As our season of Housing Seminars kicks into full gear, this week we decided to take a glance at a few markets where we’ll be presenting soon.  Over the next six weeks, we will be on the road in Denver, San Francisco Bay Area, and Philadelphia to analyze how these markets are performing, what is working, and what can be expected in the quarters ahead.  According to data from Housing IntelligencePro, new home closings are down so far this year for all three of these areas, but in recent months the annualized trend has stabilized, especially since the year-over-year comparisons are now being calculated in the post-tax credit expiration time frame.  All three metro areas have a rolling 12 month change in new home closing volume in August that is nearly unchanged from July.  While flat new home closings volume isn’t much to celebrate at such depressed levels, a more stable trend will help builders more accurately assess absorption rates and strategically plan for the future.  While no explosive recovery in new housing is expected in any of these markets, having at least more predictable market conditions aid in surviving and thriving in future months and years.

With the exception of Friday’s report on personal incomes and spending, economic data released last week were generally more positive than perhaps anticipated.  Consumer confidence increased slightly in September, first-time jobless claims fell to their lowest levels since early April, and revised final 2nd quarter GDP estimates showed the economy steadily expanding.  Better economic data domestically was not able to offset the negative sentiment created by continued debt concerns in the Eurozone. 

The September employment report is on deck for Friday which will be the biggest market mover outside of European debt drama this week.

The Economy
Personal incomes in August declined to $13,028.3 billion from a downwardly revised figure of $13,035.6 billion in July.  This is the first time since October 2009 that incomes have recorded a monthly decline.  Personal incomes are up 4.5% from $12,472.8 billion in August of last year.  Although personal incomes have recorded 20 straight months of year-over-year gains, this is the weakest annual increase for personal incomes since June 2010.  Because of increased spending and weaker incomes, the nation’s personal savings rate fell in August to 4.5% of disposable income which is the lowest it has been since November 2009.

Final estimates for second quarter GDP growth showed the economy growing at the same rate the advance estimates suggested but at a faster clip than preliminary estimates showed.  The U.S. economy expanded at a 1.3% pace in the second quarter driven higher by better trade activity and business spending compared to the previous quarter.  This marks the eighth straight quarter that the U.S. economy has expanded.  The main sources for the upward revisions in the final report were upward revisions to consumer spending and trade data.

After plunging last month, consumer confidence recovered slightly in September.  The consumer confidence index increased to a reading of 45.4 from an upwardly revised August figure of 45.2.  The consumer confidence was at its lowest levels since April 2009 last month before September's marginal gain.  Weak employment conditions domestically along with the European debt crisis are currently the biggest drags on confidence.  The present situation index declined from the previous month to a reading of 32.5 from 34.3 last month.  This is the fifth straight monthly decline for the present situation index and the lowest it has been since January.  The expectations index increased to a reading of 54.0 from 52.4 in the previous month.

Initial jobless claims continued to decline this past week.  First-time unemployment claims dropped by 37,000 to a seasonally-adjusted figure of 391,000 in the week ended September 24th from an upwardly revised figure of 428,000 in the previous week.  This is the lowest weekly unemployment claims have been since the week of April 2.  This is also the first time that initial jobless claims have come in under the key 400,000 level since the beginning of August.  Claims would need to remain at or below these levels for a sustained period of time before we experience any noticeable improvement in the overall labor market.

Housing Market
The National Association of Realtors’ Pending Home Sales Index in August declined 1.2% from the previous month to a reading of 88.6.  This is the second straight month that the index has declined and the lowest it has been since April.  However, the index is still up 7.7% from its levels this time last year when it stood at a reading of 82.3 in August 2010.

National average mortgage remained declined from the previous week to 4.01% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on September 29th.  The average rate on a 30-year fixed mortgage is at new all-time record lows.  These rates have not recorded a weekly gain in the past five weeks.  Rates have now averaged under 5.0% for 32 straight weeks.

In the week ending September 23rd, the MBA’s seasonally-adjusted purchase index increased 2.6% from the previous week.  Purchase mortgage application activity rebounded this past week after reaching its lowest levels since late February last week.  Overall mortgage application this past week, including refinances, jumped 9.3% due to record-low mortgage rates.

For additional market-level data and analysis please visit our website at http://www.housingintelligence.com.  For more detailed information on  these and other indicators, please visit the following links: