The Chicago Fed’s National Activity Index (CFNAI) was a reading of +0.47 in September, up from August’s revised reading of -0.25. The positive figure indicates that the index is above its historical trend. The index’s 3-month moving average is at +0.25.
58 of the 85 individual indicators made positive contributions to the CFNAI in September, while 27 made negative contributions. 56 indicators improved from August to September, while 29 indicators deteriorated. Of the indicators that improved, 12 made negative contributions.
The Production and Income index component registered +0.30 from -0.20 last month. Employment and Hours was +0.22 from +0.04, Personal Consumption and Housing was -0.13 from -0.09, and Sales, Orders, and Inventories was +0.08 from -0.01.
The CFNAI is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories. Each of these data series measures some aspect of overall macroeconomic activity.
It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.4% in September to a seasonally adjusted annual rate of 5.17 million. This annual rate is 1.7% lower than the 5.26 million-unit level in September 2013.
Lawrence Yun, NAR chief economist, says the improved demand for buying seen since the spring has carried into the fall. “Low interest rates and price gains holding steady led to September’s healthy increase, even with investor activity remaining on par with last month’s marked decline,” he said. “Traditional buyers are entering a less competitive market with fewer investors searching for available homes, but may also face a slight decline in choices due to the fact that inventory generally falls heading into the winter.”
“Economic instability overseas is leading to volatility in the stock market and is causing investors to seek safer bets, which will likely keep interest rates in upcoming weeks hovering near or below where they are now,” said Yun. “This is welcoming news for consumers looking to buy, although they could temporarily become more cautious by less certain economic conditions.”
The existing home sales rate in 3 of the 4 U.S. regions in September:
- Northeast: 0.68 million from 0.67 million month prior.
- Midwest: 1.17 million from 1.24 million month prior.
- South: 2.12 million from 2.02 million month prior.
- West: 1.20 million from 1.12 million month prior.
Total housing inventory at the end of September decreased 1.3% to 2.30 million existing homes available for sale. That represents a 5.3 month supply at the current sales pace. Unsold inventory is 6.0% above a year ago, when there were 2.17 million existing homes available for sale.
The median time on market for all homes was 56 days in September. That is up from 53 days in August. Short sales were on the market for a median of 116 days, while foreclosures typically sold in 53 days, and non-distressed homes took 59 days. 35% of homes sold in September were on the market for less than a month.
The national median existing home price for all housing types was $209,700, up 5.6% from a year ago.
Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1.017 million. This is 6.3% above the revised August estimate of 957k, and is 17.8% above the September 2013 rate of 863k.
Single-family starts increased to an annual rate of 646k from 639k and multi-unit starts increased to 3371k from 318k.
Charles Schwab Corp. is weeks away from introducing an automated investing service aimed at winning business from novice investors it does not currently serve, company officials told Reuters.
The service is being developed in-house and likely will be free, giving the San Francisco-based discount brokerage pioneer a leg up on a slew of upstart firms known as robo-brokers that charge management fees of 0.15 to 0.35 percent of a client’s assets.
It would position Schwab as the first conventional brokerage with its own robo-broker offering. In automated investing plans, clients fill out questionnaires about investment goals and risk tolerances. Their answers automatically determine the portfolios of exchange-traded funds or other assets they buy.
Schwab ready to unveil free ‘robo-broker’ service
S&P Case-Shiller Home Prices increased in July, with the 10-City composite and 20-city composite indices both ticking up 0.6% (not seasonally adjusted).
Year over year, the 20-City Composite is up 6.7%. This is a slower annual rate of growth than the 8.1% in June and the 13.6% rate in October 2013.
The national house price level is now roughly equal to where it stood in November 2004.
Of the 20 cities tracked in the index, Los Angeles has had the greatest increase in home prices since 2000, while Detroit has been the only city where prices have declined over the past 14 years.
From a year ago, house prices have increased the most in Las Vegas, where they rose 12.8%. Cleveland has had the slowest rate of annual increase, rising only 0.9%.
Dallas and Denver are the only cities whose prices have increased beyond their pre-recession peak. Las Vegas remains the furthest below its peak.
The U.S.Federal Housing Finance Agency saw its national house prices increasing 0.1% in July (not seasonally adjusted), and increasing 4.4% from a year ago.
The FHFA HPI is calculated using home sales price information from mortgages either sold to or guaranteed by Fannie Mae and Freddie Mac.
The U.S. index is 6.4% below its April 2007 peak and is roughly the same as its July 2005 index level.
Of the 9 different geographic census divisions that FHFA tracks, house prices have increased the most year over year in the Pacific and increased the least in the Middle Atlantic.
In both the Case-Shiller index and the FHFA index house prices continue to increase, but the pace is slowing.
Because housing is durable, the housing supply is slow to adapt to declines in demand. This paper uses long-term vacancy—defined as nonseasonal housing units that have been vacant for an unusually long period of time—to quantify the extent of excess supply in the housing market. I find that long-term vacancy is less than 2 percent of all nonseasonal housing units and accounts for only one quarter of the aggregate increase in nonseasonal vacancy from 2001 to 2011. Thus, at the national level, excess supply is considerably less extensive than indicated by traditional measures of vacancy. However, the stock of long-term vacant housing is concentrated in a small number of neighborhoods that do have appreciably high long-term vacancy rates. Some of these neighborhoods have characteristics suggesting that excess supply is related to overbuilding during the housing boom, while others have characteristics that are symptomatic of persistently weak housing demand.
Long-Term Vacant Housing in the United States
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.8% in August to a seasonally adjusted annual rate of 5.05 million. This annual rate is 5.3% lower than the 5.39 million-unit level in August 2013.
Lawrence Yun, NAR chief economist, says sales activity remains stronger than earlier in the year, but fell last month as investors stepped away. “There was a marked decline in all-cash sales from investors,” he said. “On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country.”
Yun adds, “As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”
The existing home sales rate in each of the 4 U.S. regions in August:
- Northeast: 0.67 million from 0.64 million month prior.
- Midwest: 1.24 million from 1.21 million month prior.
- South: 2.03 million from 2.12 million month prior.
- West: 1.11 million from 1.17 million month prior.
Total housing inventory at the end of August decreased 1.7% to 2.31 million existing homes available for sale. That represents a 5.5 month supply at the current sales pace. Unsold inventory is 4.5% above a year ago, when there were 2.21 million existing homes available for sale.
The median time on market for all homes was 53 days in August. That is up from 48 days in July. Short sales were on the market for a median of 135 days, while foreclosures typically sold in 53 days, and non-distressed homes took 52 days. 40% of homes sold in June were on the market for less than a month.
The national median existing home price for all housing types was $219,800 up 4.8% from a year ago.