As you know, it is getting difficult to keep up with all of the changes in the housing market and the economy. So… to help keep you up on the latest real estate and economic indicators… here you go…

Courtesy of Hanley Wood Market Intelligence www.hanleywood.com/hwmi

Housing Hurting, Stocks Surging
While the housing sector struggles to find its footing, the equity markets are continuing to surge forward. The Dow Jones Industrial Average recently set a milestone, closing above the 13,000 mark for the first time. The strength in the stock market is even more impressive considering consumer prices are currently at their highest levels since last August and the price of crude has quietly been trading at over $65/barrel.

Weaker housing data has seemed to have little effect on market strength as well. Existing-home sales in March just reached its lowest levels since June 2003 and reported its biggest monthly drop since January 1989. March new-home sales rebounded slightly after falling to its lowest levels since June 2000 in February.

Economic data have not been too positive and leading economic indicators have declined for two out of the three months so far this year and has recorded a decline from its six-month ago levels for the first time since November. Consumer confidence also fell for the second straight month in April. For stocks and the economy to continue to surge forward, the housing sector will need to start showing signs of stabilization while the Fed keeps inflation in check.

The Economy
The Consumer Price Index in March rose 0.6% from the previous month on a seasonally adjusted basis. This is the fourth straight month that prices have increased while March’s increases in consumer prices were the largest since last April. The core-CPI, which economists watch as a closer indicator of inflation because it excludes often volatile food and energy prices, increased 0.4% in March on a non-seasonally adjusted basis from February and only 0.1% on a seasonally-adjusted basis. On an unadjusted basis, headline CPI increased 2.8% from its year ago levels while core CPI increased 2.5% year-over-year in March. The year-over-year increase in headline prices in March was the highest since August while year-over-year core prices fell to their lowest levels since last May. While core prices did ease slightly, the increase in the headline number due to higher energy costs is very worrisome.

Leading indicators increased from a downwardly revised February figure this past month. In February, the leading indicator had fallen to its lowest level since last August before slightly rebounding in March. Currently the leading index stands at 137.4, a 0.2 point increase from a revised 137.2 last month. The index is down 0.2 points from its levels six months ago of 137.6 seen in September. This is the first time the leading indicator has recorded a decline from its levels six months ago since November.

Housing Market
Existing-home sales plunged last month while new-home sales rebounded slightly from its February lows. Both the new and existing home markets saw inventories decline which are positive signs toward stabilization in the housing market.

New home sales gained 2.6% in March to a seasonally adjusted 858,000 homes, up from a revised February figure of 836,000. On a year-over-year basis, new home sales are down 23.5% from last year. New homes sales for the last 3 months were revised lower by 48,000. At the current sales pace, there are 7.8 months of new homes supply on the market. The median price for a new home increased to an all-time high of $254,000 which represents a 0.9% increase from February price levels and a 3.7% increase from this time last year.

Seasonally-adjusted sales of existing homes dropped 8.4% from February levels to 6.12 million units. That is the lowest sales pace recorded since June 2003. Sales of existing homes are down 11.3% from the 6.90 million units in March 2006. The median sales price increased to $217,000 which is a 1.6% increase from last month but a 0.3% decrease from this time last year. Inventory of existing homes increased to 7.3 months supply at the current sales pace, while the number of existing homes for sale declined 1.6% to 3.745 million units.

National average mortgage rates fell to 6.16% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on April 26th. Average rates are down 42 basis points from the same time last year. In the week ending April 20th, the MBA’s seasonally-adjusted Purchase Index increased to 411.0 from 396.5 in the previous week. The latest figure reflects 3.66% increase from last week and a 5.55% increase from the same time last year. The ARMs share of mortgages stood at 18.3%, as borrowers continue to be more cautious in the current housing environment and opting for safer fixed-rate loans.

Employment Growth 1,974,000 C-
Unemployment Rate 4.4% A+
Real GDP Growth 2.5% C-
Consumer Confidence 104.0 C+
Purchase Mortgage Applications 411 C
Mortgage Rates 6.16% A+
Median Price Existing Home $217,000 F
Existing Home Sales 6,120,000 C+
Existing Home Inventory 3,745,000 C-
Existing Home Affordability 43.4% F
Median Price New Home $254,000 C-
New Home Sales 858,000 D+
New Home Inventory 539,000 F
New Home Affordability Ratio 38.6%

This data is used with permission from Hanley Wood Market Intelligence

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