Pending home sales rose for third straight month in April, reaching highest level in over a decade

Pending home sales rose for the third consecutive month in April and reached their highest level in over a decade.  All major regions saw gains in contract activity last month except for the Midwest, which saw a meager decline.

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Durable goods orders jumped 3.4 percent in April as jet sales surged

Orders for durable or long-lasting goods made in the U.S. jumped 3.4% in April because of a surge in bookings for commercial jets. But a key measure of business investment fell again.

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Mortgage applications rise 2.3 percent in latest survey, mostly due to purchase loans

The Market Composite Index increased 2.3 percent on a seasonally adjusted basis from one week earlier, with the Purchase Index increasing 5 percent. The average interest rate for 30-year fixed-rate mortgages increased to 3.85 percent from 3.82 percent.

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Initial unemployment claims dip 10,000 in latest report

In the week ending May 21, initial unemployment claims were 268,000, a decrease of 10,000 from the previous week’s unrevised level of 278,000. The 4-week moving average was 278,500, an increase of 2,750 from the previous week’s unrevised average of 275,750.

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FHFA House Price Index up 1.3 percent in 1Q 2016 and 5.7 percent year-on-year

U.S. house prices rose 1.3 percent in the first quarter of 2016 according to the HPI, and for March was up 0.7 percent from February.  Between the first quarters of 2015 and 2016, the index rose 5.7 percent.

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New home sales reached more than eight-year high in April

New U.S. single-family home sales recorded their biggest gain in 24 years in April, touching a more than eight-year high as purchases increased broadly, a sign of growing confidence in the economy’s prospects.

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The Evolution of the Smart Home: Smarter homes will benefit from smarter consumers

It should come as no surprise that the average consumer in 2016 has a general idea of what a smart home is, with a recent study estimating that 30 million U.S. households will add smart home technology in the next 12 months.  But what may surprise you is that the market remains largely the domain of early adopters – including the purchasers of new homes – because the hype doesn’t yet match the reality.  If, as market researcher Gartner is predicting, the typical family home could contain more than 500 smart devices by 2022, the transition from early adopter to mainstream consumer will require simplicity and ease of use over shiny, new products which don’t serve to budge the status quo.

So how can the building industry bridge this gap?  By focusing the most on those smart home services which interest consumers the most – like home security, cited by 63 percent of consumers in a recent study commissioned by August Home and Xfinity Home – and pairing them with triggering events, most notably moving into a new house (26 percent) or remodeling an existing one (14 percent).  Yet because the speed of adoption and lists of concerns can vary by age group, providing consumers the ability to match their individual wish lists with these products and services is essential.

Fortunately, there are initiatives already underway to educate consumers about smart home options.  For the existing home market, Coldwell Banker has recently partnered with CEDIA, the global trade association for home technology, to launch a smart home education curriculum for its brokers and agents.  Offered via Coldwell Banker University by a CEDIA instructor, the program will focus on just how smart home products are changing the way people live and interact with their homes.  Given that the company’s Smart Home Marketplace Survey concluded that almost half of Americans either own or are planning to invest in smart home technology by the end of 2016, the plan is to give their agents an advantage when marketing their listings.

Fortunately for home builders, our industry is a lot further ahead in this game, with the Housing Innovation Alliance acting as a collaborative think tank since 2006.  Sponsored by Pittsburgh-based housing innovator IBACOS, the alliance now includes more than 75 leading builders as well as more than a dozen building products suppliers and manufacturers.  With the mantra “builders helping builders,” the alliance also assists its members with the marketing, appraisal and financing of ‘high-performance’ homes.

The alliance achieves its goals through three primary areas:  How We Live (identifying ways in which builders can best understand how consumers view the performance of their homes), How We Build (sharing best practices, trends, codes and standards), and The Future of Housing (analyzing and sharing global and technological trends shaping housing in the years to come).

In order to better demonstrate the benefits of a high-performance home, Avid Ratings has also recently introduced its GoTour program.  Both virtual and augmented reality give potential buyers the ability to ‘tour’ a home before and after it’s built to view all of the technology options – even those usually hidden behind walls.  By allowing viewers to cycle between rooms as well as among categories such as lighting, appliances and other energy efficiencies, they can jump-start their own research on how to save money, which might even result in a larger selection of options when the contract is signed.  Even better, since virtual reality allows potential buyers to view these systems from the comfort of their own homes, they can save both time and money by not having to drive somewhere else to see it in person.

In order to simplify comparison shopping for consumers, IBACOS has also introduced its own rating to better gauge thermal comfort for its residents.  As opposed to just measuring energy efficiency – which may be at odds with comfort much of the time – the Thermal Comfort Rating Metric (TCRM) would let buyers decide how important comfort is when weighed against cost and efficiency.  For builders, a realistic rating system could help reduce the cost of callbacks when buyers are prepared for these trade-offs, and have had their specifications tweaked into the building of the home itself.

Finally, there’s also a network effect at play here, in which greater penetration feeds on itself.  According to iControl’s most recent State of the Smart Home report, 66 percent of consumers who know someone with a smart home are likely to be more interested in these technologies – and that’s even before they step foot in your model home.

Existing home sales rose again in April for second straight month, up 6.0 percent year-on-year

Despite ongoing inventory shortages and faster price growth, existing-home sales sustained their recent momentum and moved higher by 1.7 percent for the second consecutive month in April, and are now up 6.0 percent from April 2015.

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Leading Economic Index rose sharply in April

The U.S. LEI picked up sharply in April, with all components except consumer expectations contributing to the rebound from an essentially flat first quarter.

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Federal Reserve meeting minutes indicate another potential rate hike in June

Federal Reserve Open Market Committee participants generally agreed that easing in financial conditions would support domestic economic activity. The Committee is prepared to raise rates at the June FOMC meeting as long as the incoming data cooperate with its outlook.

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Philadelphia Fed’s Business Outlook Survey reported tenuous growth in May

Firms responding to the Manufacturing Business Outlook Survey in May continued to report tenuous growth, with the indicator for general activity essentially unchanged and remaining slightly negative.

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Initial unemployment claims fall 16,000 in latest report following last week’s rise

In the week ending May 14, initial claims were 278,000, a decrease of 16,000 from the previous week’s unrevised level of 294,000. The 4-week moving average was 275,750, an increase of 7,500 from the previous week’s unrevised average of 268,250.

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Mortgage applications dip 1.6 percent in latest report as rates remain unchanged

The Market Composite Index decreased 1.6 percent on a seasonally adjusted basis from one week earlier. The average interest rate for 30-year fixed-rate mortgages remained unchanged at 3.82 percent.

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Housing starts rebounded sharply in April but still down 1.7 percent year-on-year

Housing starts in April rebounded to an annual rate of 1,172,000. This is 6.6 percent above the revised March estimate of 1,099,000, but is 1.7 percent below the April 2015 rate of 1,192,000.

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Building permits rose 3.6 percent in April but still down 5.3 percent year-on-year

Building permits in April rose to an annual rate of 1,116,000. This is 3.6 percent above the revised March rate of 1,077,000, but is 5.3 percent below the April 2015.

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CPI rose in April at the highest pace in over three years, mostly due to higher gas prices

The Consumer Price Index increased 0.4 percent in April, while the index for all items less food and energy rose 0.2 percent. Over the last 12 months, the all items index rose 1.1 percent.

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Empire State Manufacturing Index declines sharply in May

The May 2016 Empire State Manufacturing Survey indicates that business activity declined for New York manufacturers. The headline general business conditions index turned negative, falling nineteen points to -9.0.

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Builder confidence holds steady in May at 58

Builder confidence in the market for newly-built single-family homes remained unchanged in May at a level of 58; sales expectations in the next six months increased three points to 65, current sales conditions and buyer traffic both held steady at 63 and 44, respectively.

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FNC Residential Price Index up 1.0 percent in March and 5.7 percent year-on-year

U.S. home prices rose sharply in March, up 1.0% from February and at the fastest in nine months after tepid growth throughout the fall and winter months. On a year-over-year basis, prices continue to enjoy robust growth, rising 5.7% from a year ago.

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Producer Price Index (PPI) rose 0.2 percent in April, unchanged for previous 12 months

The Producer Price Index for final demand rose 0.2 percent in April. On an unadjusted basis, the final demand index was unchanged for the 12 months ended in April.

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Retail sales rebounded 1.3 percent in April, for largest gain since March 2015

Overall retail sales expanded 1.3% in April from March, representing the largest gain since March 2015 and up 3% since April 2015.

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Consumer sentiment rebounded in early May, with expectations index soaring the most

Consumer sentiment rebounded in early May due to more frequent income gains, an improved jobs outlook, and the expectation of lower inflation and interest rates.

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Mortgage applications edge up 0.4 percent in latest survey as rates dip again

The Market Composite Index increased 0.4 percent on a seasonally adjusted basis from one week earlier. The average contract interest rate for 30-year fixed-rate mortgages decreased to its lowest level since April 2016, 3.82 percent.

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Initial unemployment claims rise 20,000 in latest report to highest level since late February 2015

In the week ending May 7, initial claims were 294,000, an increase of 20,000 from the previous week’s unrevised level of 274,000. The 4-week moving average was 268,250, an increase of 10,250 from the previous week’s unrevised average of 258,000.

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Consumer confidence posted slight decline in April

Consumer confidence from The Conference Board continued on its sideways path, posting a slight decline in April, following a modest gain in March. However, their expectations regarding the short-term have moderated, suggesting they do not foresee any pickup in momentum.

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Wholesale inventories edged up in March while sales posted largest increase since last April

U.S. wholesale inventories edged up 0.1 percent in March as sales recorded their largest increase in nearly a year, rising 0.7 percent.

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Job openings rose in March to highest level in eight months while layoffs declined

U.S. job openings increased in March to the highest level in eight months and layoffs continued to decline, indicating the labor market remains fairly robust despite April’s slowdown in employment gains.

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Consumer credit use surged by 10 percent in March

Household borrowing surged in March at the fastest pace since November 2001 as financing for automobiles picked up and Americans' outstanding credit-card debt soared.

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Job growth slowed sharply to 160,000 in April as unemployment rate remained unchanged at 5.0 percent

Total nonfarm payroll employment increased by 160,000 in April, the unemployment rate was unchanged at 5.0 percent and the labor force participation rate decreased to 62.8 percent.

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Initial unemployment claims rise 17,000 in latest report

In the week ending April 30, initial unemployment claims were 274,000, an increase of 17,000 from the previous week. The 4-week moving average was 258,000, an increase of 2,000 from the previous week.

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Mortgage applications fall 3.4 percent as rates rise slightly

The Market Composite Index decreased 3.4 percent on a seasonally adjusted basis from one week earlier. The average interest rate for 30-year fixed-rate mortgages increased to 3.87 percent.

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Factory orders rebounded in March as inventories increased for first time in nine months

Factory orders rebounded by 1.1% in March after February's 1.9 decline. Inventories increased by 0.2% -- the first jump after eight consecutive months of decreases.

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Planned job cuts rose 35 percent in April, YTD totals up 24 percent over 2015

US-based employers announced workforce reductions totaling 65,141 during April, for a 35 percent increase over March. Job losses were focused in the energy, computer and retailing sectors.

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Service sector economy index rose to 55.7 percent in April

The NMI® registered 55.7 percent in April, 1.2 percentage points higher than the March reading of 54.5 percent. The majority of the respondents’ comments reflect optimism about the business climate and the direction of the economy.

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NMI® HISTORY
Month	NMI®	Month	NMI®
Apr 2016	55.7	Oct 2015	58.3
Mar 2016	54.5	Sep 2015	56.7
Feb 2016	53.4	Aug 2015	58.3
Jan 2016	53.5	Jul 2015	59.6
Dec 2015	55.8	Jun 2015	56.2
Nov 2015	56.6	May 2015	55.9
Average for 12 months – 56.2 High – 59.6 Low – 53.4

Manufacturing sector index fell to 50.8 percent in April but still in positive territory

The April PMI registered 50.8 percent, a decrease of 1 percentage point from the March reading of 51.8 percent. 15 of 18 industries reported an increase in production in April (up from 12 in March).

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              THE LAST 12 MONTHS

Month	PMI®		Month	PMI®
Apr 2016	50.8		Oct 2015	49.4
Mar 2016	51.8		Sep 2015	50.0
Feb 2016	49.5		Aug 2015	51.0
Jan 2016	48.2		Jul 2015	51.9
Dec 2015	48.0		Jun 2015	53.1
Nov 2015	48.4		May 2015	53.1
Average for 12 months – 50.4 High – 53.1 Low – 48.0

Private sector employment growth dipped to 156,000 jobs in March

Private sector employment increased by 156,000 jobs from March to April, down from 189,000 the previous month.

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Consumer sentiment declines again in April

Consumer sentiment continued its slow decline in April due to weakening expectations for future economic growth, although consumers' views of their current finances remained positive.

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Compensation costs rose 0.6 percent in first quarter of 2016

Compensation costs for civilian workers increased 0.6 percent for the first quarter of 2016. Wages and salaries increased 0.7 percent, and benefits increased 0.5 percent.

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Both personal income and spending rose again in March

Personal income increased $57.4 billion, or 0.4 percent, and personal consumption expenditures (PCE) increased $12.8 billion, or 0.1 percent.

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Construction spending rose in March to highest level since October 2007

Construction spending rose 0.3 percent in March after a 1 percent gain in February, raising total spending to $1.14 trillion per year, the highest level since October 2007.

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