U.S. Existing-Home Sales Rose in November to New Postcrisis High Homebuying activity increased in November to the strongest sales pace in nearly a decade, though rising prices and mortgage rates could pressure the U.S. housing sector in the new year.
Purchases of previously owned homes, which account for the vast majority of U.S. sales, edged up 0.7% from October to a seasonally adjusted annual rate of 5.61 million last month, the National Association of Realtors said Wednesday. That was the third straight monthly rise, beating economists’ expectations for a modest November decline, and the strongest sales rate since February 2007. (…)
Sales in November rose 15.4% compared with the same month a year earlier. The annual gain was exaggerated by a one-off plunge in sales during November 2015 that the NAR had blamed on new federal mortgages rules delaying closings.
First-time home buyers represented 32% of November sales. (…)
The total inventory of homes on the market declined 9.3% y/y to 1.850 million. (Chart from Haver Analytics)
The Mortgage Bankers Association reported that its total Mortgage Market Volume Index increased 2.5% last week (-9.5% y/y), but made up just part of the prior week’s 4.0% decline. Since their peak early in July, applications have fallen by roughly one-third. Refinancing applications gained 3.0% w/w, yet were off by one-half versus the level early in July. Purchase applications increased 2.7% (0.9% y/y), but were 6.8% below the high early in June.
The effective interest rate on a 15-year mortgage rose to 3.73%, up from the July low of 2.97%. The effective rate on a 30-year fixed-rate loan rose to 4.52%, up from the 3.70% low in early-July. The rate on a Jumbo 30-year loan increased to 4.43%. For adjustable 5-year mortgages, the effective interest rate of 3.54% was higher than 2.87% roughly six months ago.
Trump’s New Appointments Shake Up Trade, Regulation Donald Trump selected billionaire investor Carl Icahn and Peter Navarro, a critic of trade with China, for his economic team.
Donald Trump’s Win Sends Economic Optimism to Highest Level Since 2012 Donald Trump’s election has pushed confidence in the economy’s direction to its most favorable level in four years, according to the latest WSJ/NBC News poll.
Some 42% of respondents say they believe the economy will get better over the coming year, versus 19% who say it will get worse. The last time Americans were as optimistic about the economy came in October 2012, when 45% saw the economy getting better, compared with just 9% who saw it getting worse.
One year ago, some 24% of respondents believed the economy would improve over the following 12 months, equal to the share who believed it would worsen. (…)
In the WSJ/NBC News poll, the improving economic sentiment is driven largely by Republicans’ postelection enthusiasm. Some 68% of Republican voters see the economy improving over the next year, versus 6% who believe it will get worse. Last year, just 14% of Republicans saw the economy improving, compared with 34% who saw it getting worse.
Independent voters also believe the economy will improve by a 22-percentage-point margin, a reversal from last year, when independents saw the economy getting worse by a 15-percentage-point margin. (…)
Gallup’s survey is even more upbeat:
- The Trump effect: the outlook soared post elections:
Americans now need to translate that optimism into actions:
- Total housing starts have been flat for nearly 2 years.
- Core retail sales have been choppy in recent months and clearly weak in November.
- Small biz owners have also reacted positively to Mr. Trump’s election but their capex plans actually declined in the November survey.
- Sales of light vehicles have levelled off lately and are down 2.1% YoY.
U.S. Car Makers Idle Plants Amid Oversupply Concerns Detroit auto makers are pulling back on first-quarter production in response to a cooling in retail demand and a shift in consumer tastes, a speed bump for an industry that has laid the foundation for U.S. economic expansion in recent years.
Number of the Day
Year-over-year decline in U.S. rail shipments of motor vehicles and auto parts last week, according to the Association of American Railroads.
All three domestic car companies this week said they have scheduled down time at some of their factories for as much as three weeks in January. Auto makers typically idle assembly plants for a week or two around the holidays—but shutting factories for multiple weeks in January is unusual.
The moves are an attempt to help clear inventory of certain models such as sedans and minivans, which have been stacking up on dealer lots at a rapid pace in recent months. Such cars have attracted paltry interest among buyers more interested in sport-utility vehicles. (…)
Auto makers produced 3.6% more vehicles in North America last month than November 2015, according to researcher WardsAuto.com, a sign that executives were optimistic U.S. auto demand would be buoyant heading into 2017. (…)
Wards on Wednesday projected December car sales would grow at a strong seasonably adjusted pace. Inventory, however, will continue ballooning, the firm said, mostly due to increases in stocks at dealers selling GM, Ford and Chrysler products. (…)
Number of the Day: 10.8%: Year-over-year decline in U.S. rail shipments of motor vehicles and auto parts last week, according to the Association of American Railroads. (WSJ)
There are now bulls everywhere. (Chart from Yardeni Research)
And these bulls are very relaxed and serene:
VIX Hits Lowest Intraday Level in More than a Year The CBOE Volatility Index, often touted as the stock market’s fear gauge, dropped to its lowest intraday level since August 2015, one sign that investors aren’t pricing big risks into the market.
(…) the relationship between S&P 500 sectors broken down since the U.S. presidential elections as investors bet on individual winners and losers under a Donald Trump administration. The result has been big volatility moves in certain corners of the market that balance out with little effect on the broader index, Mr. Chintawongvanich said. (…)
Boeing chief praises Trump after meeting over Air Force One costs Defence executives discuss projects with president-elect after cost criticism
Good PR from everybody. I don’t know why TWTR is not going up given how effective it is proving to be in managing a country. Maybe Twitter should be nationalized.
Boeing’s chief executive lavished praise on Donald Trump on Wednesday after a meeting to discuss the president-elect’s sharp criticisms of the cost of the US group’s Air Force One contract and other big defence programmes.
“It was a terrific conversation. Got a lot of respect for him. He’s a good man. And he’s doing the right thing,” Dennis Muilenburg said after the meeting, which was prompted when Mr Trump sent an angry tweet earlier this month threatening to cancel the Air Force One contract. (…)
Mr Muilenburg called the meeting “very productive” and said he was “very encouraged by the dialogue”. Of the $4bn cost estimate, he said: “We’re going to get it done for less than that . . . I was able to give the president-elect my personal commitment on behalf of the Boeing Company.” (…)
BA shareholders should tweet Muilenburg to ask him to personally guarantee Boeing will not lose money on AF1.
Mr Muilenburg had already spoken to the president-elect immediately after his tweet and told him that the cost of Air Force One was largely determined by government requirements for security, communications and other specifications. After Wednesday’s meeting, Mr Muilenburg said: “We’re all focused on the same thing here; we’re going to make sure that we give our warfighters the best capability in the world and that we do it in a way that is affordable for our taxpayers.” (…)
Mr. Trump is just as effective with female execs, making a move here from The Apprentice to So You Think You Can Dance?
The president-elect also met another US defence contractor that has felt the sharp side of his Twitter feed recently, Lockheed Martin’s chief executive Marillyn Hewson.
Mr Trump tweeted last week that “the F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after” his inauguration.
Asked whether he had secured any concessions from Ms Hewson, Mr Trump told reporters: “We’re just beginning, it’s a dance . . . but we’re going to get the costs down and we’re going to get it done beautifully.”
I am sure he’s a beautiful dancer. This last one is a beauty after all the above:
He also held a meeting with senior military leaders and praised them as “good negotiators”. The Pentagon this week pushed back against his criticism of the F-35, saying it has “basically been on schedule” and “on budget” since 2011. (…)
The President-elect should give tweeting lessons to these “good negotiators”.