Housing Market Snapshot

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We continue to see substantial improvements in the housing market, particularly when you look at year-over-year comparisons.

According to the most recent data, housing starts were at a seasonally adjusted annual rate of 917,000 in February, up 27.7% since February 2012. New housing permits were at 946,000, which is 33.8% above the February 2012 level of 707,000. New home sales surged 15.6% in January to a seasonally adjusted annual rate of 437,000 units — the highest level since July 2008. On a year-over-year basis, new home sales were up 28.9% compared with January 2012.

Compared to a year ago, existing home sales were up 10.2% in February. Pending home sales were up 9.5% compared with January 2012. And total construction spending has risen 7.1% since January 2012.

Housing prices have also seen solid gains. According to the most recent data, the Standard & Poor's/Case-Shiller 20-city housing price index was up 6.8% compared to January 2012, the largest annual gain since 2006.

According to NAR, the national median existing home price for all housing types was $173,600 in February, up 11.6% from February 2012, the strongest year-over-year gain since November 2005.

Meanwhile, inventory remains low and builders are much more optimistic compared to a year ago. At the current sales pace, there's a 4.1-month supply of new homes on the market. It is anticipated that housing prices will continue to rise and inventory will remain tight due to lost building material production capacity and a limited pipeline of developed lots.

Gains in employment are helping to improve the housing market. Jobless claims in the week ending March 9 reached 332,000, the lowest level since January 2008, the very onset of what many have dubbed the Great Recession. For the week ending March 16, the less volatile four-week average of claims for unemployment benefits was 339,750, the lowest level since February 2008.

In the News WELCOME ABOARD HERE'S what's going on!   The combined construction of new single-family homes and apartments in February rose 0.8% to a seasonally adjusted annual rate of 917,000 units. Single-family starts increased 0.5%. Volatile multifamily starts rose 1.4%. Compared to the previous year, housing starts were up 27.7% in February. Applications for new building permits, seen as an indicator of future activity, rose 4.6% to an annual rate of 946,000 units. The National Association of Home Builders/Wells Fargo monthly housing market index fell two points in March to 44. An index reading below 50 indicates negative sentiment about the housing market. The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending March 15 fell 7.1%. Purchase volume fell 4%. Refinancing applications decreased 8%. Existing home sales rose 0.8% in February to a seasonally adjusted annual rate of 4.98 million units from 4.94 million units in January. Compared to a year ago, existing home sales were up 10.2% in February. The inventory of unsold homes on the market rose 9.6% to 1.94 million in February, a 4.7-month supply at the current sales pace, up from a 4.3-month supply in January. The index of leading economic indicators — designed to forecast economic activity in the next three to six months — rose 0.5% in February, following an upwardly revised 0.5% increase in January. Initial claims for unemployment benefits for the week ending March 16 rose by 2,000 to 336,000. Continuing claims for the week ending March 9 rose by 5,000 to 3.053 million. The less volatile four-week average of claims for unemployment benefits was 339,750, the lowest level since February 2008. Upcoming on the economic calendar are reports on the housing price index and new home sales on March 26, and pending home sales on March 27.

HELLO, and welcome to my publication:

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending March 1 rose 14.8%. Purchase volume rose 15%. Refinancing applications also increased 15%.

Non-manufacturing activity rose to 56 in February from 55.2 in January. A reading above 50 signals expansion. It was the 38th straight month of expansion in the services sector.

Factory orders fell $9.6 billion or 2% in January to a seasonally adjusted $472.9 billion. This follows a 1.3% increase in December. Excluding the volatile transportation sector, orders increased 1.3% in January.

The trade deficit increased to $44.4 billion in January from $38.1 billion in December. Exports fell $2.2 billion or 1.2% to $184.5 billion. Imports increased $4.1 billion or 1.8% to $228.9 billion.

Retail sales rose 0.2% for the week ending March 2, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 1.8%.

Wholesalers increased their inventories 1.2% to $504.4 billion in January. Sales at the wholesale level fell 0.8% to $415.4 billion in January. On a year-over-year basis, sales were 3% higher than January 2012.

Initial claims for unemployment benefits for the week ending March 2 fell by 7,000 to 340,000. Continuing claims for the week ending February 23 rose by 7,000 to 3.09 million. The less volatile four-week average of claims for unemployment benefits was 348,750, the lowest level since early March 2008. The unemployment rate decreased to 7.7% in February from 7.9% in January. Employers added 236,000 jobs in February.

Upcoming on the economic calendar are reports on retail sales on March 13 and industrial production on March 15.

HI AND  WELCOME TO TODAY's REPORT:

New home sales surged 15.6% in January to a seasonally adjusted annual rate of 437,000 units — the highest level since July 2008 — from a revised rate of 378,000 units in December. On a year-over-year basis, new home sales were up 28.9% compared with January 2012. At the current sales pace, there is a 4.1-month supply of new homes on the market.

The Standard & Poor's/Case-Shiller 20-city housing price index — on a non-seasonally adjusted basis — rose 0.2% in December after a 0.1% decline in November. On a year-over-year basis, prices rose 6.8% compared with December 2011, the largest annual gain since 2006.

Pending home sales, a forward-looking indicator based on signed contracts, rose 4.5% in January after a revised 2% decrease in December. On a year-over-year basis, pending home sales were up 9.5% compared with January 2012.

Orders for durable goods — items expected to last three or more years — fell $11.8 billion or 5.2% to $217 billion in January. This decrease follows a revised 3.7% increase in December. Excluding volatile transportation-related goods, January orders posted a monthly increase of 1.9%.

The Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at a revised annual rate of 0.1% in the fourth quarter of 2012, compared to the initial estimate of a 0.1% decrease.

Manufacturing activity rose to 54.2 in February after a reading of 53.1 in January. A reading above 50 signals expansion.

Total construction spending fell 2.1% to $883.3 billion in January, following an upwardly revised 1.1% increase in December. Compared to January 2012, construction spending has risen 7.1%.

Initial claims for unemployment benefits for the week ending February 23 fell by 22,000 to 344,000. Continuing claims for the week ending February 16 fell by 91,000 to 3.074 million. The less volatile four-week average of claims for unemployment benefits was 355,000.

Upcoming on the economic calendar are reports on factory orders on March 6 and unemployment on March 8.