Summary for Week ending January 25th

This was a light week for economic data.

The housing data - new and existing home sales - appeared a little weak in December, but the underlying details were solid.  For some some commentary on the reports see: Existing Home Sales: Another Solid Report and New Home Sales and Distressing Gap. The housing recovery is ongoing.

Other positive data included a sharp drop in the 4-week average of initial weekly unemployment claims, further expansion in the Architecture Billings Index, and an increase in the ATA trucking index.

On the negative side, both the Richomd and Kansas City Fed manufacturing indexes indicated contraction in January. However, the Markit Flash PMI (for manufacturing was fairly strong).

The NMHC quarterly apartment survey indicated some loosening in the apartment market suggesting the decline in the vacancy rate might slow or even stop (just one quarter of survey results though). This will be something to watch carefully (last graph below).

Next week will be very busy!

And here is a summary of last week in graphs:

' New Home Sales at 369,000 SAAR in December

Click on graph for larger image in graph gallery.

The Census Bureau reports New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 369 thousand. This was down from a revised 398 thousand SAAR in November (revised up from 377 thousand). Sales for September and October were revised up too.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Annual 2012 sales were up almost 20% compared to 2011:

"An estimated 367,000 new homes were sold in 2012. This is 19.9 percent above the 2011 figure of 306,000."

The second graph shows New Home Months of Supply.

The months of supply increased in December to 4.9 months from 4.5 months in November.

The all time record was 12.1 months of supply in January 2009.

This is now in the normal range (less than 6 months supply is normal).

"The seasonally adjusted estimate of new houses for sale at the end of December was 151,000. This represents a supply of 4.9 months at the current sales rate."

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

This graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale was just above the record low in December. The combined total of completed and under construction is also just above the record low since "under construction" is starting to increase.

This was below expectations of 388,000 sales in December, but with the strong upward revision to November sales (and smaller upward revisions to September and October) this was another solid report.