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The latest housing data on net show this sector stalling. But the hope is that an improving labor market will carry over to housing.
 Equities were mostly down this past week. The week began with most indexes lifted by Apple's new dividend and share repurchase program. Stocks declined Tuesday, following those in Europe, the U.K. and the Asia Pacific on signs that China's economy may be slowing. A flat reading on the NAHB housing market index also weighed on stocks.
Equities were mixed and little changed at mid-week as the latest data on existing home sales unexpectedly declined but modestly. Stocks were down Thursday despite mostly favorable economic news. Initial jobless claims fell and the index of leading indicators was notably strong. Partially offsetting was a flat reading for FHFA house prices. Weighing on stocks were flash PMIs from Europe and China. In corporate news, a disappointing forecast from FedEx was a negative for stocks as the firm is seen by many as a proxy for overall economic activity.
Equities rebounded at close of the week even as new home sales disappointed. Lift was primarily from energy stocks on news that Iranian exports of oil are on the decline due to sanctions.
Equities were mostly down this past week. The Dow was down 1.1 percent; the S&P 500, down 0.5 percent; the Nasdaq, up 0.4 percent; and the Russell 2000, down marginally but essentially unchanged.
For the year-to-date, major indexes are up as follows: the Dow, up 7.1 percent; the S&P 500, up 11.1 percent; the Nasdaq, up 17.8 percent; and the Russell 2000, up 12.0 percent.
Weekly percent change column reflects percent changes for all components except interest rates. Interest rate changes are reflected in simple differences.
 Treasury yields ended down moderately but started the week headed in the other direction. Rates firmed Monday after New York Fed President William Dudley said he was uncertain that the Fed would engage in additional buying of Treasury bonds, that is, additional quantitative easing.
After little change Tuesday, rates declined moderately at mid-week on a dip in mortgage applications and a decline in existing home sales. Also, comments from Fed Chairman Ben Bernanke softened rates. He stated before a Congressional committee that higher energy prices may weaken the consumer sector.
 Following an essentially unchanged Thursday (with conflicting indicators being offsetting), rates dropped moderately Friday. This was largely due to sluggish new home sales.
For this past week Treasury rates were down as follows: 3-month T-bill, down 1 basis point; the 2-year note, down 1 basis point; the 5-year note, down 3 basis points; the 7-year note, down 5 basis points; the 10-year note, down 6 basis points; and the 30-year bond, down 10 basis points.
 Oil prices ended about where they started for the week but daily volatility picked up somewhat. Crude rose modestly Monday on news that China had raised the price of oil. Tuesday, the spot price of West Texas Intermediate dropped about 2-1/4 bucks on comments out of Saudi Arabia that the country could boost oil output by 25 percent if needed.
Crude rose a little more than a dollar a barrel on Wednesday as data on U.S. inventories showed an unexpected decline. Spot WTI declined more than $2 per barrel Thursday after manufacturing indicators for the euro area and China showed contraction for manufacturing.
But at week’s close, WTI rebounded a buck and three quarters on news that Iranian exports will decline due to sanctions.
Net for the week, the spot price for West Texas Intermediate nudged down 58 cents per barrel to settle at $106.48.
It is the slow time of year for housing on a not seasonally adjusted basis. Sales slow during winter and peak near summer break for students (making moving easier for the parents). And construction is weakest as winter cold or rain is not conducive. Atypically warm weather should result in stronger unadjusted data for housing carrying over to SA numbers more so. But more often than not, the numbers eased in the latest releases. But there is hope for improvement as the jobs picture has gotten better.
 The best news on housing this week was within the housing starts report, although not at the headline level.
Housing starts nudged down in February but from an upwardly revised January, leaving levels essentially as expected and the overall picture a little better. Housing starts dipped 1.1 percent in February after gaining 3.7 percent in January. February’s 0.698 million unit pace was up 34.7 percent on a year-ago basis.
 For the latest month, strength was in the multifamily component. Multifamily starts jumped 21.1 percent after a 13.1 percent increase in January. Levels are improving but the baseline is still low. Single-family starts fell 9.9 percent in February, following a 0.4 percent rise the prior month.
By region, the dip in starts was led by a 12.3 percent decline in the Northeast with the West easing 5.9 percent. The Midwest and South gained 3.0 percent and 1.5 percent, respectively.
The good news was in permits. Housing permits were moderately stronger than starts. Permits rose 5.1 percent, following a 1.6 percent boost in January. The February figure of 0.717 million units was above the consensus projection of 0.700 million. Strength was about evenly divided between single-family and multifamily components.
Recent strength in new housing activity is likely partially related to a warmer-than-normal winter as conditions have been more favorable to home builders. But the NAHB housing market index has been slowly moving upward, suggesting some actual modest improvement. Nonetheless, relative strength appears to be in the multifamily component.
 Winter volatility (seasonal factors are large this time of year) is the theme in home sales. Sales of existing homes slowed slightly in February but followed an extremely strong and upwardly revised January. Sales slipped 0.9 percent last month to a 4.59 million annual rate. January was revised 13,000 higher to 4.63 million for a 5.7 percent gain.
Good news for February was that prices firmed, up 1.3 percent to a median $156,600 which followed a steep slide in January of 4.7 percent. However, this price measure is not a repeat sales measure (comparing same houses), and is heavily affected by which end of the market is strong (low price or high price).
The pickup in January sales appears to have encouraged prospective sellers to put their homes on the market as supply rose to 6.4 months at the current sales rate, not too heavy but compared to 6.0 months in January and against 8.6 months a year ago. Distressed sales remain heavy at 34 percent but are down slightly from the 35 percent rate in January. All cash transactions rose two percentage points to 33 percent. These numbers suggest that investors are playing a key role in supporting the housing market and that typical homebuyers are only gradually entering the market.
 New home sales are somewhat lagging existing home sales. New home sales fell 1.6 percent in February to a 313,000 annual rate, following a 5.4 percent drop in January and a 4.3 percent boost in December. January is revised to 318,000, a 3,000 downward revision offset by a large 12,000 upward revision to December which at 336,000 is the best rate so far of the recovery.
The biggest strength in the February report was in prices which surged 8.3 percent for the median to $233,700 for the highest since June with the year-on-year rate, at plus 6.2 percent, showing its first positive reading since October. But, as with the existing home sales measure, prices are affected by relative strength in the high end versus the low end. The price for a specific house on average in the U.S. simply does not jump 8.3 percent in a single month.
Regionally, February sales rose in the Northeast and West but fell sharply in the South which is by far the largest and most important region in this series. Given that winter was very mild, the seasonally adjusted dip in sales is a little worrisome.
 Home prices are not improving as hoped or earlier believed. According to the FHFA, house prices in January were unchanged, following a 0.1 percent rise in December (originally up 0.7 percent). This house price measure is a repeat transaction measure which compares changes in the price of the same house in a bundle of houses.
On a year-on-year basis, the FHFA HPI is down 0.7 percent versus down 1.6 percent in December.
Among key home price indexes, the FHFA version has been relatively strong as it has the healthiest composition of homes being measured. The Case-Shiller index has been weaker, reflecting the inclusion of homes that were of riskier financing. Essentially, repeat transaction measures of home prices indicate that the housing market has softened in recent months.
 Improvement in the jobs market is emerging as the most significant factor lifting the economic outlook. The fall in jobless claims headlines helped create a giant 0.7 percent rise in the index of leading economic indicators.
Also, improvement on European sovereign debt is sneaking in. The interest rate spread now shares the number one spot with jobless claims. The fed funds rate has been little changed and near zero. Meanwhile, the 10-year Treasury rate has firmed on reversal of flight to safety on progress on Greek debt, leaving the spread higher.
The third and fourth ranking positives for February were the stock market and building permits. Manufacturing data are positive as is the indication on credit. This report was a stand-out although it still likely translates to only moderately strong economic growth in coming months.
The housing sector was mixed but mostly down a bit the latest week with permits the most notable positive. It will take data from the spring months ahead to see the real trend in housing. But the modest improvement in the labor market—as seen in the downtrend in initial jobless claims—is encouraging news for housing. Housing will truly strengthen only when job growth is healthy enough for new household formation and for job hopping. But forward momentum overall has improved somewhat as seen in the index of leading indicators.
We get a mix of news on housing, the consumer, and manufacturing starting with pending home sales (Monday) and Case-Shiller home prices (Tuesday). Consumer reports include consumer confidence (Tuesday) and personal income and consumer sentiment (both on Friday). Manufacturing is updated midweek with durables orders. Also, it will be a little dated but analysts will parse Thursday’s third estimate of fourth quarter GDP.
The pending home sales rose 2.0 percent in January. January's strength was centered in the South which is by far the largest region for home sales. Year-on-year, the region showed a very strong 10.5 percent gain.
Pending home sales Consensus Forecast for February 11: +1.0 percent
Range: -1.0 to +4.5 percent
The Dallas Fed general business activity index improved to 17.8 in February from 15.3 the month before. The breakeven level is zero in Fed District manufacturing surveys—in contrast to 50 for ISMs. The latest number was the highest reading since November 2010. Production picked up the pace, rising to 11.2 from 5.8 the month before. However, the new orders index showed slower growth at 5.8 versus 9.5 in January.
Dallas Fed general business activity index Consensus Forecast for March 12: 15.5
Range: 15.0 to 18.5
The S&P/Case-Shiller 20-city home price index (SA) for December fell 0.5 percent, following a 0.7 percent decrease the month before. The year-on-year rate ended 2012 with a minus 4.0 percent showing, two tenths steeper than the rate in November and the worst reading since, as the report stated, the housing crisis began in mid-2006. Unadjusted readings for the 20-city index, which are closely watched in this report, tell the same story with the year-on-year rate also down 4.0 percent. The bottom line is that while sales may be improving, prices are still under downward pressure. Foreclosures are adding to supply and price discounting is what is boosting sales.
The S&P/Case-Shiller 20-city HPI (SA, m/m) Consensus Forecast for January 12: -0.2 percent
Range: -0.5 to +0.3 percent
The S&P/Case-Shiller 20-city HPI (NSA, y/y) Consensus Forecast for January 12: -3.8 percent
Range: -4.2 to -3.4 percent
The Conference Board's consumer confidence index jumped 9.3 points in February to 70.8—the highest reading since a 72.0 level in February 2011 and notably above the recession low of 25.3 in February 2009. The view of the jobs market made the difference. Those describing jobs as hard to get dropped to 38.7 percent versus January's 43.3 percent. February was the first reading below 40 percent since November 2008. The strength in job activity carried over to new optimism for income prospects with optimists, at 15.4 percent, once again ahead of pessimists which total a modest 12.7 percent.
Consumer confidence Consensus Forecast for March 12: 70.9
Range: 68.0 to 77.0
The Richmond Fed manufacturing index in February rose a very sizable eight points to 20. New orders jumped 7 points to 21. Backlog orders, shipments, employment, and the workweek all showed solid monthly acceleration in the Richmond district.
Richmond Fed manufacturing index Consensus Forecast for March 12: 18
Range: 15 to 21
Durable goods orders in January fell back a revised 3.7 percent, following a revised 3.3 percent jump in December. Excluding transportation, durables fell a revised 3.0 percent after a 2.3 percent advance in December. By components, weakness was led by transportation but other components were mostly down.
New orders for durable goods Consensus Forecast for February 12: +2.9 percent
Range: +0.9 percent to +6.4 percent
New orders for durable goods, ex-trans., Consensus Forecast for February 12: +1.5 percent
Range: +0.4 percent to +2.6 percent
GDP in the fourth quarter was a little stronger than earlier believed as GDP growth broke the psychological 3 handle. The Commerce Department in its second estimate revised fourth quarter GDP growth up to 3.0 percent from the initial estimate of 2.8 percent. The latest figure compares to a modest 1.8 percent rise in the third quarter.
The upward revision to the percent change in real GDP primarily reflected an upward revision to nonresidential fixed investment, a downward revision to imports, and an upward revision to personal consumption expenditures (PCEs).
Economy-wide inflation according to the GDP price index was bumped up to 0.9 from the near flat initial estimate of 0.4 percent annualized. The latest was a notable deceleration from 2.6 percent in the third quarter.
Real GDP Consensus Forecast for third estimate Q4 11: +3.0 percent annual rate
Range: +2.8 to +3.9 percent annual rate
GDP price index Consensus Forecast for third estimate Q4 11: +0.9 percent annual rate
Range: +0.9 to +1.0 percent annual rate
Initial jobless claims fell 5,000 in the March 17 week to a better-than-expected 348,000 versus a revised 353,000 in the prior week. The four-week average was down 1,250 to 355,000. Claims peaked early on in the recession at over 600,000 and were last below 300,000 during the peak of the expansion in 2006.
Jobless Claims Consensus Forecast for 3/24/12: 350,000
Range: 341,000 to 352,000
The Kansas City Fed manufacturing index rose to 13 in February from 7 the month before. Breakeven is zero for this survey's diffusion indexes. Production was healthy at 20 versus 13 the month before. The new orders index eased incrementally to 8 from 9 while the backlog index rose to 13 from 8 in January. A consensus is not available this month.
Personal income in January increased 0.3 percent after a 0.5 percent boost the month before. However, the important wages & salaries component was a little stronger, advancing 0.4 percent, matching December’s growth rate. Consumer spending in January improved to a 0.2 percent gain from no change in December. The headline PCE price index heated up somewhat to 0.2 percent from 0.1 percent in December. The core rate firmed to 0.2 percent, also from 0.1 percent in December.
Looking ahead for February, the private wages & salaries component in personal income is likely to post a healthy gain in February as aggregate private earnings rose 0.4 percent. A 6.5 percent jump in unit new motor vehicle sales suggests a strong durables component in PCEs with higher gasoline prices boosting nondurables. PCE inflation is likely to be mixed as the headline CPI jumped 0.4 percent but the core rose only 0.1 percent.
Personal income Consensus Forecast for February 12: +0.4 percent
Range: +0.2 to +0.6 percent
Personal consumption expenditures Consensus Forecast for February 12: +0.6 percent
Range: +0.2 to +0.8 percent
PCE price index Consensus Forecast for February 12: +0.3 percent
Range: +0.1 to +0.5 percent
Core PCE price index Consensus Forecast for February 12: +0.1 percent
Range: +0.1 to +0.2 percent
The Chicago PMI in February rose 3.8 points to a robust 64.0. And forward momentum was even stronger as the new orders index jumped to 69.2 from 63.6 in January. New orders in this report have been strong throughout the recovery and especially over the last six months.
Chicago PMI Consensus Forecast for March 12: 63.0
Range: 59.7 to 66.0
The Reuter's/University of Michigan's consumer sentiment index nudged down 1.0 point in preliminary March to 74.3 from the final reading for February. Components were mixed. Current conditions rose from 83.0 to 84.2 while expectations slipped to 68.0 from 70.3.
Consumer sentiment Consensus Forecast for final March 12: 75.0
Range: 72.0 to 78.9
R. Mark Rogers is the author of The Complete Idiot’s Guide to Economic Indicators, Penguin Books, 2009.
Econoday Senior Writer Mark Pender contributed to this article.
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