HOUSING: HICCUP OR HARBINGER?

We detailed our expectation for a #HousingSlowdown in our 2Q14 Macro themes call  - CLICK HERE - and (TEASER) we’ll be launching comprehensive coverage of housing in the next few weeks. 

 

The housing data of the last few days continues to offer further, positive confirmation of the marked, and geographically pervasive, slowdown in housing demand. 

 

Home price growth follows the slope of demand and current demand measures (Existing/Pending/New Home Sales) continue to flag while mortgage application data thru mid-April is signaling a further deceleration in forward transaction activity.   

 

That the deceleration in activity is occurring in the face of both the positive shift in weather and declining interest rates makes it that much more notable. 

 

While weather probably exaggerated some of the underlying weakness to start the year, we continue to think that the collective impact of stagnant income growth, declining affordability, a reversal in institutional interest, and the implementation of QM regulations will serve to pressure housing demand over the intermediate term. 

 

Below we provide a summary highlight of the recent data: 

 

APRIL DATA:  The NAHB HMI and weekly MBA mortgage data represent a couple of the most real-time measures of existent demand/sentiment trends and both continue to signal weakness.

 

  • Mortgage Applications:  The composite mortgage application index declined 3.3% WoW as the Purchase Applications and Refinance sub-indices hit new lows in YoY growth.  As it stands, Purchase Applications are down -19.3% off peak and -18.5% YoY while refi activity is down -71% YoY!

 HOUSING: HICCUP OR HARBINGER? - Mortgage Apps 042314

 

  • NAHB HMI:  Headline NAHB confidence increased 1pt MoM in April vs the downwardly revised March print with builder confidence flat or down across geographies with the exception of the Northeast.  Confidence in the West region slid for a third consecutive month, continuing its expedited 26 pt drawdown from a peak reading of 71 just three months ago. The composite index is now down 10 points off its December peak of 57.

 

HOUSING: HICCUP OR HARBINGER? - NAHB April

 

HOUSING: HICCUP OR HARBINGER? - NAHB Regional

 

 

MARCH DATA:  Home price growth decelerated and both Existing and New Home Sales slowed sequentially in March.  The slowdown, coming post the weather inflection, was again pervasive across geographies, further confuting the "its the weather" in isolation thesis.   

 

  • Existing Home Sales:  Existing Home Sales declined -0.2% MoM and -8% YoY – accelerating 70bps vs the -7.3% decline in February.  Sales were down across geographies with the West region again leading the declines

HOUSING: HICCUP OR HARBINGER? - Existing Home Sales by Region march

 

 

  • New Home Sales:  New Home sales declined -13% YoY, marking the 1st month of negative year-over-year growth since September of 2011.   The Northeast was the lone region recording a MoM increase in sales while year-over-year sales growth declined across all geographies.

HOUSING: HICCUP OR HARBINGER? - New Home Sales by Region

 

HOUSING: HICCUP OR HARBINGER? - New Home Sales by Region march

 

 

  • Corelogic HPI:  The preliminary estimate is for a sequential deceleration of 160bps in home price growth in March – the slowest pace of growth in 13 months and the largest sequential deceleration since June of 2006 .  As a reminder, the march/april data will be the first to reflect any early impacts of QM implementation, which went into effect on January 10th.    

 

HOUSING: HICCUP OR HARBINGER? - Corelogic March

 

Christian B. Drake

@HedgeyeUSA

 


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more