A Shaky Floor for Housing, Not Yet Nailed Down
- New Home Sales for March decreased by 7.1 percent, to a 328,000 unit sales rate.
- The February Case-Shiller 20-City Composite Home Price Index was 3.6 percent below a year ago.
- The Conference Board’s Consumer Confidence Index was down slightly in April to 69.2.
Today’s housing and consumer related data are shaky, all showing losses, but closer examination shows evidence of a floor under housing and perhaps consumer confidence too. New home sales for March decreased by 7.1 percent from February to an annual rate of 328,000. The good news in that number comes from the substantial upward revision to February new home sales, now set at 353,000. So new home sale earlier this year were substantially above the very weak 290,000 unit pace set last August. On a moving average basis, the trend in new home sales still looks good. The February Case-Shiller 20-City Composite Home Price Index dipped by 0.8 percent for the month, before seasonal adjustment. After seasonal adjustment the numbers look better. The seasonally adjusted 20-city index gained 0.2 percent, and 13 out of 20 metro areas showed no change or a monthly increase in prices. Over the previous 12 months, the composite index is down 3.5 percent. Phoenix is notable in the report, showing a yearly increase in prices of 3.3 percent. Atlanta is also notable for having the biggest yearly drop in prices, down 17.3 percent in February from a year ago. With nascent improving trends in home sales, construction and prices, it looks like residential real estate is stabilizing after a long ride down. What remains to be seen is the potential depressive effect from increasing foreclosures this year. However, block sales of banked-owned properties may help to mitigate that effect in some areas. For now, it looks like there is a somewhat shaky floor under residential real estate. What firms that floor?…job creation. And so it is critical for labor data to improve in the coming months from recent weaker-than-expected readings in order to believe that the floor in housing is firm and will be built upon.
Consumer confidence was little changed in April according to the Conference Board. Their consumer confidence index ticked down slightly from 69.5 in March to 69.2 in April. The small decline was due to a decrease in the expectations index. The present situation index actually improved in April from 49.9 up to 51.4, indicating that consumers felt better in April despite a spate of weaker-than-expected economic data.
Market Reaction: Equity prices are up. Treasury yields are up at the long end of the yield curve. Oil is up to $103.93/barrel. The dollar is down against the yen and the euro.