Economic Indicators: Weekly Update – March 26

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 – March 26, 2011 – Every week the Research staff 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 March 21-March 25, 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.

Highlights for Monday, March 21, 2011:

• February Existing Home Sales Numbers were released. To read the press release,click here.

Highlights for Tuesday, March 22, 2011:

• The Federal Housing Finance Agency released its monthly house price index (HPI) today. The price index for purchase loans (vs. refinances) eased 0.3% from December to January.
• The year-over-year decline in the FHFA’s index confirms the trend in NAR’s median price figure for January released a month earlier. An influx of distressed sales and investor purchases has placed downward pressure on prices in recent months.
• The FHFA’s index does not include cash transactions, which were roughly 33% of sales in February according to NAR’s REALTORS® Confidence Index. The all-cash component has grown in recent months due to tougher credit restrictions.

Highlights for Wednesday, March 23, 2011:

• Mortgage purchase applications increased 2.7 percent for the week ending March 18th. Purchase applications are a leading indicator of home sales.
• Mortgage purchase applications were down 15.3 percent from the same week a year ago.
• Consumers took advantage of low mortgage rates, which fell to 4.76 percent on a 30-year fixed mortgage.

Highlights for Thursday, March 24, 2011:

• Decreases in new jobless claims continue, suggesting improvements in payroll growth with initial claims falling another 5,000 to 382,000. This is a 15,000 claims improvement over the past month with the four-week average also falling to 385,250.
• This is the best reading of jobless claims since the recovery. Falling below the 400,000 level was critical for continuous job market 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.

Friday, March 25, 2011:

• A second revision to GDP data out today shows that the real economy grew in the fourth quarter of 2010 at a 3.1 percent rate and at a 2.9 percent rate from 2009 to 2010. This is an upward revision from the second estimate and roughly in-line with the advance or first estimate released in January. This is near the long-term trend level for economic growth but somewhat weaker than expected growth following a recession.
• There were no revisions to the increase in prices which advanced 2.1 percent in the quarter and 1.3 percent from 2009 to 2010. These price increases are at a level that should not lead to an increased inflation premium in interest rates such as the mortgage rate.
• More recently, prices have advanced more rapidly, especially food and gas prices. For this reason, Consumer Sentiment slipped in March to 67.5, the lowest reading since November 2009. The decline in consumer assessment of current conditions was mild, but the subindex measuring consumer expectations retreated to its lowest level since March 2009. Consumers expect a steady, not decreasing, unemployment rate, fewer increases in income and rising prices. Despite these expectations, there is not yet a reported adjustment in spending plans, though if the negative outlook persists, this may be on the horizon. For more information on inflation and prices, see NAR’s most recent Inflation Watch.

©National Association of Realtors® – reprinted w/permission