If you’re underwater with your mortgage, don’t feel alone — and don’t feel like you have no options. With the Home Affordable Refinance Program (HARP) loan, you may be able to refinance no matter how upside-down your mortgage is.
According to researchers at CoreLogic, a leading analytics firm, 11.1 million or 22.8 percent of all residential properties in the United States were worth less than the amount their homeowners owed on the mortgages used to purchase them. It’s hard not to feel stressed out in that situation. Fortunately, you have a life preserver.
The HARP loan is a federal program specifically designed to reach out and give a helping hand to responsible homeowners that have suffered a reversal of fortune thanks to collapse of the real estate bubble. The federal government originally rolled out the HARP program in 2009 to help homeowners who were underwater or near underwater. However, the program was recently broadened to reach even more borrowers who need a helping hand. Originally, HARP applied to 895,000 underwater borrowers; and now HARP II is expected to help up to double that amount. According to HUD, about 400,000 homeowners have taken advantage of the program since it launched in April 2012.
And that’s terrific news, because it means that not only do the homeowners who are in truly dire straits have access to help, but the underwater homeowners who are continuing to make payments and need some financial breathing room can get some relief by refinancing. The new HARP II loans mean that those homeowners can have extra money going back to their bottom line each month, while continuing to pay off their loans in a reasonable timeframe. And that’s a good thing for Fannie Mae and Freddie Mac, because that equates to more financially stable and dependable borrowers.
The new program offers a number of advantages over the original HARP loans. First off, there is no loan-to-value or combined loan-to-value restriction on fixed-rate loans with terms of 30 years and under. In other words, HARP II can help millions of homeowners no matter how upside-down they are on their mortgages. Previously, there was cap that restricted borrowers who owed more than 125 percent of their home’s current worth from accessing the program.
In addition, an appraisal may be waived if a value for the home can be automatically generated, and the borrower only needs to have a 620 FICO score.
There are three main components to qualifying for a HARP II refinance loan. The first requirement is that your loan must be owned by either Fannie Mae or Freddie Mac. If you’re not sure, I can easily look up your loan for you and determine if you qualify. You can also visit www.fanniemae.com/loanlookup or www.freddiemac.com/mymortgage and fill out the quick, online forms, which will tell you if either government-sponsored enterprise owns your loan. Second, your loan must have been sold to Fannie or Freddie before June 1, 2009. Third, a HARP II refinance must benefit you in least one of four ways:
- It must reduce your loan’s monthly principal and interest payment.
- It must reduce the loan’s interest rate.
- It must reduce the loan’s amortization term.
- It must transition your mortgage to a more stable type of loan. For example, it must move you from an interest-only loan to a fully amortizing loan; it must move you from an adjustable-rate mortgage to a fixed-rate loan; or it must transition you from a longer 30-year term to a 15-year loan.
If you have a Fannie Mae- or Freddie Mac-owned loan that is underwater, or close to it, and you are looking to come up for air, please contact me using the information printed on this message. I would be happy to meet with you to review your current loan status and discuss how the HARP II program can help you breathe easy and gain the financial confidence and stability you deserve.
Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance Program (HARP) and you may be eligible to take advantage of these changes. If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP. You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites: www.freddiemac.com/mymortgage or http://www.fanniemae.com/loanlookup.
| Americans are borrowing more, with consumer credit shooting up in March to an annual rate of 10.2 percent, the Federal Reserve reported last week. Total consumer borrowing amounted to $2.54 trillion for the month, representing a $21.36 billion gain over the previous month. Revolving debt, such as credit card debt, amounted to $803.6 trillion in comparison to February’s $798.5 trillion, and grew by an annual rate of 7.8 percent. Non-revolving debt, such as student loans and car loans, totaled $1.738 trillion, in comparison to February’s $1.722 trillion, and grew by an annual rate of 11.3 percent for the month. |
| The question is whether or not the gains represented increased economic activity and confidence. “The optimistic read is that consumers’ improved outlook on the economy and employment prospects led them to feel comfortable spending on credit, while a more downbeat interpretation is that credit is needed for consumers to keep up,” analysts at Nomura Global Economics remarked in a public statement regarding the Fed’s data. Looking at foreign trade, March exports totaled $186.8 billion and imports came to $238.6 billion, resulting in a goods and services deficit of $51.8 billion, up from $45.4 billion in February, the Census Bureau and Bureau of Economic Analysis reported last week. March exports were $5.3 billion more than February exports of $181.5 billion, and March imports were $11.7 billion more than February imports of $226.9 billion. Import prices declined 0.5 percent in April, according to last week’s statistics from the Bureau of Labor Statistics. This followed a 1.5 percent increase in March. The April decrease was driven by lower fuel prices, which more than offset a small increase in non-fuel prices. The price index for overall exports rose 0.4 percent in April after a 0.8 percent increase the previous month. In employment news, initial jobless claims for the week ending May 5 dipped to 367,000, a decrease of 1,000 from the previous week’s revised figure of 368,000, the Employment and Training Administration reported last week. The four-week moving average was 379,000, a decrease of 5,250 from the previous week’s revised average of 384,250. The Administration also reported that the total number of unemployed workers covered by insurance during the week ending April 28 dropped to 3,229,000, a decrease of 61,000 from the preceding week’s revised level of 3,290,000. The four-week moving average was 3,290,000, a decrease of 10,500 from the preceding week’s revised average of 3,300,500. This week’s economic news starts off tomorrow with retail sales data for April from the Census Bureau, which also releases March’s business inventories. Also on Tuesday, the Bureau of Labor Statistics releases April’s consumer price index. On Wednesday, the Census Bureau publishes housing construction permits and starts for April, and the Federal Reserve releases April’s industrial production and capacity utilization data. The week wraps up with initial jobless claims for last week from the Employment and Training Administration, and April’s leading economic indicators from the Conference Board. |
| Employment data was a major newsmaker last week, with the economy adding 115,000 jobs in April. This put the unemployment rate at 8.1, which was slightly down from March’s rate of 8.2 percent, the Bureau of Labor Statistics reported last week. Key job sectors that saw gains were professional and business services, retail trade, and health care. The pace of job growth in April shows signs of a possible slowing trend. The 115,000 job gain followed March’s gain of 154,000 jobs and gains averaging 252,000 per month for December, January and February. |
| In other employment news, initial claims for jobless benefits filed during the week ending April 28 dropped to 365,000, a welcome decline of 27,000 claims from the previous week’s revised figure of 392,000, the Employment and Training Administration reported last week. The four-week moving average was 383,500, an increase of 750 from the previous week’s revised average of 382,750. The total number of insured unemployed workers during the week ending April 21 dropped to 3,276,000, a decrease of 53,000 from the preceding week’s revised level of 3,329,000, the Administration also reported. The four-week moving average was 3,297,000, a decrease of 18,250 from the preceding week’s revised average of 3,315,250. First quarter non-farm business sector labor productivity decreased at a 0.5 percent annual rate, according to last week’s report from the Bureau of Labor Statistics. The decline in productivity reflects increases of 2.7 percent in output and 3.2 percent in hours worked. From the first quarter of 2011 to the first quarter of 2012, productivity increased 0.5 percent as output and hours worked rose 2.8 percent and 2.2 percent, respectively. Labor unit costs (the ratio of hourly compensation to productivity) for non-farm businesses increased 2.0 percent in the first quarter of 2012, while hourly compensation increased 1.5 percent. Unit labor costs rose 2.1 percent over the last four quarters. Construction spending during March ticked up to an annual rate of $808.1 billion, a 0.1 percent increase over February’s revised estimate of $807.3 billion. The March figure is 6 percent over the March 2011 estimate of $762.6 billion. Spending on private construction skirted up to an annual rate of $531.9 billion, 0.7 percent over February’s revised estimate of $528.1 billion. Residential construction saw a similar gain of 0.7 percent to hit an annual rate of $244.1 billion in March, up from February’s revised estimate of $242.5 billion. Personal income and spending were both up in March, according to last week’s report from the Bureau of Economic Analysis. Incomes increased $50.3 billion, or 0.4 percent for the month, and disposable personal income (DPI; income minus taxes) increased $42.5 billion, or 0.4 percent. Personal consumption expenditures increased $29.6 billion, or 0.3 percent. Turning to car and truck sales, April saw an increase of 2.3 percent, the sixth monthly gain in a row, according to figures released by the car and truck makers last week. Cars sales in the month increased 3.2 percent to 632,129 and truck sales in the month gained 1.3 percent to 552,318 units. Much of April’s gains can be chalked up to significant increases for Toyota and Chrysler. After suffering post-tsunami havoc in its supply chain, Toyota was finally able to see some daylight and enjoyed an 11.6 percent gain. Chrysler sales gained 20 percent, due in large part to its passenger car sales. Other noteworthy performances: GM sales declined 8.2 percent, Honda saw a 2.2 percent decline, Volkswagen skyrocketed 27.3 percent, BMW also shot up by 27.8 percent, and Ford dropped 5.1 percent. This week’s lineup of financial news starts today with March’s consumer credit scores from the Federal Reserve. The Census Bureau follows up Wednesday with March wholesale inventories. Thursday sees a considerable bit of trade news with March’s balance of trade from the Census Bureau, and April import and export prices from the Bureau of Economic Analysis. Also, the Employment and Training Administration releases initial jobless claims for last week. The week wraps up Friday with April’s producer price index from the Bureau of Labor Statistics. |
| New home sales dropped in March, with transactions of new single-family houses in March 2012 dipping to an annual rate of 328,000, a 7.1 percent decline below February’s revised rate of 353,000, the Census Bureau and the Department of Housing and Urban Development reported last week. That said, March’s performance was still 7.5 percent over March 2011′s estimate of 305,000. Real estate watchers chalked up March’s sales decline to winter’s unexpectedly benign weather, which saw much of the positive market activity that would have taken place in early spring actually occur in February. In fact, the Bureau revised its sales figures for February, originally released in March, to show new home sales for the month at an annual rate of 353,000, which was a sizable increase from the 313,000 figure initially released. |
| The median price for new houses sold in March was $234,500 and the average sales price was $291,200. The estimate of new houses for sale at the end of March was 144,000, representing a 5.3-month supply at the current sales rate. Looking at how consumers feel about economic conditions, the Conference Board’s Consumer Confidence Index was virtually unchanged, ringing in at 69.2 (a baseline of 100 was set in 1985), down slightly from 69.5 in March. The Expectations Index, which charts how consumers think the economy will go, declined to 81.1 from 82.5, while the Present Situation Index, which tracks how consumers feel about present economic conditions, improved to 51.4 from 49.9 last month. “Consumer confidence was virtually unchanged in April, following a modest decline in March,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. “As was the case last month, the slight dip was prompted by a moderation in consumers’ short-term outlook, while their assessment of current conditions continued to improve. Overall, consumers are more upbeat about the state of the economy, but they remain cautiously optimistic.” Durable goods saw a steep decline in March, according to last week’s release from the Census Bureau. Orders for manufactured durable goods placed in March tumbled $8.8 billion, or 4.2 percent, to $202.6 billion, the Bureau reported. The decline in orders, down two of the last three months, followed a 1.9 percent February increase. Transportation equipment, also down two of the last three months, saw the largest decrease, $7.1 billion or 12.5 percent to $49.7 billion. This was due largely to a drop in orders for non-defense aircraft and parts, which decreased $7.7 billion. Excluding transportation, new orders decreased 1.1 percent. Excluding defense, new orders decreased 4.6 percent. Shipments of manufactured durable goods in March, up three of the last four months, increased $2.0 billion, or 1 percent, to $208.8 billion. This followed a 0.3 percent decrease in February. Inventories of manufactured durable goods in March, up 27 consecutive months, increased $1.7 billion or 0.4 percent to $375.1 billion, once again marking yet another record monthly level since the series was first published. Initial claims for jobless benefits placed by the newly unemployed during the week ending April 21 dropped to 388,000, a decrease of 1,000 from the previous week’s revised figure of 389,000, the Employment and Training Administration reported last week. The four-week moving average was 381,750, an increase of 6,250 from the previous week’s revised average of 375,500. The total number of insured unemployed workers for the week ending April 14 ticked up to 3,315,000, an increase of 3,000 from the preceding week’s revised level of 3,312,000, the Administration also reported. The four-week moving average was 3,311,750, a decrease of 9,750 from the preceding week’s revised average of 3,321,500. This week sees a busy slate of financial headlines, starting today with March’s personal income and expenditures from the Bureau of Economic Analysis. This is followed tomorrow by the Census Bureau’s release of March’s construction spending figures, and April’s car and truck sales from the auto manufacturers. On Wednesday, the Census Bureau releases March’s factory orders, followed Thursday by initial jobless claims for last week from the Employment and Training Administration, and preliminary non-farm productivity figures and labor costs for Q1 from the Bureau of Labor Statistics. The Bureau wraps up this week on Friday with April’s unemployment rate, non-farm payrolls, productivity and average workweek. |
| Real estate dominated last week’s economic headlines, with March’s existing home sales and housing inventory down, but prices stabilizing, according to the National Association of REALTORS®. Total sales of existing single-family homes, townhomes, condominiums and co-ops declined 2.6 percent to an annual rate of 4.48 million in March from an upwardly revised 4.60 million in February, but were 5.2 percent above the 4.26 million-unit pace in March 2011. “The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases,” NAR chief economist Lawrence Yun said. “Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year. With job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year.” |
| Total housing inventory at the end of March declined 1.3 percent to 2.37 million existing homes available for sale, which represented a 6.3-month supply at the current sales pace. March’s listed inventory was 21.8 percent below a year ago and well below the record of 4.04 million in July 2007. The national median existing-home price for all housing types was $163,800 in March, up 2.5 percent from March 2011. Distressed homes — such as foreclosures and short sales sold at deep discounts — accounted for 29 percent of March’s sales (18 percent were foreclosures and 11 percent were short sales), compared with 34 percent in February and 40 percent in March 2011. Looking at new real estate activity, construction permits issued in March for privately owned housing units were at an annual rate of 747,000, according to last week’s report from the Census Bureau. This was 4.5 percent over February’s revised rate of 715,000, and was 30.1 percent over the March 2011 estimate of 574,000. Permits for single-family homes in March were at a rate of 462,000, which was 3.5 percent below February’s revised figure of 479,000. Construction starts on privately owned housing in March were at an annual rate of 654,000, which was 5.8 percent below February’s revised estimate of 694,000, but was 10.3 percent over the March 2011 rate of 593,000. Starts on single-family homes in March were at a rate of 462,000, which was 0.2 percent below February’s revised figure of 463,000. Completed constructions of housing in March were at an annual rate of 600,000. This was 4.2 percent above February’s revised estimate of 576,000 and was 0.5 percent over the March 2011 rate of 597,000. Single-family housing completions in March were at a rate of 440,000, which was 1.4 percent over February’s revised rate of 434,000. Turning to the retail sector, U.S. retail and food services sales for March hit $411.1 billion, an increase of 0.8 percent from the previous month and 6.5 percent over March 2011, the Census Bureau also reported last week. Total sales for the January through March 2012 period were up 6.4 percent from the same period a year ago. Retail trade sales were up 0.8 percent from February 2012 and 6.5 percent over last year. Building material and garden equipment and supplies dealers’ sales were up 14.1 percent from March 2011 and non-store retailers were up 9.3 percent from last year. In employment news, initial claims for jobless benefits filed in the week ending April 14 dipped to 386,000, a decrease of 2,000 from the previous week’s upwardly revised figure of 388,000, the Employment and Training Administration reported last week. The four-week moving average was 374,750, an increase of 5,500 from the previous week’s revised average of 369,250. The total number of insured unemployed workers during the week ending April 7 was 3,297,000, an increase of 26,000 from the preceding week’s revised level of 3,271,000, the Administration also reported. The four-week moving average was 3,317,750, a decrease of 21,500 from the preceding week’s revised average of 3,339,250. This week’s financial news kicks off tomorrow with consumer confidence scores for April from the Conference Board and March’s new home sales from the Census Bureau. The Bureau follows on Wednesday with durable goods orders for March. On Thursday, the Employment and Training Administration releases initial jobless claims for last week, and on Friday the University of Michigan releases its April consumer sentiment figures. |
| Mortgage rates were big news last week, as the rate for a 15-year home loan hit an all-time record low and the 30-year rate hovered .01 percent above February’s record low of 3.87. In addition, foreclosure filings for Q1 fell to the lowest rate since 2007.The good news was offset, however, by the continued drop in home loan applications as refinances slowed, despite lower rates and the continued decline in housing prices. We experienced a sizable 12-percent drop in the international trade deficit for February, according to the report from the Census Bureau released last week. Total February exports of $181.2 billion and imports of $227.2 billion resulted in a goods and services deficit of $46 billion, down from January’s revised total of $52.5 billion. |
| February exports were $0.2 billion more than January exports of $180.9 billion, and February imports were $6.3 billion less than January imports of $233.4 billion. In comparison to last year, the goods and services deficit increased $0.6 billion from February 2011 to February 2012. Exports were up $15.4 billion, or 9.3 percent, and imports were up $16.1 billion, or 7.6 percent. Turning toward prices of foreign trade goods, U.S. import prices advanced 1.3 percent in March, the Bureau of Labor Statistics reported last week, after edging down 0.1 percent the previous month. Higher fuel and non-fuel prices contributed to the advance. Prices for U.S. exports rose 0.8 percent in March, following increases of 0.4 percent in February and 0.2 percent in January. The advance in import prices was the first increase for the index since rising 0.7 percent in November and the largest monthly rise since a 2.6 percent advance in April 2011. Import prices increased 3.4 percent over the past year, the smallest 12-month advance for the index since a similar 3.4 percent rise between November 2008 and November 2009. The gain in export prices was the largest monthly advance for the index since a 0.8 percent rise in April 2011. In March, higher prices for both nonagricultural goods and agricultural goods contributed to the advance. Despite recording the largest monthly increase in 11 months, overall export prices rose only 0.9 percent over the past 12 months, the smallest year-over-year advance since a 0.4 percent rise for the November 2008-09 period. The number of initial claims for jobless benefits in the week ending April 7 hit 380,000, an increase of 13,000 from the previous week’s revised figure of 367,000. The four-week moving average was 368,500, an increase of 4,250 from the previous week’s revised average of 364,250. The total number for insured unemployed workers during the week ending March 31 was 3,251,000, a decrease of 98,000 from the preceding week’s revised level of 3,349,000. The four-week moving average was 3,334,250, a decrease of 35,750 from the preceding week’s revised average of 3,370,000. The Producer Price Index for finished goods went unchanged in March, according to last week’s news from the Bureau of Labor Statistics. The index for finished goods was unchanged in March, as a 0.3 percent increase in prices for finished goods less foods and energy and a 0.2 percent advance in the index for finished consumer foods offset a 1 percent decline in prices for finished energy goods. The decrease in energy goods was led by the gasoline index, which declined 2 percent, seasonally adjusted. Lower prices for diesel fuel and residential electric power also were factors in the decline in the finished energy goods index. This week’s financial news starts today with retail sales totals for March and business inventories for February from the Census Bureau. The Bureau also follows up with March housing starts and building permits on Tuesday. The Federal Reserve releases March industrial production and capacity utilization that day, as well. On Thursday, the Employment and Training Administration releases initial jobless claims filing for last week, the National Association of REALTORS® releases existing home sales data for March and the Conference Board closes out the week with March’s leading economic indicators. |
Whether you are considering a first home, a larger home for a growing family, moving into your dream home or perhaps buying a second home or rental property, two key economic factors, mortgage rates and home prices, have lined up in your favor. Let’s take a look at how they are working together to give you extremely potent buying power and why you should take action now before these favorable conditions change.
Irresistible Interest Rates
When you read in the newspapers that rates are at historic lows, this is not an exaggeration. Interest rates on home loans truly are at the lowest they have been in decades. The reason for this is that due to the recent “Great Recession,” the Fed has had to lower the federal funds rate to between 0 percent and 0.25 percent. The federal funds rate is the interest rate at which savings banks, commercial banks, savings and loan associations and credit unions trade balances with each other.
The federal funds rate impacts all other rates, including mortgage loans, so, at times of slow or no economic growth, the Federal Reserve will lower the federal funds rate in hopes of making credit cheaper to all people and in turn boosting the economy. This is why home mortgage rates have remained so low. The moment the economy starts to truly grow, the Federal Reserve will start to increase the federal funds rate, and home financing loan rates will follow suit.
Right now, mortgage rates are incredibly attractive after a downward slide over the course of 2011 that ended with 30-year fixed-rate mortgages in the 3.9 percent interest rate range. So far, in 2012, rates have topped the 4 percent mark, according to surveys from the Mortgage Bankers Association, but these are still historic lows.
Will rates stay like that? Well, factors such as increases in retails sales and improvements in unemployment are pointing to a recovery. After a spike to 10 percent in October 2009, unemployment rates have been on a solid downward trend since September 2011, and have been hovering at 8.3 percent.
Certainly, qualifying for loans is harder these days. More rigorous documentation is required, and down payment requirements and other lending terms aren’t as loose as they were during the 2005-2006 real estate boom, but if you are in solid financial shape, you needn’t worry. I’d be happy to sit down with you and look at what loans make the most sense for your financial position, and to work out different scenarios using today’s low rates, as well as rates after possible increases in the near future.
Home Prices
In terms of home prices, now has never been a better time to buy. After spending months at stratospheric highs during the real estate boom, homes that had doubled in price by 2006 are still below their pre-bubble values.
If anything, home prices are still in retreat. Using data from the National Association of REALTORS®, the median cost of existing single-family homes ended 2011 nearly at the same price it began the year, $158,000. And that price tag is down from 2010 and 2009.
That said, inventory might be starting to slip, which could see prices go higher. In recent months, housing inventory has been hovering around a six-month supply (at current sales rates), with roughly 2.4 million homes for sale. That might look like a lot, but it is nearly 20 percent below what it was a year ago.
Using simple supply-and-demand, it’s not hard to see that with declining inventory, today’s low prices could go up in the not-too-distant future. This is just as true for today’s rock-bottom interest rates, so it’s not hard to see why savvy homebuyers are responding to the bargains. All-cash purchases of existing homes are accounting for roughly 30 percent of transactions, and investors are accounting for more than 20 percent of purchases. The investors know a good deal when they see one, and today’s lending and real estate environment represents an amazing bargain indeed.
Make Your Move
The numbers don’t lie. You will most likely never see a better buying opportunity than now. If you are considering a purchase of a larger home to accommodate a growing family, the dream home you’ve always wanted, an investment property or any other home purchase, take the time to review to the numbers. Mortgage rates and home prices have created a spectacular buyer’s market.
But remember, it won’t stay this way forever. An improving economy could foster higher rates, and declining inventory could see prices go up. If you are on the fence about a real estate decision, don’t be. Now is the time to make your move. Please contact me using the information provided on this newsletter and I’d be happy to help you develop a strategy to take advantage of this historic opportunity.
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| Jobless claims fell to the lowest levels since April 2008 in the week ending March 31. Initial claims for unemployment benefits fell 6,000 to a seasonally adjusted 357,000, the Labor Department said last Thursday. However, only 120,000 new jobs were added in March, compared to 240,000 in February, the Labor Department also reported. According to payroll processor ADP, small businesses (those with 49 employees or less) accounted for about half of the gains. Companies in the services sector added 164,000 jobs. |
| Last week’s real estate news kicked off with February’s construction spending, which dipped to an annual rate of $808.9 billion, a 1.1 percent drop from January’s revised estimate of $818.1 billion, the Census Bureau reported last week. February’s figure was 5.8 percent over February 2011′s estimate of $764.2 billion. Spending on private construction dipped to an annual rate of $527.3 billion, 0.8 percent down from January’s revised estimate of $531.7 billion. Residential construction was at an annual rate of $246.5 billion in February, which was nearly the same as January’s revised estimate of $246.4 billion. In manufacturing news, the Census Bureau also reported last week that new orders for manufactured goods in February increased $6.0 billion, or 1.3 percent to $468.4 billion. Excluding transportation, new orders increased 0.9 percent. Shipments, up nine consecutive months, increased $0.3 billion, or 0.1 percent, to $462.6 billion. Unfilled orders, up 22 of the last 23 months, increased $12.1 billion, or 1.3 percent, to $931.1 billion. This put the unfilled orders-to-shipments ratio at 6.23, up from 6.12 in January. Inventories of manufactured goods, up 28 of the last 29 months, increased $2.2 billion, or 0.4 percent, to $616.8 billion. This was at the highest level since the series was first published in 1992. February’s inventories-to-shipments ratio was 1.33, unchanged from January. March’s U.S. car and truck sales increased 12.7 percent, marking the best quarter for auto makers since 2008. The increase was attributed by several analysts to the average car on the road being 11 years old, and jobs being added back into the economy, which means more Americans are moving to replace their aging cars, especially with gas prices so high. Notable performers included General Motors, which saw sales rise 12 percent over March 2011; Chrysler, which posted a 34 percent sales increase; Toyota, which saw sales increase 15 percent; and Ford which had a sales gain of 5 percent. This week’s economic news kicks off tomorrow with wholesale inventories for February from the Census Bureau, followed Wednesday by March import and export prices, also from the Census Bureau. Also on Wednesday, the Treasury Department will release its March budget figures. On Thursday, the Bureau of Labor Statistics will release March’s producer price index, and the Census Bureau releases February’s trade balance figures. On Friday, the Bureau of Labor Statistics closes out the week by following up with March’s consumer price index. |
| Unemployment claims hit their lowest level in four years in the week ending March 24. Initial claims for the week dipped to 359,000, a decrease of 5,000 from the previous week’s revised figure of 364,000 and the lowest level since April 2008, the Employment and Training Administration reported. The four-week moving average was 365,000, a decrease of 3,500 from the previous week’s revised average of 368,500 — the lowest since May 2008. The Administration also reported that the total number of insured unemployed workers during the week ending March 17 was 3,340,000, a decrease of 41,000 from the preceding week’s revised level of 3,381,000. The four-week moving average was 3,387,750, a decrease of 21,750 from the preceding week’s revised average of 3,409,500. |
| Despite gains on the job front, consumer confidence for March tapered a bit after an upswing in February, consumer analysts at the Conference Board reported last week. The Board’s Consumer Confidence Index for March stood at 70.2 (a baseline of 100 was set in 1982), down from 71.6 in February. That said, the Present Situation Index — how consumers feel about current economic conditions — increased to 51.0 from 46.4. The Expectations Index — how consumers feel about where the economy is headed — declined to 83 in March from 88.4 in February. “Consumer Confidence pulled back slightly in March, after rising sharply in February,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. “The moderate decline was due solely to a less favorable short-term outlook, while consumers’ assessment of current conditions, on the other hand, continued to improve. The Present Situation Index now stands at its highest level in three and a half years, suggesting that despite this month’s dip in confidence, consumers feel the economy is not losing momentum.” Consumers’ assessment of the job market was mixed. Those saying jobs are “plentiful” increased to 9.4 percent from 7 percent, while those stating jobs are “hard to get” also rose, to 41 percent from 38.6 percent. Those anticipating more jobs in the months ahead decreased to 17.3 percent from 18.8 percent, while those anticipating fewer jobs increased to 18.3 percent from 16.4 percent. The proportion of consumers expecting an increase in their incomes improved slightly to 15.8 percent from 15.5 percent. Gross domestic product, the output of goods and services produced by labor and property located in the United States, increased at an annual rate of 3 percent in the fourth quarter of 2011, the Bureau of Economic Analysis reported last week in its third estimate. (The third estimate is based on more complete source data than were available for the “second” estimate issued last month.) The increase in real GDP in the fourth quarter primarily reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), nonresidential fixed investment, exports and residential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending, according to the Bureau. In manufacturing, new orders for manufactured durable goods placed in February increased $4.5 billion or 2.2 percent to $211.8 billion, according to last week’s report from the Census Bureau. Transportation equipment, up three of the last four months, had the largest increase, $2.1 billion or 3.9 percent to $57.9 billion. Excluding transportation, new orders increased 1.6 percent. Excluding defense, new orders increased 1.7 percent. February’s shipments of manufactured durable goods in February, down following two consecutive monthly increases, decreased $0.8 billion or 0.4 percent to $206.6 billion. Once again, inventories of manufactured durable goods hit new highs in February, which was up 26 consecutive months, increased $1.6 billion or 0.4 percent to $373.7 billion. This was at the highest level since the series was published on in 1992. This week’s financial news starts today with February construction spending from the Census Bureau. The Bureau follows up tomorrow with factory orders for February, and the auto manufacturers release their car and truck sales figures for March on Tuesday, as well. Thursday, the Employment and Training Administration releases initial jobless claim totals for last week, and on Friday, the Bureau of Labor Statistics releases March’s unemployment rate, payrolls, hourly earnings and average workweek. The week wraps on Friday with February’s consumer credit totals from the Federal Reserve. |
| New unemployment claims hit their lowest level in four years during the week ending March 17. Initial jobless claims filed skirted down to 348,000, a decrease of 5,000 from the previous week’s revised figure of 353,000, the Employment and Training Administration reported. The four-week moving average was 355,000, a decrease of 1,250 from the previous week’s revised average of 356,250. The Administration also reported that the total population of insured unemployed U.S. workers during the week ending March 10 was 3,352,000, a decrease of 9,000 from the preceding week’s revised level of 3,361,000. The four-week moving average was 3,385,750, a decrease of 13,000 from the preceding week’s revised average of 3,398,750. |
| Real estate was also a big newsmaker in last week’s economic news, with existing home sales slightly off February’s pace, but still well above the pace of a year ago, the National Association of REALTORS® reported last week. Total sales of existing single-family homes, townhomes, condominiums and co-ops slipped 0.9 percent to an annual rate of 4.59 million in February from an upwardly revised 4.63 million in January, but were 8.8 percent higher than the 4.22 million-unit level in February 2011, thanks to improving real estate conditions. “The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market,” said NAR chief economist Lawrence Yun. “Although relatively unusual, there will be rising demand for both rental space and homeownership this year.” Looking at price, the national median existing-home price for all housing types was $156,600 in February, up 0.3 percent from February 2011, NAR reported. Distressed homes, such as foreclosures and short sales that are sold at deep discounts, accounted for 34 percent of February sales (20 percent were foreclosures and 14 percent were short sales), down from 35 percent in January and 39 percent in February 2011. Total housing inventory at the end of February rose 4.3 percent to 2.43 million existing homes available for sale, which represents a 6.4-month supply at the current sales pace, up from a 6-month supply in January. Even so, unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 19.3 percent below a year ago. Permits issued in February for construction of privately owned housing units were at an annual rate of 717,000, which was 5.1 percent over January’s revised rate of 682,000 and 34.3 percent higher than the February 2011 estimate of 534,000, the Census Bureau reported last month. Permits for single-family homes issued in February were at a rate of 472,000, which is 4.9 percent over January’s revised figure of 450,000. Construction starts of privately owned housing in February were at an annual rate of 698,000, which was 1.1 percent down from January’s revised estimate of 706,000, but was 34.7 percent over the February 2011 rate of 518,000. Starts on single-family homes in February were at a rate of 457,000; this is 9.9 percent below the revised January figure of 507,000. Completed constructions of private homes in February were at an annual rate of 568,000, which was 6.2 percent over January’s revised estimate of 535,000, but was 7 percent below the February 2011 rate of 611,000. Completions of single-family homes in February were at a rate of 421,000; this was 8.2 percent over the revised January rate of 389,000. This week’s financial news starts off tomorrow with consumer confidence scores for March from the Conference Board. Wednesday, the Census Bureau reports on durable goods orders for February. On Thursday, the Employment and Training Administration releases initial jobless claims totals for last week, and the Bureau of Economic Analysis releases its third estimate for Q4 2011′s gross domestic product. The week wraps Friday with February consumer spending and incomes from the Bureau of Economic Analysis, and the University of Michigan releases its March consumer sentiment survey. |