Chicago Fed National Activity Index (CFNAI) for April 2023

Federal Reserve Bank of Chicago released its National Activity Index (CFNAI) for April 2023:

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Predicted: -0.20

• Actual (CFNAI): +0.07

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• Previous Month (revised): -0.37

• 3-Month Moving Average (CFNAI-MA3): -0.22
  

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The CFNAI is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data:

• Production and income;
• Employment, unemployment, and hours;
• Personal consumption and housing; and
• Sales, orders, and inventories.

The "predicted" figure is what economists were expecting, while the yellow-highlighted figure is what was reported.

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 CHART: CFNAI-MA3 with Inflation Cycles
April 2023 Update

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Understanding The CFNAI:

A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

Periods of economic expansion have historically been associated with values of the CFNAI-MA3 above -0.70 and the CFNAI Diffusion Index above -0.35. Conversely, periods of economic contraction have historically been associated with values of the CFNAI-MA3 below -0.70 and the CFNAI Diffusion Index below -0.35.

An increasing likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +0.70 more than two years into an economic expansion. Similarly, a substantial likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +1.00 more than two years into an economic expansion.

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• Click here to view the full Chicago Fed report

• Click here for The List of 85 Existing Monthly Indicators
  

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Chicago Fed National Activity Index (CFNAI) for June 2022

The Federal Reserve Bank of Chicago released its National Activity Index (CFNAI) for June 2022:

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Predicted: -0.20

• Actual (CFNAI): -0.19

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• Previous Month (revised): -0.19

• 3-Month Moving Average (CFNAI-MA3): -0.04
  

==================

The CFNAI is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data:

• Production and income;
• Employment, unemployment, and hours;
• Personal consumption and housing; and
• Sales, orders, and inventories.

The "predicted" figure is what economists were expecting, while the yellow-highlighted figure is what was reported.

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CHART: Chicago Fed National Activity Monthly Index
June 2022 Update

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CHART: CFNAI-MA3 with Business Cycles
June 2022 Update

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Understanding The CFNAI:

A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

Periods of economic expansion have historically been associated with values of the CFNAI-MA3 above -0.70 and the CFNAI Diffusion Index above -0.35. Conversely, periods of economic contraction have historically been associated with values of the CFNAI-MA3 below -0.70 and the CFNAI Diffusion Index below -0.35.

An increasing likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +0.70 more than two years into an economic expansion. Similarly, a substantial likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +1.00 more than two years into an economic expansion.

==================

• Click here to view the full Chicago Fed report

• Click here for The List of 85 Existing Monthly Indicators
  

==================

 

 

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Pending Home Sales Index for November 2021

The Pending Home Sales Index (PHSI) report for November 2021 was released by The National Association of Realtors® (NAR) this morning:

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Predicted: Unchanged.

• Actual: 122.4

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-- Previous Month (revised): 125.2

-- 12 Months Previous: 125.8

•  Change from Previous Month: -2.236% (-2.8 points)
  
  
•  Change from One Year Previous: -2.703% (-3.4 points)

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• Click here to view Pending Home Sales Index data.
  
  
• PHSI Methodology
  

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From the NAR website:

• An index above 100 coincides with a historically high level of home sales activity.
  
  
• An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales. 2001 sales are fairly close to the higher level of home sales expected in the coming decade relative to the norms experienced in the mid-1990s. As such, an index of 100 coincides with a historically high level of home sales activity.
  

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From Today's Report:

"...Pending home sales slipped in November, receding slightly after a previous month of gains, according to the National Association of Realtors®. Each of the four major U.S. regions witnessed contract transactions decline month-over-month. Year-over-year activity mostly retreated too, as three regions reported drops and only the Midwest saw an increase.

The Pending Home Sales Index (PHSI), www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, fell 2.2.% to 122.4 in November. Year-over-year, signings slid 2.7%. An index of 100 is equal to the level of contract activity in 2001.

"There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices," said Lawrence Yun, NAR's chief economist. "While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability."

Yun notes that housing demand continues to be high, explaining that homes placed on the market for sale go from "listed status" to "under contract" in approximately 18 days.

"Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year," he said. "These aspects, along with the exorbitant prices and a lack of available homes, have created a much tougher buying season."

Yun adds that a countrywide surge of the omicron variant poses a risk to the housing market's performance, as buyers and sellers are sidelined, and home construction is delayed.

Realtor.com®'s Hottest Housing Markets (link is external) most recent data showed that out of the largest 40 metros, the most improved markets over the past year were Orlando-Kissimmee-Sanford, Fla.; Tampa-St. Petersburg, Fla.; Dallas-Fort Worth-Arlington, Texas; Jacksonville, Fla.; and Denver-Aurora-Lakewood, Colo..."

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 Housing Snapshot
Pending Home Sales
November 2021

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Pending Home Sales Index for July 2021

The Pending Home Sales Index (PHSI) report for July 2021 was released by The National Association of Realtors® (NAR) this morning:

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Predicted: Unchanged.

• Actual: 110.7

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-- Previous Month (revised): 112.7

-- 12 Months Previous: 121.0

•  Change from Previous Month: -1.775% (-2.0 points)
  
  
•  Change from One Year Previous: -8.512% (-10.3 points)

==========

• Click here to view Pending Home Sales Index data.
  
  
• PHSI Methodology
  

========

 

From the NAR website:

• An index above 100 coincides with a historically high level of home sales activity.
  
  
• An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales. 2001 sales are fairly close to the higher level of home sales expected in the coming decade relative to the norms experienced in the mid-1990s. As such, an index of 100 coincides with a historically high level of home sales activity.
  

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From Today's Report:

"...Pending home sales dipped modestly in July, noting two consecutive months of declines, according to the National Association of Realtors®.  Only the West region registered a month-over-month gain in contract activity, while the other three major U.S. regions reported drops. All four regions saw transactions decrease year-over-year.

The Pending Home Sales Index (PHSI), www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, declined 1.8% to 110.7 in July. Year-over-year, signings fell 8.5%. An index of 100 is equal to the level of contract activity in 2001.

'The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,' said Lawrence Yun, NAR's chief economist. 'That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months.

'Homes listed for sale are still garnering great interest, but the multiple, frenzied offers -- sometimes double-digit bids on one property -- have dissipated in most regions,' Yun said. 'Even in a somewhat calmer market, a number of potential buyers are still choosing to waive appraisals and inspections.'

As of July, 27% of buyers bypassed appraisal and inspection contingencies. By refraining from these evaluations, in most cases, buyers are looking to accelerate the homebuying process, according to Yun.

July Pending Home Sales Regional Breakdown

Month-over-month, the Northeast PHSI fell 6.6% to 92.0 in July, a 16.9% decrease from a year ago. In the Midwest, the index dropped 3.3% to 104.6 last month, down 8.5% from July 2020.

Pending home sales transactions in the South declined 0.9% to an index of 130.9 in July, down 6.7% from July 2020. The index in the West rose 1.9% in July to 99.8, but still down 5.7% from a year prior.

The National Association of Realtors® is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.

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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales are not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues.

The index is based on a sample that covers about 40% of multiple listing service data each month. In developing the model for the index, it was demonstrated that the level of monthly sales contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population..."

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Housing Snapshot
Pending Home Sales
July 2021

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Pending Home Sales Index for May 2018

The Pending Home Sales Index (PHSI) report for May 2018 was released by The National Association of Realtors® (NAR) this morning:

• Actual: 105.9

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Previous Month (revised): 106.4

•  Change from Previous Month: -0.4699% (-0.5 point)
  
  
•  Change from One Year Previous: -2.216% (-2.4 points)

==========

• Click here to view Pending Home Sales Index data.
  
  
  
• PHSI Methodology
  

========

 

 From the NAR website:

• An index above 100 coincides with a historically high level of home sales activity.
  
  
• An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales. 2001 sales are fairly close to the higher level of home sales expected in the coming decade relative to the norms experienced in the mid-1990s. As such, an index of 100 coincides with a historically high level of home sales activity.
  

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From today's report:

"...Pending home sales decreased modestly in May and have now fallen on an annualized basis for the fifth straight month, according to the National Association of Realtors®. A larger decline in contract activity in the South offset gains in the Northeast, Midwest and West.

The Pending Home Sales Index, www.nar.realtor/pending-home-sales, a forward-looking indicator based on contract signings, decreased 0.5 percent to 105.9 in May from 106.4 in April. 

Lawrence Yun, NAR chief economist, says this year’s spring buying season will go down as one of unmet expectations. 'Pending home sales underperformed once again in May, declining for the second straight month and coming in at the second lowest level over the past year,' he said. 'Realtors® in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.'

The lackluster spring, according to Yun, has primarily been a supply issue, and not one of weakening demand. If the recent slowdown in activity were because buyer interest is waning, price growth would start slowing, inventory would begin rising and homes would stay on the market longer. Instead, the underlying closing data in May showed that home price gains are still outpacing income growth, inventory declined on an annual basis for the 36th consecutive month, and listings typically went under contract in just over three weeks1.

'With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market. One encouraging sign has been the increase in new home construction to a 10-year high,' added Yun. 'Several would-be buyers this spring were kept out of the market because of supply and affordability constraints. The healthy economy and job market should keep many of them actively looking to buy, and any rise in inventory would certainly help them find a home.'

Yun now forecasts for existing-home sales in 2018 to decrease 0.4 percent to 5.49 million – down from 5.51 million in 2017. The national median existing-home price is expected to increase around 5.0 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.7 percent.

The PHSI in the Northeast increased 2.0 percent to 92.4 in May, but is still 4.8 percent below a year ago. In the Midwest the index rose 2.9 percent to 101.4 in May, but is still 2.5 percent lower than May 2017.

Pending home sales in the South declined 3.5 percent to an index of 122.9 in May (unchanged from a year ago). The index in the West inched forward 0.6 percent in May to 94.7, but is 4.1 percent below a year ago..."

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Pending Home Sales Index for April 2018

The Pending Home Sales Index (PHSI) report for April 2018 was released by The National Association of Realtors® (NAR) this morning:

• Actual: 106.4

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Previous Month (revised): 107.8

•  Change from Previous Month: -1.299% (-1.4 points)
  
  
•  Change from One Year Previous: -2.116% (-2.3 points)

==========

• Click here to view Pending Home Sales Index data.
  
  
• PHSI Methodology
  

========

 

 From the NAR website:

• An index above 100 coincides with a historically high level of home sales activity.
  
  
• An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales. 2001 sales are fairly close to the higher level of home sales expected in the coming decade relative to the norms experienced in the mid-1990s. As such, an index of 100 coincides with a historically high level of home sales activity.
  

========

 

From today's report:

"...After two straight months of modest increases, pending home sales dipped in April to their third-lowest level over the past year, according to the National Association of Realtors®. All major regions saw no gain in contract activity last month.

The Pending Home Sales Index, www.nar.realtor/pending-home-sales, a forward-looking indicator based on contract signings, declined 1.3 percent to 106.4 in April from an upwardly revised 107.8 in March. With last month’s decrease, the index is down on an annualized basis (2.1 percent) for the fourth straight month.

Lawrence Yun, NAR chief economist, says the housing market this spring is hindered because of the severe housing shortages in much of the country. 'Pending sales slipped in April and continued to stay within the same narrow range with little signs of breaking out,' he said. 'Feedback from Realtors®, as well as the underlying sales data, reveal that the demand for buying a home is very robust. Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher.'

Added Yun, 'The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels.'

Heading into the summer months, if low supply and swift price growth were not enough of a headwind for the housing market, Yun believes that rising mortgage rates and gas prices could lead to hesitation among some would-be buyers.

'The combination of paying extra at the pump, while also needing to save more for a down payment because of higher rates and home prices, may weigh on the psyche of those looking to buy,' he said. 'For now, the economy is very healthy, job growth is holding steady and wages are slowly rising. However, it all comes down to overall supply. If more new and existing homes are listed for sale, it would allow home prices to moderate enough to stave off inflationary pressures and higher rates.'

Yun still forecasts for existing-home sales in 2018 to increase 0.5 percent to 5.54 million – up from 5.51 million in 2017. The national median existing-home price is expected to increase around 5.1 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.7 percent.

The PHSI in the Northeast remained at 90.6 in April, and is 2.1 percent below a year ago. In the Midwest the index decreased 3.2 percent to 98.5 in April, and is 5.1 percent lower than April 2017.

Pending home sales in the South declined 1.0 percent to an index of 127.3 in April, but is still 2.7 percent higher than last April. The index in the West inched backward 0.4 percent in April to 94.4, and is 4.6 percent below a year ago.

The National Association of Realtors® is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.

# # #

According to NAR’s April Realtors® Confidence Index, properties typically stayed on the market for 26 days in April, down from 30 days in March and 29 days a year ago.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing..."

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