Tom Moeller

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The Mortgage Bankers Association's Loan Applications Index fell 6.8% (-41.8% y/y) in the week ending March 25 after the previous week's 8.1% drop. Applications to refinance an existing loan fell 14.9% (-60.1% y/y) after a 14.4% decline in the previous week. Applications to purchase a home increased 0.6% (-10.2% y/y) following a 1.5% decline.

The share of applications for refinancing declined to 40.6% last week from 44.8% the previous week. The share was 62.2% during all of last March. The adjustable-rate mortgage (ARM) share of activity in the latest week rose to 6.6% from 6.4% the week before.

Mortgage interest rates in the week of March 25 jumped to 4.96% for 30-year fixed-rate loans from 4.68% in the previous week. It was the highest rate since December 2018, up from a 2.95% low in December 2020. The effective rate on a 15-year mortgage rose to 4.15% last week from 3.89% in the week prior. The rate on a Jumbo 30-year mortgage rose to 4.53% from 4.26%. The rate on a 5-year adjustable-rate mortgage increased to 3.90% from 3.59%.

Applications for fixed-rate loans declined 7.0% (-43.8% y/y) in the week ended March 25 following a 9.0% fall in the prior week. Applications for adjustable-rate mortgages fell 3.7% (+12.9% y/y) after rising 5.9% in the previous week.

The average size of a mortgage loan edged 0.1% higher (19.4% y/y) last week to $387,900. The average size of a loan for purchase fell 1.6% (+12.8% y/y) to $452,900. The average size of a refinanced loan declined 1.8% (+6.5% y/y) to $292,900.

This survey covers over 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 **SURVEYW** database.

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- Refinancings stand at lowest level since 2019.
- Applications for purchase rise slightly.
- Mortgage interest rates move steadily higher.

U.S. Mortgage Applications Decline as Refinancings Plunge

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The Federal Housing Finance Agency (FHFA) House Price Index increased 1.6% (18.2% y/y) during January following a 1.3% December rise, revised from 1.2%. It was the largest monthly increase since last June. The home price series dates back to January 1991.

Twelve-month price gains were led by the Mountain (23.1% y/y), South Atlantic (21.9% y/y), East South Central (20.6% y/y) and Pacific Regions (20.1% y/y).

Not far behind was the West South Central (18.4% y/y) region.

Strength also was exhibited in New England (15.9% y/y), the East North Central (14.7% y/y), West North Central (14.0% y/y) and Middle Atlantic (13.3% y/y) regions of the country.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancings on the same kinds of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver's **USECON** database.

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- Monthly increases are mixed regionally.
- Mountain states lead price gains y/y.

U.S. FHFA House Price Index Strengthens in January

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The Conference Board Consumer Confidence Index during March increased 1.4% (-6.7% y/y) to 107.2 following a 4.9% February decline to 105.7, revised from 110.5. A reading of 107.5 had been expected in the Action Economics Forecast Survey.

The Present Situation Index improved 7.0% this month (28.1% y/y) to 153.0 after falling 1.0% in February to 143.0, revised from 145.1. The Consumer Expectations index declined 5.2% in March (-31.5% y/y) to 76.6, following a 9.0% February decline to 80.8, revised from 87.5. It was the third straight month of sharp decline.

The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, rose sharply to a record 47.4% and more than reversed the February decline to 41.5%. Calculated by Haver Analytics, this series has had a 69% correlation with the unemployment rate over the last ten years. The jobs plentiful measure rose this month to a record 57.2% of respondents from 53.5% in February. The jobs hard-to-get measure fell to 9.8% of respondents, the lowest level since July 2000.

Current business conditions were perceived as good by an increased 19.6% of respondents in March. Expectations that business conditions would improve in six months fell sharply to 18.7% of respondents, down from 42.5% in April 2020. More jobs were expected in six months by a lessened 17.4% of respondents, half the percentage twelve months ago. The percentage expecting rising income was little changed at 14.9% of respondents.

The expected inflation rate in twelve months surged to 7.9% in March. It remained up from a 4.4% low in January of 2020. Roughly two-thirds of respondents expected that interest rates would rise over the next twelve months, the most in three years. The share of respondents planning to buy a new home within six months held steady m/m at 0.6% and remained below a June 2020 high of 2.0%. Those planning to buy a major appliance rose to 47.4% of respondents, down from 53.9% in July 2021.

The Consumer Confidence data are available in Haver's **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

**The President's Fiscal Year 2023 Budget** is available [here](https://www.state.gov/on-the-presidents-fiscal-year-2023-budget/).

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- Present situation index strengthens; expectations falter.
- Jobs are easier to find.
- Expectations for inflation surge.

U.S. Consumer Confidence Improves in March

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**Retail gasoline prices** slipped to $4.23 per gallon last week (+48.4% y/y) from $4.24 per gallon in the week prior. Prices reached a record $4.32 per gallon one week earlier. Haver Analytics adjusts the gasoline price series for normal seasonal variation. The seasonally adjusted price rose to $4.24 per gallon from $4.21 in the prior week.

The price of **West Texas Intermediate crude oil** rose to $112.87 per barrel (88.2% y/y) in the week ended March 25 after falling to $100.47 in the week prior. Yesterday, the price fell to $105.96 per barrel. The average price of **Brent crude oil** rebounded to $123.60 per barrel last week (97.7% y/y) after easing to $109.59 in the prior week. It was the highest price since April 2012. The price was $114.50 per barrel yesterday.

The price of **natural gas** strengthened to $5.18/mmbtu (103.9% y/y) in the week of March 25 after easing to $4.68 in the previous week. It was the highest price since early-February. Prices remain below the high of $5.78/mmbtu in the third week of February 2022. Yesterday, the price rose to $5.52/mmbtu.

In the four weeks ended March 18, **gasoline demand** rose 4.0% y/y, down from 15.2% y/y late in December. Growth in demand for **all petroleum products** increased a steady 11.7% y/y. Growth in **crude oil input to refineries** rose 24.4% y/y, after 13.1% y/y growth early in November. **Gasoline inventories** rose 2.5% y/y but **crude oil inventories** declined 13.7% y/y.

The **supply of gasoline** inventories in the week ending March 18 fell to 27.0 days. The supply of crude oil slipped to 26.6 days and remained down from 41.8 days early in March of last year.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver's **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY.**

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- Gasoline prices edge downward.
- Crude oil prices move higher.
- Natural gas prices exhibit renewed strength.

U.S. Energy Prices Remain Strong

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The advance estimate of the U.S. international trade deficit in goods eased to $106.59 billion in February from the record $107.57 billion in January. A $106.8 billion deficit had been expected in the Action Economics Forecast Survey. Exports of goods increased 1.2% (20.7% y/y) following a 1.5% decline. Imports gained 0.3% (21.1% y/y) after increasing 1.8% in January.

The February increase in exports reflected a 6.3% (33.8% y/y) rebound in non-auto consumer goods which followed a 13.6% January decline. Exports of foods, feeds & beverages rose 3.6% last month (5.9% y/y) after holding steady in January. Industrial supplies & materials exports rose 2.6% last month (30.5% y/y) after edging 0.8% higher. Working 3.4% lower (1.6% y/y) were exports of autos & parts following a 5.1% decline. Capital goods exports were off 1.7% in February (+16.5% y/y) after they rose 2.4% in January.

Imports increased as industrial supplies & materials surged 4.4% in February (39.3% y/y) after rising 2.6% in January. Capital goods imports rose 1.5% (16.6% y/y), about as they did in January. Nonauto consumer goods imports improved 0.6% (20.0% y/y) following a 0.9% gain. These increases were offset last month by a 9.9% decline (+4.0% y/y) in imports of autos & parts which came after a 5.1% increase. Also falling by 3.0% (+26.1% y/y) were imports of foods, feeds & beverages which followed January's 8.6% rise.

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

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- Exports rebound after sharp decline.
- Imports edge higher following strong increase.

U.S. Goods Trade Deficit Narrows in February

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Manufacturing activity in Texas improved at a slower pace in March, according to the Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas. The general business activity index fell to 8.7 this month from February's 14.0. It had risen from 2.0 in January. A lessened 17.5% of respondents reported improved business activity in March, down from February's 22.3%. An increased 8.8% of respondents reported a worsening of business conditions versus 8.3% in February. The company outlook index weakened to -0.7 this month from 6.4 in February. Data were collected between March 15-23 from 89 manufacturers.

The production index fell to 13.2 in March from 14.5 in February. The shipments reading, however, fell precipitously to 7.0 from 23.5 in February. Offsetting this decline, the growth rate of new orders improved to 13.7 from 12.6. The unfilled orders index rose to 12.4 from 7.7 in February.

Labor market activity exhibited strength as the employment reading strengthened to 25.5 from 18.4 while wages rose to 55.2, a record for the series which dates back to June 2004.

The index for prices received for finished goods rose to 47.8 in March, the highest level since October of last year. The latest reading reflected a slightly lessened 49.0% of respondents reporting price gains and a lessened 1.2% reporting price declines. The index of prices paid for raw materials rose to 74.0 from 63.4 but remained below November’s record high of 83.3.

The future general business activity index fell sharply to 8.2 in March from 20.6 in February. It was the lowest reading since March 2020. Expected production, employment and wages & benefits each fell. The expected growth rate for new orders improved, along with expected delivery times and unfilled orders.

Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report rising activity, an index will register 100. An index will register -100 when all firms report a decrease. An index will be zero when the number of firms reporting an increase equals the number reporting a decrease. Data for the Texas Manufacturing Outlook can be found in Haver's **SURVEYS** database.

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- Production & shipments growth falls sharply. 
- New orders growth and employment improve.
- Prices received & wages strengthen.

Texas Manufacturing Activity & Outlook Weaken in March

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The home buying market remains weak and disordered. The Pending Home Sales Index from the National Association of Realtors fell 4.1% in February (-5.4% y/y) following a 5.8% January fall, revised from -5.7%. It was the fourth consecutive monthly decline with sales down 18.0% from the August 2020 peak.

The Realtors Association indicated, "Pending transactions diminished in February mainly due to the low number of homes for sale. Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale.'"

Pending home sales declined in most major regions of the country. Sales in the Midwest posted the largest decline, falling 6.0% during February (-5.2% y/y) to the lowest level since March 2021. In the West, sales fell 5.4% (-5.3% y/y) and were 21.5% below the August 2020 high. February sales in the South declined 4.4% (-4.3% y/y) to the lowest level since April 2020. Moving upward by 1.9% last month (-9.2% y/y) were sales in the Northeast. Pending home sales here, nevertheless, remained 24.0% below the August 2020 high.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **SURVEYW** database.

**The Red Hot Housing Market: the Role of Policy and Implications for Housing Affordability** from Fed Governor Christopher J. Waller can be found [here](https://www.federalreserve.gov/newsevents/speech/waller20220324a.htm).

- Pending home sales decline to lowest level since May 2020.
- Sales fall in most of country.

U.S. Pending Home Sales Move Lower in February

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The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index rose to 37 during March after rising to 29 in February. It was a record for the series which dates back to July 2001. The ISM-Adjusted Index (NSA) rose to 68.9 this month, also a record.

The new orders measure rose to 33, the highest level since May of last year. An increased 46% of respondents reported order gains and a greatly lessened 9% reported declines. The shipments reading surged to a record 46, up from a low of five in January. The production measure rose to 46, also a series high. The employment measure declined to 18, its lowest level in three months.

The supplier delivery times and order backlog readings also rose to 55 and 29, respectively. The supplier delivery times index matched the record reached in November.

Inflation pressures intensified this month. The prices received index for finished products increased to 51, the highest level since August. A slightly lessened 51% of respondents reported higher prices received while a marginally lessened three percent reported price declines. The overall reading remained below the record level of 57 in August. The raw materials index rose sharply to 81 but remained below the record of 88 last May.

The expectations reading for six months ahead surged to a record 41 from 38 in February. The orders, production and shipments measures rose but employment fell. Expected pricing power surged to a record.

The latest survey was conducted in the five-day period from March 16-to-21 and included 87 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Data for the Kansas City Fed Survey can be found in Haver's **SURVEYS** database.

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- Component improvement is mostly positive.
- Expected conditions rise.
- Pricing power recoups February decline.

Kansas City Fed Manufacturing Index Strengthens to Record in March

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Manufacturers' new orders for durable goods declined 2.2% (+10.3% y/y) in February after rising an unrevised 1.6% in January. The fall followed three months of strong gain and was the first since a 0.4% easing last September. A 0.6% decline had been expected in the Action Economics Forecast Survey. Excluding transportation, orders declined 0.6% (+11.1% y/y) following a 0.8% rise, revised from 0.7%.

A 5.6% decline (+8.4% y/y) in transportation equipment orders led the overall February decline. It followed three months of strong increase. Defense aircraft orders surged 60.1% (-13.4% y/y), but orders for nondefense aircraft fell 30.4% in February following three consecutive months of double-digit increase. Motor vehicle & parts orders slipped 0.5% (+6.0% y/y). Outside of the transportation sector, machinery orders declined 2.6% (+12.7% y/y) and orders for computers & electronic products fell 1.1% (+4.2% y/y). Electrical equipment & appliance orders edged 0.2% higher (8.7% y/y).

Nondefense capital goods orders declined 6.7% last month (+14.8% y/y), but core capital goods orders eased just 0.3% (+11.0% y/y) in February following a 1.3% January rise.

Durable goods shipments were little changed (+12.3 y/y) in February following a two straight months 1.3% gain. Transportation shipments eased 0.6% (+9.6% y/y) following a 0.4% rise. Excluding transportation, shipments improved 0.2% in February (13.5% y/y) after a 1.6% jump. Machinery shipments declined 1.4% (+15.3% y/y) but shipments of computers and electronic products rose 1.1% (5.9% y/y). Shipments of electrical equipment and appliances increased 1.5% (13.9% y/y) while primary metals shipments gained 0.4% (23.1% y/y).

The advance reading on shipments of nondurable goods indicated a 1.1% increase (14.9% y/y) following a 1.4% January increase, revised from 1.3%. Shipments from all manufacturing industries increased 0.5% (13.6% y/y) in February after a 1.3% January rise. Capital goods shipments excluding defense and aircraft increased 0.5% (12.5% y/y) in February after an upwardly revised 2.1% gain.

Unfilled orders for durable goods rose 0.4% last month (8.4% y/y) following an unrevised 0.9% gain. Unfilled orders are not calculated for nondurable goods. Durable goods inventories increased 0.4% (10.0% y/y) following a 0.5% January gain. Nondurable goods inventories rose 0.9% (8.0% y/y) after increasing 1.2% in January.

The durable goods and nondurable goods data are available in Haver's **USECON** database. The Action Economics consensus forecast figure is in the **AS1REPNA** database.

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- Fewer aircraft orders lead downturn.
- Core capital goods orders ease following January surge.
- Shipments hold steady but backlogs & inventories increase.

U.S. Durable Goods Orders Fall Unexpectedly in February

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The Mortgage Bankers Association's Loan Applications Index fell 8.1% (-38.9% y/y) in the week ending March 18 after the previous week's 1.2% weakening. Applications to refinance an existing loan fell 14.4% (-54.2% y/y) after a 2.8% decline in the previous week. Applications to purchase a home eased 1.5% (-12.1% y/y) following a 0.7% gain.

The share of applications for refinancing fell to 44.8% last week from 48.4% the previous week. The adjustable-rate mortgage (ARM) share of activity in the latest week rose to 6.4% from 5.6% the week before.

Mortgage interest rates in the week of March 18 rose to 4.68% for 30-year fixed-rate loans from 4.42% in the previous week. It was the highest rate since March 2019, up from a 2.95% low in December 2020. The effective rate on a 15-year mortgage rose to 3.89% last week from 3.66% in the week prior. The rate on a Jumbo 30-year mortgage rose to 4.26% from 4.13%. The rate on a 5-year adjustable-rate mortgage increased to 3.59% from 3.44%.

Applications for fixed-rate loans declined 9.0% (-41.0% y/y) in the week ended March 18 following their 1.5% fall in the prior week. Applications for adjustable-rate mortgages increased 5.9% (23.8% y/y) after rising 4.9% in the previous week.

The average size of a mortgage loan rose 3.0% (16.4% y/y) last week to $387,500. The average size of a loan for purchase rose 1.5% (12.4% y/y) to $460,100. The average size of a refinanced loan gained 1.4% (4.9% y/y) to $298,200.

This survey covers over 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 **SURVEYW** database.

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- Purchase applications fall modestly.
- Applications for refinancing are down sharply.
- Mortgage interest rates surge.

U.S. Mortgage Applications Decline as Interest Rates Increase

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**Retail gasoline prices** fell to $4.24 per gallon last week (48.0% y/y) after rising to the record $4.32 per gallon reached in the week earlier. Haver Analytics adjusts the gasoline price series for normal seasonal variation. The seasonally adjusted price fell to $4.21 per gallon from $4.26 in the prior week.

The price of **West Texas Intermediate crude oil** declined to $100.47 per barrel (+58.9% y/y) in the week ended March 18 after rising to $113.39 in the week prior. Yesterday, the price increased to $112.12 per barrel. The average price of **Brent crude oil** fell to $109.59 per barrel last week (+65.8% y/y) from $122.29 in the prior week. The price returned to $122.29 per barrel yesterday.

The price of **natural gas** eased to $4.68/mmbtu (+85.0% y/y) in the week of March 18 after rising to $4.71 in the previous week. Prices have fallen from a high of $5.78/mmbtu in the third week of February 2022. Yesterday, the price rose to $4.77/mmbtu.

In the four weeks ended March 11, **gasoline demand** rose 8.6% y/y, down from 15.2% y/y late in December. Growth in demand for **all petroleum products** increased a steady 12.2% y/y. Growth in **crude oil input to refineries** rose a strengthened 28.7% y/y, after 13.1% y/y growth early in November. **Gasoline inventories** rose 3.8% y/y but **crude oil inventories** declined 12.9% y/y.

The **supply of gasoline** inventories in the week ending March 11 fell to 27.3 days. The supply of crude oil held steady at 27.0 days and remained down from 41.8 days early in March of last year.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver's **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY.**

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- Gasoline prices partially reverse earlier gain.
- Crude oil prices fall sharply.
- Natural gas prices slip.

U.S. Energy Prices Weaken

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The Federal Reserve Bank of Chicago reported that the Chicago Fed National Activity Index (CFNAI) declined to 0.51 during February from 0.59 in January, revised from 0.69. These figures, however, remained above the 0.44 averaged in the fourth quarter of last year.

The index's three-month moving average slipped to 0.35 in February from 0.37 in January. During the last 10 years, there has been 76% correlation between the change in the Chicago Fed Index and quarterly growth in real GDP.

The Employment, Unemployment & Hours component rose to 0.28 in February, a three-month high. The Production & Income index eased to 0.22 from 0.25 in January, but it remained up from -0.14 in December. The Sales, Orders & Inventories reading held steady at 0.04 last month. Working lower was the Personal Consumption & Housing index to -0.04 from 0.21 in January.

The CFNAI diffusion index, which measures the breadth of movement in the component series, rose to 0.32 in February from 0.29, but these readings were below the 0.40 averaged in Q4. Sixty-one of the 85 component series contributed positively to the overall index and 24 contributed negatively.

The CFNAI is a weighted average of 85 monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend. The CFNAI was constructed using data available as of March 17, 2022. February data for 50 of the 85 indicators had been published at that time. For all missing data, estimates were used in constructing the index.

The index is constructed by the Federal Reserve Bank of Chicago. These figures are available in Haver's **SURVEYS** database.

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- Three of four components improve.
- Three-month moving average eases.

Chicago Fed National Activity Index Falls in February

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