Sandy Batten

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New single-family home sales fell 8.9% (-12.0% y/y) in October to 544,000 (SAAR).



The data in this report are available in Haver's USECON database.
The consensus expectation figure from Action Economics is available in the AS1REPNA database.

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 <tr>
 <th class="firstcol" scope="col" >U.S. New Single-Family
 Home Sales (SAAR, 000s)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y %</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >???</td>
 <td >544</td>
 <td >597</td>
 <td >-12.0</td>
 <td >616</td>
 <td >560</td>
 <td >502</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Northeast</td>
 <td >???</td>
 <td >22</td>
 <td >27</td>
 <td >-46.3</td>
 <td >40</td>
 <td >32</td>
 <td >25</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Midwest</td>
 <td >???</td>
 <td >60</td>
 <td >77</td>
 <td >-16.7</td>
 <td >72</td>
 <td >69</td>
 <td >61</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; South</td>
 <td >???</td>
 <td >313</td>
 <td >339</td>
 <td >-11.6</td>
 <td >341</td>
 <td >317</td>
 <td >286</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West&nbsp;</td>
 <td >???</td>
 <td >149</td>
 <td >154</td>
 <td >-1.3</td>
 <td >164</td>
 <td >142</td>
 <td >130</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Median Price (NSA, $) </td>
 <td >???</td>
 <td >309,700</td>
 <td >321,300</td>
 <td >-3.1</td>
 <td >321,633</td>
 <td >306,500</td>
 <td >293,733</td>
 </tr>
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New single-family home sales fell 8.9% (-12.0% y/y) in October to 544,000 (SAAR). The data in this report are available in Haver's USECON database. The consensus expectation figure from Action Economics is available in the AS1REPNA [...]

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Tom Moeller

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Mortgage applications strengthened 3.3% (-3.4% y/y) in the week ended April 12 after a 0.1% rise in the prior week. Home purchase loans leapt 5.0% (-9.9% y/y) following a 4.7% decline in the prior week. Applications to refinance a loan rose 0.5% (11.3% y/y) in the week of April 12 after rising 9.9% one week earlier. 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 increased to 7.32% last week after rising to 7.18% in the prior week. 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 rose to 6.80% in the latest week from 6.61% the prior week. The rate on 30-year Jumbo loans rose to 7.54% last week from 7.30% in the week prior, while the rate on the 5-year ARM rose to 6.74% from 6.65%. These 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 declined to 32.1% in the week ended April 12 from 33.3% in the prior week. That compared to a high of 39.7% in mid-December. The percentage of applications that were ARMs rose to 7.30% from 6.90%. This recent low of 5.4% was reached in early-January.

The average loan size fell 0.5% (-0.8% y/y) to $386,200 in the week ended April 12 from $388,200 in the prior week. The average size of a purchase loan eased 0.3% (+2.3% y/y) to $447,900 in the latest week from $449,400 in the prior week. The average loan size to refinance a mortgage declined 3.8% (-2.7% y/y) to $255,300 in the week ended April 12 from $265,300 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.

- Applications surge in second week of April.
- Purchase applications jump while refinance applications rise modestly.
- Interest rates rise markedly.

U.S. Mortgage Applications Rise Despite Higher Interest Rates

Robert Brusca

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**When the Music Stopped, or at Least the Inflation Progress...**
U.K. inflation on the HICP measure eased to 0.4% in March from 0.5% in February. The month-to-month CPIH measure also rose by 0.4% from 0.5% in February. The CPIH excluding food, energy, alcohol, and tobacco rose by 0.4%, the same as in February. The Bank of England looks at several inflation gauges; it targets HICP, which rose 3.2% year-over-year in March and slowed slightly from its year-over-year pace of 3.4% a month ago. The HICP steps inflation down to 2.7% over six months but then inflation rises at a 3.9% annual rate over three months, not what the Bank of England was looking or hoping for. The CPIH is 3.7% year-over-year, down to 3.3% at an annual rate over six months and up to an even worse 4.4% over three months. The core CPIH that excludes food, energy, alcohol, and tobacco, pretty much all things necessary or fun in life, rose by 4.7% over 12 months, cooled to 3.7% over six months, but then ticked up to 3.8% at an annual rate over three months.

**Inflation makes progress, but not reliably enough**
The bottom line is that inflation, as represented by either six-month or three-month inflation rates, is generally lower than it was over 12 months ago, indicating ongoing progress on the inflation front. However, the progress isn't as substantial as the Bank of England would like to see; there's some backtracking over three months compared to six months that's not what monetary policy is looking for to gain confidence that inflation will continue to fall toward target.

**Diffusion results are mixed**
**Sequential diffusion-** Diffusion calculations applied to the categories in the table showed an inflation over 12 months that exhibits diffusion of 23% compared to inflation rates of 12-months ago. The diffusion measure is the percentage of categories where inflation is accelerating period-to-period. Over six months, diffusion falls to 7.7%. HICP inflation on that comparison fell to 2.7% from 3.2%. The diffusion calculation comes from comparing the inflation rate in each category over six months to the same category over 12 months. If the inflation rate is higher over six months than over 12 months, we count it as acceleration. Acceleration was quite rare over six months, occurring only for housing and household expenditures. However, over three months with the HICP rising to 3.9% compared to 2.7% over six months, diffusion jumped from 7.7% to 61.5%. Being above 50% is critical because it means inflation is accelerating in more categories than it is decelerating and that tends to add more authenticity to the acceleration of inflation over three months. It tells us that the acceleration was not just because of a few rogue categories or several large increases in categories that had a high weight, but rather it's something that's broad-based.

**Monthly diffusion-** Monthly data are more lenient on the diffusion front. In March diffusion is only 38.5% with the month-to-month gain of 0.4%, below a 0.5% rise in February. Inflation is accelerating in March in only 38.5% of the categories. However, in February inflation rose 0.5% compared to 0.1% in January and inflation accelerated in 61.5% of the categories, clearly over half of them. In January with that low inflation print of 0.1%, inflation accelerated in only 30.8% of the categories. Over the last three months, the diffusion data were quite good for two months and moderately bad for one of them. However, when we go back to the table to look at the three-month changes compared to six-month changes, the BOE has that high 61.5% diffusion number staring us in the face.

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**Some impact on the unemployment rate from rate-hiking**
The unemployment rate in the U.K. has begun to tick up; it's up to 4.2% (in January). Three months before that the unemployment rate had been at 3.9%, and three months before that it had been at 4.2%. There are hints here of the unemployment rate moving up, but for now it's only up from its low and it hasn't made any kind of a new cycle high. It does not appear that there would be much in the way of political pressure from rising unemployment on the Bank of England just yet. But the U.K. economy has been struggling and clearly there's a strong constituency for getting interest rates lower and lighting a fire under economic growth. The poor progress on inflation this month is going to make that difficult to do without seeing more inflation progress. For now, the Bank of England seems to be running into the same sort of problem that the Federal Reserve has run into and that is that there has been some very sharp inflation progress, but it has since run into a snag and now monetary policy may be stuck playing a waiting game starring the economic reality.

United Kingdom

U.K. Inflation Cools in March but Not by Enough

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Total industrial production increased 0.4% during March, but was unchanged y/y. The gain came after rising 0.4% in February, revised from 0.1%, and falling 0.8% in January, revised from a 0.5% decline. The Action Economics Forecast Survey expected a 0.5% increase in production last month.

Manufacturing production rose 0.5% (0.8% y/y) after increasing 1.2% in February, revised from 0.8%. A 1.1% January decline was unrevised. Mining output fell 1.4% (-2.0% y/y) after a 3.0% February increase. Utilities production rose 2.0% (-3.1% y/y) after a minimally-revised 7.6% in February decline.

In the manufacturing sector, production of durable goods rose 0.3% (1.9% y/y) in March after a 1.3% February rise. Motor vehicle & parts production strengthened 3.1% last month (10.5% y/y) but machinery output weakened 0.4% (-3.1% y/y). Electrical equipment & appliance output eased 0.4% both m/m and y/y. Primary metals production declined 0.7% (-0.6% y/y) while computer & electronic product production improved 0.1% (6.9% y/y). In the nondurable goods sector, factory output rose 0.7% last month (0.1% y/y) after rising 1.1% in February. Chemical production strengthened 0.7% (1.3% y/y) and printing production improved 1.5% (-1.1% y/y). Paper output increased 0.6% (-0.1% y/y) and textile output fell 1.4% (-5.5% y/y). Food, beverage & tobacco production fell 0.5% (-2.1% y/y). Petroleum & coal product output rose 4.8% (5.2% y/y) but apparel production declined 1.7% (-16.4% y/y), off for the fifth straight month.

The major market groups posted mixed results in March. Consumer goods output rose 1.2% (-0.4% y/y) as a 1.0% rise (-1.8% y/y) in nondurable goods production accompanied a 1.9% increase (5.0% y/y) in durable goods output. Business equipment production improved 0.1% last month (1.7% y/y) while construction supplies output fell 1.0% (-0.5% y/y). Materials output held steady (-0.3% y/y) in March.

In special aggregates, output of selected high-tech industries rose 0.3% (14.1% y/y) following a 1.1% February decline. Manufacturing output excluding selected high-tech production rose 0.5% (0.6% y/y) after rising 1.3% in February. Manufacturing output excluding selected high-tech industries and motor vehicle production rose 0.3% (-0.2% y/y) in March after strengthening 1.1% in February.

Total capacity utilization was rose to 78.4% in March from 78.2% in February. A 78.6% utilization rate had been expected. Capacity utilization for manufacturing improved to 77.4% in March from 77.1% in February. The capacity utilization rate for mining fell to 91.0% from 92.3. The operating rate for utilities increased to 69.1% last month from 67.9% in February.

Industrial production and capacity data are located in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

**Economic Uncertainty and the Evolution of Monetary Policymaking** from Fed Vice Chair Philip N. Jefferson is available [here](https://www.federalreserve.gov/newsevents/speech/jefferson20240416a.htm).

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- Rise in production follows upward revision to February gain.
- Factory output improves moderately; utilities production increases.
- Capacity utilization edges higher.

U.S. Industrial Production & Capacity Utilization Improve in March

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Total housing starts declined 14.7% (-4.3% y/y) during March to 1.321 million (SAAR) after rising 12.7% in February to 1.549 million, revised from 1.521 million. It was the lowest level of starts since August of last year and it was 26.7% below the most recent peak of 1.803 million in April 2022. The Action Economics Forecast Survey expected 1.485 million starts in March.

The decline in starts was broad-based last month. Starts of single-family units fell 12.4% (+21.2% y/y) to 1.022 million from 1.167 million in February, revised from 1.129 million. They reached a high of 1.311 in December 2020. Multi-family starts declined 21.7% (-44.3% y/y) in March to 299,000 from 382,000 in February, revised from 392,000. They reached a high of 623,000 in November 2022.

Regional activity was mixed in March. In the Northeast, the level of starts fell 36.0% (-56.8% y/y) to 80,000 after declining 8.1% in February. Starts in the Midwest fell 23.0% (+18.0% y/y) to 157,000 following a 50.0% February increase. Starts in the South weakened 17.8% (-11.0% y/y) to 736,000 after rising 17.8% in February. In the West, however, starts increased 7.1% (48.1% y/y) to 348,000 after declining 5.2% in February.

Building permits declined 4.3% (+1.5% y/y) in March to 1.458 million after rising 2.3% to 1.523 million in February, revised from 1.518 million. It was the lowest level of permits since last July. Single-family permits declined 5.7% (+17.4% y/y) to 973,000 in March following a 1.1% February increase. Multi-family permits weakened 1.2% (-20.2% y/y) to 485,000, after rising 4.9% in February.

The housing starts and permits figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Single-family and multi-family starts reverse February gains.
- Starts decline throughout most of the country.
- Building permits fall to eight-month low.

U.S. Housing Starts Drop Sharply in March; Building Permits Fall

TT

Summary

Sandy Batten

More Economy in Brief

U.S. Mortgage Applications Rise Despite Higher Interest Rates

U.K. Inflation Cools in March but Not by Enough

U.S. Industrial Production & Capacity Utilization Improve in March

U.S. Housing Starts Drop Sharply in March; Building Permits Fall

U.S. New Single-Family Home Sales (SAAR, 000s)	Nov	Oct	Sep	Nov Y/Y %	2017	2016	2015
Total	???	544	597	-12.0	616	560	502
Northeast	???	22	27	-46.3	40	32	25
Midwest	???	60	77	-16.7	72	69	61
South	???	313	339	-11.6	341	317	286
West	???	149	154	-1.3	164	142	130
Median Price (NSA, $)	???	309,700	321,300	-3.1	321,633	306,500	293,733