Economic Indicators: Weekly Update – April 22

A weekly analysis of the economic data released during the past week, and how current economic conditions are affecting the real estate market.

Palm Coast, FL – April 22, 2011 – Every week the Research staff of the National Association of Realtors® analyzes key data releases and explain what they mean for you and your business. In this update, we give the highlights of the most important data releases for the week of April 18-April 22, 2011, along with graphs that show the latest movement and overall trends.

At a glance, this table shows the forecast for some of the most pertinent weekly data for REALTORS® to keep in mind. This changes from week to week as new data becomes available. The directional shift notes the trend from last week’s numbers. For the full forecast from the latest Pending Home Sales release, click here (PDF).

Highlights for Monday, April 18, 2011:

• The yield on the 10-year Treasury closed Friday at 3.43%,. The decrease in the Treasury rate was mostly attributable to a smaller than expected increase in the core consumer price index which increased by 0.1% in March from February.
• The average annual inflation expectation in the U.S. over the next ten years remained relatively unchanged at 2.61%.
• Stronger inflation will put upward pressure on long term interest rates to increase. NAR is forecasting interest rates to increase to 5.6% by the end of 2011.

Highlights for Tuesday, April 19, 2011:

• The Census Bureau released monthly figures for housing starts this morning.  The seasonally adjusted figure for March rose 7.2% from a month earlier to 549,000 units.  This increase followed an 18.5% decline in the prior month.
• Both the single-family and multi-family sectors improved growing 7.7% and 5.8%, respectively.  Single family starts were 422,000 in March, roughly 74% lower than the 1.601 million starts recorded in March of 2006.

Highlights for Wednesday, April 20, 2011:

• Mortgage applications rose 5.3 percent for the week ending April 15.
• The weekly data does not account for the rising number of cash buyers.  According to the March REALTORS® Confidence Index, cash buyers accounted for 35 percent of transactions.

Highlights for Thursday, April 21, 2011:

• The initial jobless claims fell last week by 13,000 to 403,000.   Jobless claims below the 400,000 level usually indicate steady employment growth.
• Assuming that jobless claims continue to trend down, NAR expects about 1.5 to 2 million net new jobs in the next 12 months.
• The Federal Housing Finance Agency House Price Index ( FHFA HPI) released today shows continued easing on housing prices, which declined  1.6 percent  from January to February on a seasonally adjusted basis. The year-over-year change in February shows 5.7 percent decline.
• The FHFA index, however, only captures the purchase prices of houses bought with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. This figure excludes mortgages backed by the FHA, which accounted for roughly 15% of home sales in December. The FHFA’s index also does not include cash transactions, which were roughly 33% of sales in February according to NAR’s REALTORS® Confidence Index. The all-cash transactions also continue to grow due to tougher credit restrictions.

Friday, April 22, 2001:

• Positive data this week push the forecast up slightly, but markets take a holiday today, so no new data is released.