UPDATE: U.S. Existing Home Sales Fell 1.8% to 5.05M in Aug.; South, West Pressure Gains (XHB) Sep 22, 2014 10:04AM

(Updated - September 22, 2014 10:04 AM EDT)

August Existing Home Sales 5.05M vs 5.2M Expected; Down 1.8% MoM

Traders are watching the following stocks and ETFs:

D.R. Horton, Inc. (NYSE: DHI)
Pulte Group (NYSE: PHM)
KB Home (NYSE: KBH)
Lennar Corp. Cl A (NYSE: LEN)
Hovnanian Enterprises Inc. Cl A (NYSE: HOV)
Standard Pacific Corp. (NYSE: SPF)
Toll Brothers, Inc. (NYSE: TOL)
Ryland Group, Inc. (NYSE: RYL)
Meritage Homes Corp. (NYSE: MTH)
Beazer Homes USA, Inc. (NYSE: BZH)
SPDR S&P Homebuilders ETF (NYSE: XHB)

UPDATE - More from the NAR:

After four consecutive months of gains, existing-home sales slipped in August as investors paying in cash retreated from the market, according to the National Association of Realtors®. Sales increases in the Northeast and Midwest were outweighed by declines in the South and West.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.8 percent to a seasonally adjusted annual rate of 5.05 million in August from a slight downwardly-revised 5.14 million in July. Sales are at the second-highest pace of 2014, but remain 5.3 percent below the 5.33 million-unit level from last August, which was also the second-highest sales level of 2013.

Lawrence Yun, NAR chief economist, says sales activity remains stronger than earlier in the year, but fell last month as investors stepped away. "There was a marked decline in all-cash sales from investors,” he said. "On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country.”

Yun adds, "As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”

The median existing-home price2 for all housing types in August was $219,800, which is 4.8 percent above August 2013. This marks the 30th consecutive month of year-over-year price gains.

Total housing inventory3 at the end of August declined 1.7 percent to 2.31 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. However, unsold inventory is 4.5 percent higher than a year ago, when there were 2.21 million existing homes available for sale.

All-cash sales were 23 percent of transactions in August, dropping for the second consecutive month (29 percent in July) and representing the lowest overall share since December 2009 (22 percent). Individual investors, who account for many cash sales, purchased 12 percent of homes in August, down from 16 percent last month and 17 percent in August 2013. Sixty-four percent of investors paid cash in August.

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, says a gradual decline in investor activity, many who pay in cash, is good for the market and creates more opportunity for buyers who rely on financing to purchase a home.

On the subject of mortgage financing, Brown adds, "Realtors® applaud the recent policy change to eliminate post-payment interest charges on FHA-insured single-family mortgages,” he said. "The prepayment penalty placed an unfair and unreasonable burden on consumers who already face high housing and closing costs.”

The percent share of first-time buyers remained unchanged in August from July at 29 percent. First-time buyers have represented less than 30 percent of all buyers in 16 of the past 17 months.

Distressed homes4 – foreclosures and short sales – represented 8 percent of August sales, remaining in the single-digits for the second straight month and down from 12 percent a year ago. Six percent of August sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 14 percent below market value in August (20 percent in July), while short sales were discounted 10 percent (14 percent in July).

Properties typically stayed on the market in August longer (53 days) than last month (48 days) and a year ago (43 days). Short sales were on the market for a median of 135 days in August, while foreclosures sold in 53 days and non-distressed homes typically took 52 days. Forty percent of homes sold in August were on the market for less than a month.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage fell for the fourth consecutive month to 4.12 percent in August from 4.13 percent in July, and remains at the lowest rate since June 2013 (4.07 percent).

Single-family home sales slipped 1.8 percent to a seasonally adjusted annual rate of 4.46 million in August from 4.54 million in July, and are now 4.9 percent below the 4.69 million pace a year ago. The median existing single-family home price was $220,600 in August, up 5.2 percent from August 2013.

Existing condominium and co-op sales declined 1.7 percent to a seasonally adjusted annual rate of 590,000 units in August from 600,000 in July, and are now 7.8 percent below the 640,000 unit pace a year ago. The median existing condo price was $213,900 in August, which is 2.1 percent higher than a year ago.

Regionally, August existing-home sales in the Northeast jumped 4.7 percent to an annual rate of 670,000, but remain 4.3 percent below a year ago. The median price in the Northeast was $265,800, which is 0.8 percent lower than a year ago.

In the Midwest, existing-home sales increased 2.5 percent to an annual level of 1.24 million in August, but remain 3.9 percent below August 2013. The median price in the Midwest was $173,800, up 5.9 percent from a year ago.

Existing-home sales in the South declined 4.2 percent to an annual rate of 2.03 million in August, and are now down 4.2 percent from August 2013. The median price in the South was $186,700, up 4.7 percent from a year ago.

Existing-home sales in the West fell 5.1 percent to an annual rate of 1.11 million in August, and are 9.8 percent below a year ago. The median price in the West was $301,900, which is 5.4 percent above August 2013.


ECB Allots EUR 82.6B in First Targeted Longer-Term Refinancing Operation (FXE) Sep 18, 2014 08:52AM

The European Central Bank has today allotted €82.6 billion to 255 counterparties in the first of eight targeted longer-term refinancing operations (TLTROs) to be conducted between September 2014 and June 2016. The programme is designed to enhance the functioning of the monetary policy transmission mechanism by supporting bank lending to the real economy.

In order to participate in the tender that was announced on 16 September, credit institutions had to express their interest and send completed reporting templates by 28 August. A total of 382 entities were eligible to bid in the first TLTRO, representing, either directly or indirectly, 1372 credit institutions. Additional counterparties that intend to participate in the second TLTRO in December will have to send completed reporting templates by 20 November 2014, 3.30 p.m. CET.

The second TLTRO, as previously communicated, will be announced on 9 December and allotted on 11 December.

In the first two tenders, banks and groups of banks are entitled to an initial borrowing allowance equal to 7% of the total amount of their loans to the euro area non-financial private sector, excluding loans to households for house purchase, outstanding on 30 April 2014. Therefore, eligible banks who have not reached their initial allowance limit in the first TLTRO will be able to increase their initial borrowing amount up to that limit in the second TLTRO.

Thereafter, banks will be able to apply for additional funding, depending on the evolution of their lending activities against a specific benchmark.

The TLTROs, first announced on 5 June, together with measures announced on 4 September related to the purchase of non-financial private sector assets, will have a sizeable impact on the ECB’s balance sheet.

Key points:

  • Banks take up €82.6 billion in first of eight TLTROs

  • Programme supports lending to the real economy

  • Part of package of ECB measures that will have sizeable impact on ECB’s balance sheet


Initial Jobless Claims Rose to 280K Last Week, Coming in Below Expectations Sep 18, 2014 08:32AM

(Updated - September 18, 2014 8:32 AM EDT)

Initial Jobless Claims280 K vs 305K Expected

UPDATE - More from the Dept. of Labor:

In the week ending September 13, the advance figure for seasonally adjusted initial claims was 280,000, a decrease of 36,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 315,000 to 316,000. The 4-week moving average was 299,500, a decrease of 4,750 from the previous week's revised average. The previous week's average was revised up by 250 from 304,000 to 304,250.

There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending September 6, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 6 was 2,429,000, a decrease of 63,000 from the previous week's revised level. This is the lowest level for insured unemployment since May 19, 2007 when it was 2,417,000. The previous week's level was revised up 5,000 from 2,487,000 to 2,492,000. The 4-week moving average was 2,481,750, a decrease of 18,250 from the previous week's revised average. This is the lowest level for this average since June 23, 2007 when it was 2,477,250. The previous week's average was revised up by 1,250 from 2,498,750 to 2,500,000.


China Home Prices Continue Slump Through August (FXI) Sep 18, 2014 07:27AM

China stocks are on watch Thursday following new economic data out of the region.

Reuters, using data from China's National Bureau of Statistics, said the average home price fell 1.1 percent in China last month. That is an accelerated drop from a 0.9 percent dip realized in July and is the fourth-straight month of declines.

Year-over-year prices were up just 0.5 percent in August, from a 2.5 percent gain the prior month. It was the slowest annual growth seen over the last 20 months.

Traders are keeping an eye on iShares FTSE/Xinhua China 25 Index (NYSE: FXI) Thursday.


Bank Stocks Gain Following FOMC Statement Sep 17, 2014 02:35PM

Banks were among gainers Wednesday following a statement from the FOMC. Among other topics, traders discussed unchanged "considerable time" language in the statement related to the target range for the federal funds rate -- clearly bullish news for banks.

Gainers included:

  • Regions Financial Corp. (NYSE: RF)
  • Wells Fargo (NYSE: WFC)
  • JPMorgan Chase & Co. (NYSE: JPM)
  • Bank of America (NYSE: BAC)
  • Citigroup (NYSE: C)
  • American Express Co (NYSE: AXP)
  • Goldman Sachs (NYSE: GS)
  • U.S. Bancorp (NYSE: USB)
  • FINANCIAL SPRD (NYSE: XLF)


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