Discussing the economy, housing starts, home sales, the need for affordable housing, the latest FOMC minutes, the latest mortgage data and much more…
Highlights from NY Fed’s Economy in a Snapshot August 2017
From the NY Fed:
Real personal consumption expenditures were essentially unchanged in June, suggesting that consumer spending entered Q3 with weak momentum.
Despite some pause in Q2, housing indicators still point to continued gradual improvement in this sector. Real residential investment declined in Q2 largely from the flattening in multi-family starts and some payback for a weather-related sizable rise in single-family starts in Q1.
Payroll growth was solid in July and the unemployment rate fell back to its lowest reading since May 2001. The employment-to-population ratio and the labor force participation rate increased slightly. Growth in labor compensation measures remained subdued.
And a few charts:
Look at how multifamily starts have increased at a substantially faster pace than single family since 2010.
Look at the volume of home sales now compared to before the housing market crashed.
The Dire Need for Affordable Housing
I know I sound like a broken record but we really must do something about the lack of affordable housing. The cost to society could prove to be much higher than the costs to build more affordable places for people to live.
Consider the results of a recent study by HUD:
The number of very poor unsubsidized families struggling to pay their monthly rent and who may also be living in substandard housing increased between 2013 and 2015. HUD reports that in 2015, 8.3 million very low-income unassisted families paid more than half their monthly income for rent, lived in severely substandard housing, or both.
Demand for affordable housing is growing faster than the construction of homes working families can afford to rent, especially in high-cost areas of the country. The Trump Administration is seeking to stimulate the production and preservation of affordable housing in a number of ways. By pursuing housing finance reform, the Administration seeks to unwind the Federal government’s role in the private mortgage market and ease the stress on rental markets.
I have no doubt that any changes will benefit Wall Street and the big banks. However, this may be the lesser of 2 evils…
Highlights from the Latest FOMC Minutes
Interesting stuff from the July 25 & 26 FOMC Meeting:
- Labor market conditions continued to strengthen in June
- Real GDP likely expanded at a faster pace in the second quarter than in the first quarter
- Inflation is still running below the Fed’s target
- Credit standards on most residential mortgage loan categories eased slightly
Nothing really groundbreaking and they left their benchmark interest rate the same. It does sound like they will be raising rates soon and also starting to decrease their holdings.
Rail Traffic Increases Again
The Association of American Railroads (AAR) reported that for the week ending August 12, 2017:
Total U.S. weekly rail traffic was up 2.7% compared with the same week last year. Total carloads for the week were up 0.3% compared with the same week in 2016, while U.S. weekly intermodal volume was up 5.1% compared to 2016.
New Homes Getting Smaller
From Eye on Housing:
After increasing and leveling off in recent years, new single-family home size continued along a general trend of decreasing size during the second quarter of 2017. This change of the last two years marks a reversal of the trend that had been in place as builders focused on the higher end of the market during the recovery. As the entry-level market expands, NAHB expects typical new home size to fall as well.
According to second quarter 2017 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area was slightly lower at 2,388 square feet. Average (mean) square footage for new single-family homes declined to 2,616 square feet.
We may see the size of new homes continue to fall due to the way that prices are increasing also…
The Latest Mortgage Data from Ellie Mae
From Ellie Mae’s Origination Insight Report for July 2017:
Closing time for all loans remained steady at 43 days in July. Time to close a refinance increased to 42 days, up from 41 days the month prior, and time to close a purchase loan remained at 43 days in July.
The average 30-year rate for all loans decreased to 4.25 in July, down from 4.27 in June.
69% of all closed loans had FICO scores over 700, 72% of purchase loans had FICO scores over 700, 65% of refinances had FICO scores over 700.
The average FHA purchase FICO score held steady at 683 in July.
Home Are Selling Quickly
Buyer and seller both must be prepared for the fast pace of today’s real estate market. NAR said in the latest Existing Home Sales Report that US homes were on the market for an average of 28 days in June.
Check out this map that was made with data from NAR’s Monthly Realtors Confidence Index Survey:
Remember, this is the average time for the entire state. Looking at the data for July 2017, homes in Anderson were on the market for an average of 59 days.
Remember this is the average. Sellers that over price their homes or make any of the other common mistakes can expect a much longer time on market.
Buyers need to realize that competition is stiff for well priced homes in desirable areas. If you snooze, you will lose…
Conservatives’ Blind Love For Corporate America Must End
The controversy over tech giant Google’s firing of James Damore after he internally circulated a memo criticizing the company’s diversity-driven hiring practices has put America’s suffocating corporate culture in the limelight. Yet it also speaks to a broader question: Do modern conservatives blindly defend corporate rights to the detriment of all other values? To be fair, many on the Right used the incident as another example of America’s deteriorating culture of free expression.
A definite must read! Being a conservative does not mean you must turn a blind eye to evil…
Unemployment Claims Decrease
In the week ending August 12, the advance figure for seasonally adjusted initial claims was 232,000, a decrease of 12,000 from the previous week’s unrevised level of 244,000. The 4-week moving average was 240,500, a decrease of 500 from the previous week’s unrevised average of 241,000.
Good to see! Remember the 4 week moving average is the number to watch as it is less noisy.
And with that last little bit of positive news, I will say good bye!