S&P Case-Shiller HPI
One of the biggest stories of the 2017 economy was home prices reflected in the S&P Case-Shiller data where October’s seasonally adjusted gain for the 20-city index is a sharp 0.7 percent. For a second month in a row, all 20 cities followed by this report, show monthly gains. Adding to this strength is a sizable 5 tenths upward revision to September to a level which now stands at 1.0 percent; this however is offset in part by the two tenths downward revision to August to a 0.2 percent gain. The gain for October and the upward revision to September are tied to seasonal adjustments as the undadju8sted index rose only 0.2 percent in October with September unrevised at 0.4 percent. October, compared to other months, is relatively slow for the resale market which is compensated for by a large upward adjustment. Year on year rates for October 2017 vs. 2016 are less affected by these seasonal adjustments and here underlying strength is the signal, at 6.4 percent for 2 tenths gain and the best rate since July of 2014.
After posting back to back 17-year highs in the prior two months, the consumer confidence index cooled slightly in the December report, to a level of 112.1 vs. a revised 128.6 in November and 126.2 in October. The cooling, however doesn’t include the assessment of the current jobs market where only 15.2 percent say jobs are hard to get vs. 16.8 and 17.1 percent in the prior two months. This reading of current jobs is closely watched and will confirm expectations for another strong monthly employment report. Strength in other readings eased especially in the assessment of the future jobs markets where optimists fell nearly 2 percentage points to 18.4 percent and pessimists rose more than 4 points to 16.3 percent. Other details include a gain for those seeing their income rising which his offset, however by an increase among those who see their income falling. The strength in this report of the jobs hard to get reading dominates this report and more than offsets the slowing seen in other readings.
Pending Home Sales Index
The pending home sales index has been flat and has not been in line with the strength seen in the final sales of existing homes. The November pending home sales index only managed a 0.2 percent gain to a level of 109.5; this is still below last year’s levels. In contrast, existing home sales at annualized rate of 5.810 million in data released last week for the month of November, are at the highest level of the economic expansion. The pending home sales index is up only 0.8 percent compared to this time last year, again this is below final sales where the year on year gain is 3.8 percent. Housing data in general has been accelerating strongly as we enter the year end but the pending home sales index, though it did see a sharp 3.5 percent increase in last month’s report for October, has been mostly an exception.
Initial jobless claims remained unchanged at 245,000 in the week of December 23rd though, due to holidays, an unusually large total of 15 states had to have their data estimated. Though 245,000 Is on the high side for initial claims, the four-week average is still low at 237,750 for only a slight weekly gain. For the lagging data, continuing claims for the week of December 16th rose slightly to 1.943 million with this four-week average down 24,000 to 1.920 million. The unemployment rate for insured workers remains at the low level of 1.4 percent. The large number of cities whose data had to be estimated clouds this report but earlier readings in December point to strong health for the labor market and yet to another favorable monthly employment report