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Mid-Week Update - 2012-04-25

Matching other housing reports released last week, new home sales slowed in March but remained above year ago levels.  The Census Bureau estimates new home sales totaled 328,000 units on a seasonally adjusted annualized basis during the month, down 7.1 percent from February up still up 7.5 percent from March 2011.  Sales dropped by at least 20 percent in both the Midwest and West, but managed to increase in both the Northeast and the South.  Inventories of unsold homes continued to contract, shrinking 1.4 percent during March (and 19.1 percent from a year earlier) to 144,000 units.  This was the equivalent to a 5.3 month supply-a year earlier, there was a 7.0 month supply of unsold new homes.  The median sales price of $234,500 was 6.3 percent from the median sales price of March 2011.

Tuesday also featured the release of two home price indices:

• The 20-city S&P Case-Shiller Home Price Index grew 0.2 percent on a seasonally adjusted basis in February, with prices increasing in 11 of 20 tracked markets.  (Taking out the seasonal adjustment, you find the index falling 0.8 percent during the month with prices failing to increase in 17 of 20 markets).  The 20-city index was off 3.5 percent from year ago levels and 35.0 percent from peak levels from mid-2006.  The press released noted that home prices in nine markets hit new post-recession lows during February.   

• Federal Housing Finance Agency's purchase only home price index inched up 0.3 percent on a seasonally adjusted basis during February and was up 0.4 percent from a year earlier.  Prices increased the fastest in the Mountain, (+1.9 percent), West South Central (+1.5 percent), and East South Central (+1.0 percent) Census regions, while falling four other regions:  West North Central (-1.0 percent), Middle Atlantic (-0.9 percent), Pacific (-0.7 percent) and East North Central (-0.1 percent).  The national index was 19.4 percent below its peak reading back in April 2007.

Meanwhile, there were slightly fewer mass layoff events-events where at least 50 workers lose their jobs per incident per establishment-in March than in February.  The 1,273 mass layoff events (seasonally adjusted) during March was 20 fewer than there were in February and affected 121,310 workers.  There 5.8 percent fewer mass layoff events during the first three months of 2012 than there were during the same three months in 2011 as mass layoffs affected 6.4 percent fewer workers.  During March, the manufacturing sector was responsible for 261 mass layoff events that affected 26,328 workers. 

One measure of consumer sentiment has the mood of Americans being more or less unchanged in April  The headline index of The Conference Board's Consumer Confidence Index lost 3/10^ths of a point to a seasonally adjusted reading of 69.2 (1985 = 100). The present conditions index grew by 1.5 points to 51.4 while the expectations index lost 1.4 points to 81.1.  The press release noted that consumers were "more upbeat" about the economy but remained "cautiously optimistic."

Several regional Federal Reserve Bank reports on the manufacturing sector released last week showed activity was growing at a slower pace during April.  But the report from the Federal Reserve Bank of Richmond finds the opposite.  The headline index from the Fifth District Survey of Manufacturing Activity gained seven points in April to a seasonally adjusted +14.  This is a diffusion index, where a reading of 0 is the threshold between growth and contraction.  Among the indices growing during the month were new orders (+2 points to +13), inventories (+3 points to +7) and employment (+4 points to +10).  Survey respondents also expected new orders and shipments "would continue to grow at a solid pace in the months ahead."

Later today, the Federal Reserve will end its two-day meeting of the Federal Open Market Committee (look for a statement following the conclusion of the meeting, along with an updated economic forecast).  In addition, the Census Bureau will report on March factory orders.  Thursday brings us the March reading of the Chicago Fed National Activity Index and April pending home sales while Friday gives us the first estimate of Q1 economic growth (expected to come in below than the 3.0 percent annualized growth rate of the final three months of 2011) and the final April data from the University of Michigan Surveys of Consumers. Read all of this week's economic data in next Monday morning's edition of AFP EconWatch.