Tom Moeller

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<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060127b.jpg" width="353"></p>
<p>December new single-family home sales increased 2.9% to 1.269M after a 9.2% November decline that was less than initially estimated. Consensus expectations had been for a decline to 1.225M. For the year, new home sales set a new record of 1.280M, up 6.7% from 2004.</p>
<p>Sales gains out <b>West, </b>up 11.1% (12.9% y/y), and in the <b>Midwest</b>, up 22.7% (-8.0% y/y), offset declines in the <b>Northeast </b>(0.0% y/y) and in the <b>South</b> (4.0% y/y).</p>
<p>The median price of a new single family home fell 2.2% (-3.4% y/y) to $221,800. For the year, prices rose to an average $231,350 (6.2% Y/Y).</p>
<p>The figures from the Census Department reflect home sales counted at the time of sales contract or deposit.</p>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col"><b>Dec</b></th>
<th scope="col"><b>Nov</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2005</b></th>
<th scope="col"><b>2004</b></th>
<th scope="col"><b>2003</b></th>
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<td class="firstcol">New Single-Family</td>
<td>1,269</td>
<td>1,233</td>
<td>1.8%</td>
<td>1,280</td>
<td>1,200</td>
<td>1,091</td>
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December new single-family home sales increased 2.9% to 1.269M after a 9.2% November decline that was less than initially estimated. Consensus expectations had been for a decline to 1.225M. For the year, new home sales set a new [...]

New Home Sales Finished a Record 2005 Firm, Prices Soft

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The Consumer Price Index increased 0.3% during April following two consecutive 0.4% increases. A 0.4% rise had been expected in the Action Economics Forecast Survey. The 3.4% y/y rise compared to 3.5% in March, and was increased from a 3.1% January low. It remained below the peak 9.1% y/y increase in June of 2022. The three-month increase of 4.6% (AR) was steady with March and more than double the rise at the end of last year. As expected, prices excluding food & energy also rose 0.3% following three consecutive 0.4% monthly increases. It rose 3.6% y/y last month compared to 3.8% in March; however, during the last three months, core price inflation has accelerated to 4.1% (AR), off the 4.5% March high but higher than the 2.6% low during August of last year.

The CPI less food, energy and shelter, another measure of core pricing power, rose 0.2% after two consecutive 0.3% increases. The 2.1% y/y rise remained below the 7.6% y/y peak in February 2022.

Service costs less energy increased 0.4% in April (5.3% y/y) following two straight 0.5% increases. Transportation services costs strengthened 0.9% (11.2% y/y) following a 1.5% March jump. The cost of shelter rose 0.4% (5.5% y/y) for the fifth month in the last six as owners’ equivalent rent of primary residences increased 0.4% (5.7% y/y) for the third consecutive month. Rents of primary residences increased 0.4% (5.4% y/y) after a 0.4% gain. The cost of lodging away from home fell 0.2% (-0.3% y/y) after two months of 0.1% increase. Education & communication prices rose 0.2% (1.6% y/y) for a second straight month. Recreation services prices rose 0.3% (4.1% y/y) following a 0.1% uptick and medical care service costs rose 0.4% (2.7% y/y) after a 0.6% strengthening.

During April, the CPI for goods less food & energy dipped 0.1% (-1.3% y/y) after falling 0.2% in March. Education & communication goods costs rose 0.1% (-6.0% y/y) following a 1.2% drop in March. Prices for recreation products held steady (-2.2% y/y) after falling 0.5%. Home furnishings prices weakened 0.4% (-2.8% y/y) after a 0.1% slip, while appliance costs fell 0.9% (-5.6% y/y) after two straight months of decline. Apparel prices rose 1.2% (1.3% y/y) after rising 0.7% in March. New vehicle prices eased 0.4% both m/m and y/y after slipping 0.2% in March while used car & truck prices declined 1.4% (-6.9% y/y) after falling 1.1% in March.

Energy prices increased 1.1% (2.6% y/y) in April for a second consecutive month. These gains followed four months of decline. Gasoline prices rose 2.8% (1.2% y/y) after a 1.7% rise. Amongst other energy products, fuel oil prices rose 0.9% (-0.8% y/y) after declining 1.3% in March. Electricity prices slipped 0.1% (+5.1% y/y) after rising 0.9%, while natural gas prices declined 2.9% (-1.9% y/y) after holding steady in March.

Food prices held steady (+2.2% y/y) last month after rising 0.1% in March. Egg prices weakened 7.3% (-9.0% y/y) after five straight months of strong increase. Meat, poultry & fish prices eased 0.1% (+1.9% y/y) after rising 0.6% while cereal & bakery product prices rose 0.6% both m/m and y/y after declining 0.9% in March. Fruit & vegetable prices weakened 0.8% (+1.7% y/y) after edging 0.1% higher, while dairy prices edged up 0.1% (-1.3% y/y) and reversed the March fall. Nonalcoholic beverage prices fell 0.2% (+2.3% y/y) after a 0.3% gain.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Transportation costs surge, while shelter prices increase steadily.
- Goods price pressure weakens further.
- Energy prices move higher but food prices hold steady.

U.S. CPI Strength Diminishes in April; Core Pricing Pressures Ease

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The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 11.8% during May (-10.0% y/y) to 45 from 51 in April. The reading fell short of expectations for 51 in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 65% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The May index of present sales conditions in the housing market weakened 10.5% (-8.9% y/y) to 51 after rising 1.8% in April. The index for conditions in the next six months fell 15.0% (-8.9% y/y) in May to 51 after declining 3.2% in April. Home builders reported that the traffic of prospective buyers’ index weakened 11.8% (-9.1% y/y) to 30, down from the recent high of 40 in July 2023.

Amongst the regional indexes for May, the index for the Midwest fell 2.0% from April (+16.7% y/y) while the index for the South declined 10.0% (-19.6% y/y). The index for the Northeast declined 10.8% this month (+28.9% y/y) and the reading for the West dropped 25.0% both m/m and y/y.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions asking builders to rate market conditions as "good," "fair," "poor" or "very high" to "very low." The figure is thus a diffusion index with numerical results six over 50 indicating a predominance of "good" readings. The weights assigned to the individual index components are .5920 for single-family detached sales, present time, .1358 for single-family detached sales, next months and .2722 for traffic of prospective buyers. The results are included in Haver's **SURVEYS** database. The expectations figure is available in Haver's **MMSAMER** database.

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- Current & future readings fall meaningfully.
- Prospective home buyer traffic is depressed.
- Regional declines are broad-based.

U.S. Home Builder Index Declines Sharply in May

Winnie Tapasanun

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Total retail sales were virtually unchanged m/m (3.0% y/y) in April after downwardly revised increases of 0.6% in March (+0.7% reported on Apr. 23 & 15) and 0.7% in February (+1.0% reported on Apr. 23 & +0.9% reported on Apr. 15), according to the Census Bureau. The April no change was the worst m/m reading since January’s 1.1% drop (+0.3% y/y). A 0.4% m/m April rise had been expected in the Action Economics Forecast Survey.

Excluding motor vehicles & parts, retail sales rose 0.2% (3.6% y/y) in April, the fourth m/m rise in five months, on top of a 0.9% gain in March. A 0.3% m/m April increase had been expected. Sales of motor vehicles & parts fell 0.8% (+0.8% y/y), the third m/m fall in four months, following a 0.3% March decline.

Sales in the retail control group, which excludes autos, building materials, gasoline stations, and food services, fell 0.3% (+3.5% y/y) in April following a 1.0% rise in March and no change in February. These sales are used in the construction of personal consumption expenditures in NIPA accounts. Nonauto sales excluding gasoline & building materials declined 0.2% (+3.9% y/y) after a 0.8% March increase and no change in February.

Sales by category were mixed in April. Gasoline station sales jumped 3.1% (4.0% y/y) in April, the biggest of three consecutive m/m gains, after a 2.1% rise in March. Clothing & accessory store sales rebounded 1.6% (2.7% y/y) vs. a 2.0% March decline. Electronics & appliance store sales rose 1.5% (0.8% y/y), the third m/m rise in four months, after a 3.1% March drop. Building materials & garden equipment store sales grew 0.5% (-1.0% y/y), the fourth m/m gain in five months, on top of a 0.4% March increase.

To the downside, nonstore retail sales fell 1.2% (+7.5% y/y) in April, the third m/m fall in four months, after a 2.5% rebound in March. Sporting goods, hobby shop, book & music store sales decreased 0.9% (-4.7% y/y) following a 1.3% March drop and a 0.7% February rise. Furniture & home furnishing store sales slid 0.5% (-8.4% y/y), the fourth m/m slide in five months, after a 2.3% March decline. Miscellaneous store sales dropped 0.4% (+6.8% y/y) vs. three successive m/m rises. General merchandise store sales fell 0.3% (+3.7% y/y), the first m/m fall since November, following a 1.3% March gain (however, within this grouping, department store sales grew 0.5% (-1.2% y/y), the first m/m gain since January).

In the nondiscretionary sales categories, food & beverage store sales rose 0.8% (2.2% y/y) in April, the largest of three straight m/m rises, after a 0.5% increase in March. Health & personal care store sales, however, fell 0.6% (-0.3% y/y), the fifth m/m fall in six months, following a 0.2% March rebound.

Consumers continued to eat out despite still-high inflation (April CPI +0.3% m/m, +3.4% y/y). Restaurant & drinking place sales rose 0.2% (5.5% y/y) in April following a 0.1% March downtick and a string of meaningful increases during the March 2023 to November 2023 period.

Retail Sales data can be found in Haver's **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- +0.02% (+3.0% y/y) in Apr.; downward revisions for Mar. and Feb.
- Ex-auto sales up for the fourth month in five.
- Auto sales down for the third month in four.
- Gasoline sales post the largest of three straight m/m increases.
- Nonstore retail sales fall for the third time in four months.

U.S. Retail Sales Disappoint in April, Unexpectedly Holding Steady

Kathleen Stephansen, CBE

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Mortgage applications edged up 0.5% (-7.8% y/y) in the week ended May 10, following a rise of 2.6% (-13.5% y/y) in the week ended May 3. Home purchase loans declined 1.7% (-14.3% y/y) following a rise of 1.8% (-17.0% y/y) in the prior week. Applications to refinance a loan rose 4.7% (6.8% y/y) in the latest week after rising 4.5% (-5.8% y/y) in the week before. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The effective interest rate on a 30-year fixed-rate loan eased 11 bps to 7.26% in the week ended May 10, from 7.37% in the week ended May 3. It compared to a high of 8.12% in mid-October of last year and a low of 6.87% in the fourth week of December. The rate on 15-year fixed-rate mortgages edged up 2bps to 6.77% in the latest week from 6.75% in the week prior. The rate on 30-year Jumbo loans fell 5bps to 7.39% in the week ended May 10 from 7.44% in the week prior, and the rate on the 5-year ARM fell 4bps to 6.80% in the latest week from 6.84% the week before. These latter rates remain below the 7.31% high in the last week of October but above the recent low of 5.93% in the last week of December.

The share of applications for refinancing an existing loan rose to 32.0% in the week ended May 10 from 30.6% in the week ended May 3. That compared to a high of 39.7% in mid-December. The percentage of applications that were ARMs eased to 7.0% from 7.7%. The recent low of 5.4% was reached in early January.

The average loan size eased 1.6% (-3.0% y/y) to $379,400 in the week ended May 10, from a rise of 2.0% (-2.4% y/y) to $385,600 in the week ended May 3. The average size of a purchase loan declined 1.2% (-0.6% y/y) to $437,700 in the latest week from $443,200 in the prior week. The average loan size to refinance a mortgage was largely unchanged (-2.3% y/y) at $255,200 from $255,100 in the prior week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Mortgage applications edged up in the latest week.
- Purchase applications fell while refinancing applications rose.
- The effective interest rate on 30-year fixed-rate loans eased.

U.S. Mortgage Applications Edged Up as Interest Rates Eased Last Week