Monthly Recovery Signals
(As of May 7, 2009)
Highlights
- The affordability index fell by 4.4 percent in March but still remains at historically high levels.
- The housing market index increased by 55.6 percent in April but still remains at historically low levels.
- The pending home sales index 3.2 percent gain is a pleasant surprise.
- The recovery signal average was 1.86, reflecting weak housing market conditions.
| Monthly Recovery Signals | |||||
| Mar 09 | Feb 09 | % change | Consecutive Months | Recovery Signal | |
| Affordability Index | 166.7 | 174.4 | -4.4 | 1 | 5 |
| Housing Market Index* | 14 | 9 | 55.6 | 1 | 2 |
| Housing Permits (000) | 513 | 564 | -9.0 | 1 | 1 |
| Payroll Change (000) | -663 | -651 | 1.8 | 9 | 1 |
| Months’ Supply (existing) | 9.8 | 9.7 | 1.0 | 1 | 1 |
| New Home Sales (000) | 360 | 360 | 0.0 | 0 | 1 |
| Pending Home Sales Index* | 84.6 | 82.0 | 3.2 | 1 | 2 |
| Signal Average | 1.86 | ||||
Source: Census Bureau, National Association of Realtors, National Association of Homebuilders, Department of Labor
*Housing Market Index is for April and March
Recovery signal ranking is based on level of indicator, monthly percent change and consecutive months of same directional change
Recovery signal: 1 to 5: weak to very strong
Analysis
The recovery signal average for our group of recovery indicators is at a very low 1.86, reflecting extremely weak conditions in the nation’s housing sector. The recovery signals suggest does not portend favorably for the near term outlook for housing activity. Housing permits, payrolls, months’ supply and new home sales registerd a recovery signal of 1, reflecting weak conditions. On the positive side, pending home sales which are contracts for existing homes inched upward in March which may be a sign that the worst may be over for existing home sales. Existing home sales reached a cyclical bottom in January of this year and has drifted slightly upward ever since. It is also welcome news that homebuilders expectations of future home building increase significantly with the housing market index increasing to 14 in April from a 9 index in March. However, 14 is still a very weak measure of homebuilder expectations. Although the affordability index declined in March, it is still near historical highs and continues to suggest that homes are very affordable today.
On balance, the recovery signals suggest that the housing sector continues to exhibit downturn conditions, but they also suggest that the worst may be over. Several more months of positive changes in these signals could verify that the cylical low for housing activity occurred in January of this year. However, given the fragile state of the U.S. economy, one must proceed with caution.
Weekly Recovery Signals
(As of May 7, 2009)
Highlights
- The purchase mortgage application index increase 5 percent in the current week.
- Jobless claims fell by 34,000 in the current week. Jobless claims have declined for two consecutive weeks.
- The 30-year mortgage rate rose 6 basis points to 4.84 percent in the latest week.
| Weekly Recovery Signals | |||||
| Current week | Previous week | % change | Consecutive Weeks | Recovery Signal | |
| Purchase Application Index | 264.3 | 251.6 | 5.0 | 1 | 2 |
| Jobless Claims (000) | 601 | 635 | -5.3 | 2 | 2 |
| Mortgage Rates (30-yr) | 4.84 | 4.78 | 6 bps | 1 | 4 |
| Signal Average | 2.7 | ||||
Source: Mortgage Bankers Association, Department of Labor, Freddie Mac
Recovery signal ranking is based on level of indicator, monthly percent change and consecutive months of same directional change
Recovery signal: 1 to 5: weak to very strong
Analysis
The weekly recovery signals indicate slight improvement in our nation’s housing sector. Mortgage applications to purchase homes rose, while less people filed claims for unemployment insurance. Mortgage rate rose slightly, responding to positive economic news, but remain near historic lows.
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