain at 3.875%.
Wednesday:
• At 7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM, Existing Home Sales for May from the National Association of Realtors (NAR). The consensus is for 5.55 million SAAR, down from 5.57 million in April. Housing economist Tom Lawler expects the NAR to report sales of 5.65 million SAAR in May.

• During the day: The AIA's Architecture Billings Index for May (a leading indicator for commercial real estate). (image)



Phoenix Real Estate in May: Sales up 9%, Inventory down 9% YoY

2017-06-20T17:29:17.675-04:00

This is a key housing market to follow since Phoenix saw a large bubble and bust, followed by strong investor buying.

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in May were up 9.3% year-over-year.

2) Active inventory is now down 9.5% year-over-year. 

More inventory (a theme in most of 2014) - and less investor buying - suggested price increases would slow sharply in 2014.  And prices increases did slow in 2014, only increasing 2.4% according to Case-Shiller.

In 2015, with falling inventory, prices increased a little faster.  Prices were up 6.3% in 2015 according to Case-Shiller.

With flat inventory in 2016, prices were up 4.8%.

This is the seventh consecutive month with a YoY decrease in inventory, and prices are up 1.7% through March (7.1% annual rate).

May Residential Sales and Inventory, Greater Phoenix Area, ARMLS
SalesYoY
Change
Sales
Cash
Sales
Percent
Cash
InventoryYoY
Change
Inventory
May-085,6371---1,06218.8%54,1611---
May-099,28464.7%3,59238.7%39,902-26.3%
May-109,067-2.3%3,34136.8%41,3263.6%
May-119,8118.2%4,52346.1%31,661-23.4%
May-128,44513.5%3,90746.3%20,162-36.3%
May-139,44011.8%3,66938.9%19,734-2.1%
May-147,442-21.2%2,19329.5%29,09147.4%
May-158,29311.4%1,98824.0%24,616-15.4%
May-168,8206.4%1,93121.9%25,9805.5%
May-179,6419.3%NANA23,520-9.5%
1 May 2008 does not include manufactured homes, ~100 more
(image)



Chemical Activity Barometer "flat" in June

2017-06-20T11:52:26.342-04:00

Note: This appears to be a leading indicator for industrial production.

From the American Chemistry Council: Chemical Activity Barometer Remains Steady
The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), was flat in June following a 0.2 percent gain in May, and a 0.3 percent gain in April. This marks a slowing from the average 0.5 percent first quarter monthly gain.  Compared to a year earlier, the CAB is up 4.3 percent year-over-year, a modest yet continued slowing. All data is measured on a three-month moving average (3MMA).
...
Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.
emphasis added
(image) Click on graph for larger image.

This graph shows the year-over-year change in the 3-month moving average for the Chemical Activity Barometer compared to Industrial Production.  It does appear that CAB (red) generally leads Industrial Production (blue).

CAB increased solidly in early 2017 suggesting an increase in Industrial Production, however, the year-over-year increase in the CAB has slowed recently.(image)



Oil Prices Lower, Down Year-over-year

2017-06-20T09:57:44.703-04:00

From CNBC: Oil prices are tumbling more than 2% to $43 a barrel right now
U.S. West Texas Intermediate crude oil futures were last down $1.19, or 2.7 percent, at $43.01.
(image) Click on graph for larger image

The first graph shows WTI and Brent spot oil prices from the EIA. (Prices today added).

According to Bloomberg, WTI is at $42.87 per barrel today, and Brent is at $45.69.

Prices really collapsed at the end of 2014 - and then rebounded a little - and then collapsed again at the end of 2015 and in early 2016.

Prices then rebounded to over $50 per barrel, but have been falling recently.

(image) The second graph shows the year-over-year change in WTI based on data from the EIA.

Six times since 1987, oil prices have increased 100% or more YoY.  And several times prices have almost fallen in half YoY.

Currently WTI is down about 12% year-over-year.(image)



Lawler: Single-Family Housing Production ‘Shortfall” All In Modestly Sized, Modestly Price Segment

2017-06-19T19:59:08.386-04:00

A short note from housing economist Tom Lawler: Single-Family Housing Production ‘Shortfall” All In Modestly Sized, Modestly Price Segment

The number of US single-family homes completed last year that had at least 3,000 square feet of floor area (222,000). was higher than any year in the 20th Century save for the year 2000, when 224,000 of such really large homes were completed.

(image)
LEHC Estimates Based on Latest and Historical Census “Annual Characteristics of Housing”(image)



Lawler: Early Read on Existing Home Sales in May

2017-06-19T13:58:53.576-04:00

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports from across the country released through today, I project that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.65 million in May, up 1.4% from April’s preliminary pace and up 3.3% from last May’s seasonally adjusted pace. Unadjusted sales last month should show a larger YOY gain than seasonally adjusted sales. Local realtor/MLS data also suggest that existing home sales this May show a larger monthly increase than last May, and I project that the NAR’s estimate of the inventory of existing homes for sale in May will be 1.98 million, up 2.6% from April’s estimate and down 7.5% from last May. Finally, local realtor/MLS data suggest that the NAR’s estimate of the median existing single-family home sales price in May will be up by about 6.5% from last May.

CR Note: The NAR is scheduled to release existing home sales for May on Wednesday, June 21st. The consensus forecast is for sales of 5.55 million SAAR (take the over).(image)



Hotels: Hotel Occupancy down Year-over-Year

2017-06-19T11:27:48.661-04:00

From HotelNewsNow.com: STR: US hotel results for week ending 10 June
The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 4-10 June 2017, according to data from STR.

In comparison with the week of 5-11 June 2016, the industry recorded the following:

Occupancy: -0.8% to 73.0%
• Average daily rate (ADR): +1.5% to US$128.37
• Revenue per available room (RevPAR): +0.7% to US$93.73
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

(image) The red line is for 2017, dashed is 2015 (best year on record), blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels).

Currently the occupancy rate is tracking close to last year, and just behind the record year in 2015.

For hotels, occupancy will increase further during the summer travel season.

Data Source: STR, Courtesy of HotelNewsNow.com(image)



Q2 GDP Forecasts being Revised Down

2017-06-19T09:34:32.111-04:00

From Merrill Lynch:
Housing starts were a big disappointment in May, plunging 5.5% to 1,092k saar from 1,156k in April. ... Feeding the data into our tracking model sliced 0.1pp from our 2Q estimate, leaving us at 2.2% qoq saar.
From the Altanta Fed: GDPNow
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 2.9 percent on June 16, down from 3.2 percent on June 14. The forecast for second-quarter real residential investment growth decreased from 1.8 percent to 0.4 percent after this morning's housing starts release from the U.S. Census Bureau.
emphasis added
From the NY Fed Nowcasting Report
The New York Fed Staff Nowcast stands at 1.9% for 2017:Q2 and 1.5% for 2017:Q3.
(image)



Sunday Night Futures

2017-06-18T21:16:55.419-04:00

Weekend:
Schedule for Week of June 18, 2017

From CNBC: Pre-Market Data and Bloomberg futures: S&P futures are up 6 and DOW futures are up 40 (fair value).

Oil prices were down over the last week with WTI futures at $44.84 per barrel and Brent at $47.13 per barrel.  A year ago, WTI was at $49, and Brent was at $50 - so oil prices are DOWN year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.28 per gallon - a year ago prices were at $2.35 per gallon - so gasoline prices are down year-over-year.(image)



Schedule for Week of June 18, 2017

2017-06-18T17:24:58.049-04:00

The key economic reports this week are New and Existing Home sales for May.

----- Monday, June 19th -----

No major economic releases scheduled.

----- Tuesday, June 20th -----

No major economic releases scheduled.

----- Wednesday, June 21st -----

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

(image) 10:00 AM: Existing Home Sales for May from the National Association of Realtors (NAR). The consensus is for 5.55 million SAAR, down from 5.57 million in April.

The graph shows existing home sales from 1994 through the report last month.

During the day: The AIA's Architecture Billings Index for May (a leading indicator for commercial real estate).

----- Thursday, June 22nd -----

8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 240 thousand initial claims, up from 237 thousand the previous week.

9:00 AM: FHFA House Price Index for April 2017. This was originally a GSE only repeat sales, however there is also an expanded index.

11:00 AM: the Kansas City Fed manufacturing survey for June.

----- Friday, June 23rd -----

(image) 10:00 AM ET: New Home Sales for May from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the March sales rate.

The consensus is for an increase in sales to 590 thousand Seasonally Adjusted Annual Rate (SAAR) in May from 569 thousand in April. (image)



Oil Rigs: "Smallest four week add since last year"

2017-06-16T20:25:13.187-04:00

A few comments from Steven Kopits of Princeton Energy Advisors LLC on June 16, 2017:
• The party’s over.  Oil prices are beginning to weigh on drilling activity.

• Total US oil rigs were up 6 to 747

• However, only 1 new horizontal oil rig was added, and only 3 in the last two weeks

• On a 4 wma basis, this is the smallest gain since last October

• $45 / barrel WTI appears to be a pain point for US shales
(image) Click on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.(image)



Lawler: Reasonable Population Projections Are Important!

2017-06-16T15:48:00.882-04:00

From housing economist Tom Lawler: Reasonable Population Projections Are Important!One of the key variables analysts look at in attempting to project such things as housing demand, labor force growth, government “entitlement” spending, and a host of other key “macro” indicators is the projected population -- not just (or even mainly) the total population, of course, but more especially the age distribution of the population. At first glance, one might think that projecting the age distribution of the population would be rather simple: if you know your country’s current age distribution, you should, if your country has “closed borders,” be able to “walk forward” each individual age “cohort” using reasonable assumptions of death rates by age. However, we are not a “closed border” country, and as such, projections of the population by age also need to take into account “net international migration” by age, which encompasses both immigration by age and emigration (folks moving out of the country) by age.Rather than making their own assumptions about death rates and net international migration, many analysts rely on “official” Census long-term population projections to produce forecasts of other variables. Sadly, however, such “official” projections are done infrequently, and the last “official” Census population projection was from late 2014, and is extremely out of date.To remind folks, the 2014 Census long-term population projection incorporated an assumption that net international migration would increase materially beginning in 2014, and gradually increase from these unusually high levels through the next several decades. Updated population estimates through 2016, however, suggest that these net international migration assumptions through 2016 were way too high. In addition, recent data suggest that death rates over the past two years have been higher than those incorporated in the Census 2014 projections. As a result, the latest estimate of the US population as of July 1, 2016 is 868,105 lower than the projection from 2014, with the bulk of this projection “miss” coming in the 20-64 year old range.In addition, the Census 2014 population projections did not (for obvious reasons) incorporate an assumption that Donald Trump would be elected president and that the House and Senate would be controlled by Republicans, and what that combination might mean in terms of likely net international migration trends over the remainder of the decade. Suffice it to say, the net international migration assumptions from the Census 2014 population projections from 2016 on are unrealistically high.In sum, as is obvious, the “latest” long-term population projections from Census are extremely out of date, and are of little if any use to anyone. While Census does plan to issue a new long-term population projection around the end of this year, in the interim any analysts who wish to issue projections of any variables that depend on population forecasts must produce their own population projections. Click on graph for larger image.Unfortunately for analysts, there is no clear or logical methodology to project net international migration over the next few years based on either the rhetoric or the policy “statements” from the Trump administration. However, one thing analysts can do is to show different population projection “scenarios” based on different net inte[...]



Comments on May Housing Starts

2017-06-16T12:54:09.202-04:00

Earlier: Housing Starts decreased to 1.092 Million Annual Rate in May The housing starts report released this morning showed starts were down 5.5% in May compared to April, and were down 2.4% year-over-year compared to May 2016.  This was a weak report and was well below the consensus forecast.Note that multi-family starts are volatile month-to-month, and has seen wild swings over the last year - and has been especially weak over the last few months.However, single family starts - although down in May compared to April - were up 8.5% year-over-year.This first graph shows the month to month comparison between 2016 (blue) and 2017 (red).Click on graph for larger image.Starts were down 2.4% in May 2017 compared to May 2016, and starts are up 3.2% year-to-date. Note that single family starts are up 7.2% year-to-date, and the weakness (as expected) has been in multi-family starts.My guess is starts will increase around 3% to 7% in 2017.Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).These graphs use a 12 month rolling total for NSA starts and completions. The blue line is for multifamily starts and the red line is for multifamily completions. The rolling 12 month total for starts (blue line) increased steadily over the last few years - but has turned down recently.  Completions (red line) have lagged behind - but completions have been generally catching up (more deliveries).  Completions lag starts by about 12 months.I think the growth in multi-family starts is behind us - in fact, multi-family starts probably peaked in June 2015 (at 510 thousand SAAR) - although I expect solid multi-family starts for a few more years (based on demographics).The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.Note the exceptionally low level of single family starts and completions.  The "wide bottom" was what I was forecasting following the recession, and now I expect a few years of increasing single family starts and completions. [...]