With a discouraging report on foreclosures last week indicating an increase in August, we thought we’d take the opportunity to examine the areas that have thus far done the best job at absorbing the distressed inventory that has come on to the market since the start of the housing decline.  According to data from Housing IntelligencePro, among the top 100 new home markets there were seven that have managed to absorb nearly all foreclosed homes back into the market on a cumulative basis since 2005.  Two were from Texas, two from New Mexico, and were joined with Albany, Boston, and Las Cruces, NM.  While housing is still a gloomy subject, some areas are definitely weathering the storm better than others.

In broader economic news, barometers of manufacturing activity as measured by the Empire State and Philly Fed surveys suggested weaker activity pointing towards an economic slowdown.  Unemployment claims continued their steady climb last week which shows that labor market conditions remain sluggish.  Financial markets were driven higher on Friday by coordinated efforts by the European Central Bank along with other central banks will make it easier for Eurozone nations to borrow money and alleviate some of the region’s sovereign debt concerns.  That positive tone in the Eurozone changed dramatically on Monday as a Greek default is becoming increasingly more likely.

There are several economic data releases on tap this week that will gauge conditions of the economy and the housing market.  On Monday, the National Association of Homebuilders’ housing market index showed that builder confidence declined in September to its lowest levels since June.  August data for housing starts, building permits, and existing home sales will also be released this week.  Leading economic indicators report on Thursday will give us an idea of where the economy may be heading in the months ahead.  The Federal Open Market Committee is also set to meet on Sept. 20.  They are expected to keep rates unchanged but it will be more important to see if the language from the Fed changes and if there are any plans for a third round of quantitative easing.

The Economy
The consumer price index increased in August due to higher energy, apparel, and transportation.  All major expenditure categories recorded increases last month.  Headline consumer prices increased 0.4% from the previous month on a seasonally-adjusted basis while core consumer prices recorded a 0.2% increase.  Over the past year, headline CPI increased 3.8% from this time last year.  This is the largest annual increase in headline consumer prices since September 2008.  The core CPI increased 2.0% year-over-year in August.  This matches the largest annual increase in core consumer prices for any month since November 2008.

Initial jobless claims continued its recent upward trend this past week.  First-time unemployment claims increased by 11,000 to a seasonally-adjusted figure of 428,000 in the week ended September 10th from an upwardly revised figure of 412,000 in the previous week.  This is the highest that jobless claims have been since the end of June.  This is also the fifth consecutive week that initial jobless claims have come in above the 400,000 level.

Total non-farm employment in the U.S. remained unchanged from the previous month in August.  There were 17,000 private sector jobs gained during August which was much weaker growth in private sector hiring than compared to recent months.  Those gains were offset but 17,000 jobs lost in the public sector.  Budget cuts around the country continue to pressure public sector employment and will continue to do so in the months ahead.

With no jobs gained, the nation’s unemployment rate remained steady at 9.1%.  This equates to approximately 13 million unemployed people across the country.  Although the jobless rate is lower than it was this same time last year and this same time two years ago, it has not shown any real signs of improvement since March.

After July's slight rebound, consumer confidence plunged in August due to the reemerging concerns of a double-dip recession and the credit crisis in Europe. The consumer confidence index plunged to a reading of 44.5 from a revised July figure of 59.2. This is the lowest the index has been since April 2009.

Housing Market
Homebuilder confidence in September declined one point from the previous month to a reading of 14.  This is the lowest the housing market index has been since June.  Continued turmoil in Europe, weak domestic demand for housing, and a weaker employment picture offset the positive effects of record-low mortgage rates to push builder confidence lower this month.

National average mortgage declined from the previous week to 4.09% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on September 15th.  The average rate on a 30-year fixed loan is at a new all-time record low.  This is the second consecutive week that rates have reached new lows.  Rates have now averaged under 5.0% for 30 straight weeks. 

In the week ending September 2nd, the MBA’s seasonally-adjusted purchase index increased 7.02% from the previous week but was down 7.02% compared to this same time last year.  This is the third straight week that the purchase index has recorded gains after reaching its lowest levels since December 1996 three weeks ago.  This is the highest the purchase index has been since the second week of August.

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: