Based upon what we’ve seen of the March data come in, it looks like Oklahoma City is on track to see the largest year-over-year gain in new home closings for the first quarter of 2011.  Our data feature this week, courtesy of Housing IntelligencePro, provides an advance estimate of gain in new home closings during the initial three months of the year.  Following Oklahoma City’s 9% gain, St. Louis, Philadelphia, Orlando and Portland round out the top five in what is otherwise still a pretty rough housing market in most areas of the nation.  Markets needed at least 500 new home closings during the quarter to be considered. 

March housing data released this week were a bit more positive compared to February.  Existing home sales and prices both improved while housing starts and building permits also increased.  While all these indicators were rebounding from near-record lows, the increase in activity ahead of the key homebuying season was still a somewhat encouraging sign.  Mortgage rates also declined this past week after four straight weeks of increases which helped mortgage application activity to pick up.  The Mortgage Banker Association’s Purchase Index rose to its highest levels since December.

In broader economic news, Standard & Poor’s downgraded its outlook on long-term U.S. sovereign debt which sent shockwaves in the markets to start the week.  Some moderately positive housing and economic data along with better-than-expected corporate earnings reports helped curb the pessimism during the holiday-shortened week.  The broader S&P 500 index closed trading on Monday down over 1% because of the negative news regarding U.S. debt but increased in the following three days to finish the short trading week up 1.3%.

The Economy
The leading index increased again in March to a reading of 114.1 which is a 0.50 point increase from February levels.  The index is up 4.20 points from its levels six months ago when it stood at 109.9 in September.  This is the ninth consecutive month that the leading index has increased.  A jump in building permit activity along with healthy gains in vendor performance fueled gains in the leading index for March.  The steady rise in the leading index suggests that economic growth will remain positive in the coming months.  However, the recent slowdown in manufacturing activity coupled with a big drop in March in the index for consumer expectations are concerns that may slow economic growth going forward.

First-time unemployment claims fell by 13,000 to a seasonally-adjusted 403,000 in the week ended April 16th from an upwardly revised figure of 416,000 last week.  This is the second straight week that initial jobless claims have remained above the 400,000 level.

Rising energy costs continued to fuel inflation concerns in March.  The consumer price index continued to rise last month due to significant increases in energy, transportation, and food and beverage costs.  Higher oil prices have pushed prices in all of these categories higher.

The consumer price index jumped 1.0% from the previous month on a non-seasonally adjusted basis and increased 0.5% for the second straight month on seasonally-adjusted basis.  The 1.0% monthly rise on a non-seasonally adjusted basis is the largest one-month increase in headline consumer inflation since June 2008.

The core-CPI, which economists watch as a closer indicator of inflation because it excludes often volatile food and energy prices, increased 0.3% compared to February levels on a non-seasonally adjusted basis and a 0.1% increase on a seasonally-adjusted basis.

On an unadjusted basis, headline CPI increased 2.7% from its year ago levels while core CPI increased 1.2% year-over-year in March.  This is the largest annual increase for any month in headline consumer prices since December 2009 and the largest annual increase in core consumer prices for any month since February 2010.

Housing Market
Existing home sales in March recovered 3.7% from the previous month to a seasonally-adjusted annual rate of 5,100,000 units.  However, home sales are still down 6.3% compared to March of last year when the seasonally-adjusted annual sales rate stood at 5,440,000.  This is the second straight month that resale activity has recorded year-over-year declines.  It should be taken into account that the federal homebuyer tax credit helped to artificially increase the demand for housing this time last year.  Existing single-family home sales increased 4.0% from last month to 4,450,000 units while condo and co-op sales increased 1.6% from February levels to 650,000 units.

Along with increased sales activity, existing home prices also rebounded in March.  The median price of an existing home in March increased to $159,600 from a February figure of $156,100.  This is the first month since June 2010 that median existing home prices have recorded a monthly increase.  The median existing home price is still 5.9% lower than it was this time last year when it stood at $169,600.  Higher home prices caused the existing home affordability ratio to decline for the second straight month in March after hitting an all-time high in January.  Affordability based on average 30-year fixed mortgage rates in March eased to 70.7% from a revised reading of 71.1% in February.

Inventory of existing homes increased 1.5% to a preliminary 3,549,000 units in March from 3,498,000 units in February.  This is the second straight month that the stock of existing homes up for sale has increased.  Inventory levels are now back to their highest levels since December 2010 as sellers begin listing their homes in preparation for the upcoming spring homebuying season.  March’s inventory levels are still 2.1% lower than they were this time last year.  At the current sales pace, there are 8.4 months of supply of existing homes on the market.

U.S. housing starts rebounded in March while depressed February figures were also revised higher.  Housing starts increased 7.2% from the previous month to a seasonally-adjusted annual rate of 549,000 units.  Residential construction is still down significantly from year-ago levels when building activity was buoyed by the federal homebuyer tax credit.  Total starts are down 13.4% compared to this same time last year.  In March, single-family housing starts increased 7.7% to a seasonally-adjusted annual rate of 422,000 units while multi-family housing starts increased 5.8% from last month to a seasonally-adjusted annual rate of 127,000 units.

Building permits jumped 11.2% from last month to a seasonally-adjusted annual pace of 594,000 units in March.  The increase is a positive sign since permit activity is an indicator of residential construction activity in the months ahead.  Building permit activity in March was fueled by a jump in the Multi-family 5+ unit segment.  Permits in that segment surged 28% from last month to its highest levels since January 2009.  Single-family building permits increased 5.7% from last month to a seasonally-adjusted annual rate of 405,000 units. 

National average mortgage declined from the previous week to 4.80% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on April 21st.  This is the first time in the past five weeks that rates have recorded a weekly decline.  Rates are now back to their lowest levels since mid-March.  The 30-year fixed-rate mortgage has still averaged below 5.0% for nine consecutive weeks.

In the week ending April 15th, the MBA’s seasonally-adjusted purchase index rebounded 9.96% from the previous week but was still down 12.2% compared to the same time last year.  This is the highest the purchase index has been since early December 2010.

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