Housing, Regional Manufacturing, Consumers Remain Firm
- New Home Sales for August were essentially flat, easing 0.3 percent, to a 373,000 unit annual rate.
- The Case-Shiller 20-City Composite House Price index increased by 1.6 percent in July.
- Mortgage Applications for the week ending September 21 increased by 2.8 percent, driven by refis.
- The Richmond Fed’s Manufacturing Activity Survey showed improvement in September.
- The Dallas Fed’s Manufacturing Outlook Survey also showed increased activity in September.
- The Conference Board’s Consumer Confidence Index rose sharply to 70.3 in September.
The housing sector continues to show a broadly improving trend. New home sales for August were essentially unchanged from July, declining by 0.3 percent to a 373,000 unit sales rate. The supply of new homes is tight, down to 4.5 months’ worth, providing incentive for builders to forge ahead. Previously reported existing home sales gained 7.8 percent in August, reaching a 4.82 million unit sales rate. According to the Case-Shiller House Price Index, prices are firming nationwide. The 20-city composite index gained 1.6 percent in July and is up 1.2 percent from a year ago. Some of the gains in house prices may be due to a shift in mix as fewer distressed homes are available. But firmer prices are very good news, even as the mix of houses for sales begins to re-normalize. All 20 cities in the index showed gains for the month, and the majority also showed gains from a year ago. Leading the charge is Phoenix, up 16.6 percent from a year ago. Lagging is Atlanta, down 9.9 percent from a year ago. The MBA Mortgage Applications Composite Index increased by 2.8 percent for the week ending September 21. Most of the gains were from refis. However, a surge in the purchase index in the first week of September bodes well for home sales for the month.
Another ray of sunshine came from the two regional Fed manufacturing surveys released this week. Both the Richmond Fed and the Dallas Fed reported improving manufacturing conditions in September for their regions. This adds support to the expectation that the national ISM Manufacturing Index will soon start to level out after 3 consecutive months in contraction. Finally, the Conference Board’s Consumer Confidence index increased sharply from 63.1 in August to 70.3 for September. Europe is still a mess, and Asia is cooling down, but conditions in the U.S. remain stable, thanks in part to resilient home buyers who are firming up housing markets across the country.
Market Reaction: Equity prices are down, as are Treasury yields. NYMEX crude oil is down to $89.83/barrel. The dollar is down against the yen and up versus the euro.
Click here for a PDF version of the Comerica Economic Alert: Home Sales 092612.