{"id":1705,"date":"2020-04-21T12:21:03","date_gmt":"2020-04-21T16:21:03","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1705"},"modified":"2020-04-21T12:21:03","modified_gmt":"2020-04-21T16:21:03","slug":"march-existing-home-sales-and-april-philadelphia-fed-nonmanufacturing-survey","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1705","title":{"rendered":"March Existing Home Sales and April Philadelphia Fed NonManufacturing Survey"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Sales: -8.5%; Over-Year: +0.8%; Prices\n(Over-Year): +8%\/ Phil. Fed (NonMan.): down 61.3 points; Firm Activity: down\n69.7 points; Expectations: down 8.9 points<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe housing market is starting to get sick.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Few sectors are immune from the virus\nravaging the economy and it is not a surprise that housing is starting to show\nstrains as well.  Going into March, this\nportion of the economy was in really good shape<\/em><\/strong> and was expected to\nlead the way.  Sales were strong and\nprices were starting to firm.  However, given\nthe realities of social distancing, it is hard to convince people making their\nlargest purchase that the house they are seeing on the Internet is the home for\nthem.  True, everything you see on the\nInternet is true and accurate, but it you believe that, I\u2019ve got a fixer-upper\nthat is in pristine condition.  Make me\nan offer.  And that is the problem now,\nespecially on the demand side.  The\nNational Association of Realtors reported that sales fell sharply March and\nevery region declined.<\/em><\/strong>  But to\nshow how strong the market has been, the sales pace was still above the level\nposted in March 2019. <\/em><\/strong> Though the\ninventory of homes for sale rose, it is still low. It will be interested to see\nif supply drops in the April report.  I\nhave heard from realtors that they are pulling a lot of homes temporarily from\nthe market.  Finally, prices soared. <\/p>\n\n\n\n

The Philadelphia Fed\u2019s index of nonmanufacturing firms crashed and burned in early April.\u00a0 The index of economic activity dropped to -96.4.\u00a0 The lowest possible is -100 <\/em><\/strong>and that was not reached because 1.8% of the respondents said regional business activity rose. The other 98.2% said it declined.\u00a0 No one said it remained the same.\u00a0 Amazing.\u00a0 As for their own firm, 85.4% said activity fell while only 2.9% indicated it was up.<\/em><\/strong>\u00a0 But those are hardly surprising results.\u00a0 What was discouraging were the expectations data.\u00a0 Confidence about regional and firm activity six months from now deteriorated. <\/em><\/strong>\u00a0Despite all the stories of reopening, business leaders seem to be less hopeful a return to good growth is in the cards.\u00a0 <\/p>\n\n\n\n

MARKETS AND FED POLICY IMPLICATIONS:The March data are trickling in and they are hard to get a good handle on the extent of the damage.\u00a0 For some industries, the shutdowns didn\u2019t occur until well into the month.\u00a0 Thus, the readings represent a combination of pre and post-shut-down economies. <\/em><\/strong>\u00a0That is the case with the housing market.\u00a0 We will not really know the extent of the harm until the April numbers are released.<\/em><\/strong>\u00a0 It is hard, though hardly impossible, for closings to happen (for existing homes sales) or for contracts to be signed, which go into new home sales.\u00a0 But virtual visits don\u2019t replace in-person walk-throughs and as anyone who has bought a home knows, it is the feel that usually matters.<\/em><\/strong>\u00a0 Pending home sales, which will be released on April 29th<\/sup>, should tell us a lot about the existing market. As for the economy, some states are trying to start things back up.The risk\/reward of that is being hotly debated, but the downside seems to be a lot greater than the upside since there will be only modest initial increases in hiring and output.\u00a0 A resurgence of the virus in those states could set back the process significantly.<\/em><\/strong>\u00a0 But the governors in those states are willing to take that chance, so we are starting what is rare in social science: A real world mass experiment.\u00a0 Meanwhile, the total and complete collapse of near-term oil prices shows the extent of devastation (and the impact of the Russia\/Saudi price war).\u00a0 It is unclear whether this will alter the thinking of most investors who apparent believe that the pathway back to normal is a V-shaped huge and rapid recovery.But it is a warning.When you start paying people to hold your product, you are in deep trouble.<\/em><\/strong>\u00a0 That is what negative interest rates signal \u2013 massive economic weakness.\u00a0 The Fed seems willing to shower the economy with all the liquidity it can handle and more, if necessary, so I don\u2019t expect negative rates to become policy \u2013 thankfully.<\/em><\/strong>\u00a0 But negative commodity prices are something we should not simply dismiss, even if they are only temporary.\u00a0 The enormous problems we face in restarting an economy this big and this damaged have to be discussed first and then addressed.\u00a0 Policymakers are treating the symptoms but have not even started the process of formulating a plan to reverse the damage.\u00a0 <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Sales: -8.5%; Over-Year: +0.8%; Prices (Over-Year): +8%\/ Phil. Fed (NonMan.): down 61.3 points; Firm Activity: down 69.7 points; Expectations: down 8.9 points IN A NUTSHELL:  \u201cThe housing market is starting to get sick.\u201d WHAT IT MEANS:  Few sectors are immune from the virus ravaging the economy and it is not a surprise that … Continue reading March Existing Home Sales and April Philadelphia Fed NonManufacturing Survey<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1705","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1705","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1705"}],"version-history":[{"count":2,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1705\/revisions"}],"predecessor-version":[{"id":1707,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1705\/revisions\/1707"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1705"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1705"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1705"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}