Click on graph for larger image. 
According to the S&P/Case-Shiller home price report, the home price index covering 10 major U.S. cities increased 13.5% in the year ended in January. The 20-city price index advanced 13.2% ...
... "From the bottom in 2012, prices are up 23% and the housing market is showing signs of moving forward with more normal price increases." [said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.]
...
"Expectations and recent data point to continued home price gains for 2014. Although most analysts do not expect the same rapid increases we saw last year, the consensus is for moderating gains," the report said.
| Net Home Orders | |||
|---|---|---|---|
| 3-mo period ending: | 2/28/2014 | 2/28/2013 | % Change |
| Lennar | 4,465 | 4,055 | 10.1% |
| KB Home | 1,765 | 1,671 | 5.6% |
| Hovnanian | 1,402 | 1,581 | -11.3% |
| Total | 7,632 | 7,307 | 4.4% |
According to the summary results of bank stress tests announced by the Federal Reserve on Thursday, the largest banking institutions in the United States are collectively better positioned to continue to lend to households and businesses and to meet their financial commitments in an extremely severe economic downturn than they were five years ago. This result reflects continued broad improvement in their capital positions since the financial crisis.
Reflecting the severity of the most extreme stress scenario--which features a deep recession with a sharp rise in the unemployment rate, a drop in equity prices of nearly 50 percent, and a decline in house prices to levels last seen in 2001--projected loan losses at the 30 bank holding companies in the latest stress tests would total $366 billion during the nine quarters of the hypothetical stress scenario. The aggregate tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual 11.5 percent in the third quarter of 2013 to the minimum level of 7.6 percent in the hypothetical stress scenario. That minimum post-stress number is significantly higher than the 30 firms' actual tier 1 common ratio of 5.5 percent measured in the beginning of 2009.
The Fed said 29 of the 30 largest institutions have enough capital to continue lending even when faced with a hypothetical jolt to the U.S. economy lasting into 2015, including a severe drop in housing prices and a spike in the unemployment rate.
The results will factor into the Fed's decision next week to approve or deny individual banks' plans for returning billions of dollars to shareholders through dividends or share buybacks. The Fed's annual "stress tests" are designed to ensure large banks can withstand severe losses without needing a government rescue.
Information received since the Federal Open Market Committee met in January indicates that growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. Household spending and business fixed investment continued to advance, while the recovery in the housing sector remained slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.
The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in April, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $25 billion per month rather than $30 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $30 billion per month rather than $35 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.
The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.
With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance. The change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Richard W. Fisher; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; and Daniel K. Tarullo.
Voting against the action was Narayana Kocherlakota, who supported the sixth paragraph, but believed the fifth paragraph weakens the credibility of the Committee's commitment to return inflation to the 2 percent target from below and fosters policy uncertainty that hinders economic activity.
emphasis added
The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for January 2014. In the past month, the indexes increased in 48 states and remained stable in two, for a one-month diffusion index of 96. Over the past three months, the indexes increased in 50 states, for a three-month diffusion index of 100.
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
Click on graph for larger image. 
Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and is all green again.
If starts or sales are up at least 20% YoY in any month in 2014, [NDD] will make a $100 donation to the charity of Bill's choice, which he has designated as the Memorial Fund in honor of his late co-blogger, Tanta. If housing permits or starts are down 100,000 YoY at least once in 2014, he make a $100 donation to the charity of my choice, which is the Alzheimer's Association.
Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm. After investing $8 billion since April 2012 to buy 43,000 homes in 14 cities, the company has narrowed most of its purchasing to Seattle, Atlanta, Miami, Orlando and Tampa.
“The institutional wave has passed,” Gray, who oversees almost $80 billion in property investments, said in a telephone interview. “It’s at a much lower level than it was 12 or 24 months ago.”
...
American Homes 4 Rent (AMH) has slowed its buying in some of its 42 markets, chief executive officer David Singelyn said at a March 5 investor conference in Florida. ... American Residential Properties Inc. (ARPI), a landlord with 6,000 homes, slowed acquisitions by almost half in its latest quarter ending Dec. 31
Congress has been stalled since extended federal jobless benefits expired on Dec. 28, 2013, taking away financial support from an estimated two million people so far.
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Under the agreement reached Thursday, those who had lost benefits in late December would receive retroactive payments.
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To ensure that the roughly $9.7 billion bill doesn't add to the federal budget deficit, it includes measures designed to generate new revenue.
The deal's fate in the Republican-controlled House of Representatives wasn't immediately clear. House Speaker John Boehner (R., Ohio) had said earlier this year that he would consider renewing the long-term benefits if lawmakers could come up with a plan to offset the cost ...
Bay Area home buyers were kept scrambling last month as a continued lack of inventory contributed heavily to a six-year low in sales. ...
A total of 4,963 new and resale houses and condos sold in the nine-county Bay Area last month. That was the lowest for any February since 2008, when 3,989 homes sold. Last month’s sales rose 5.7 percent from 4,696 in January, and fell 8.2 percent from 5,404 in February 2013, according to San Diego-based DataQuick.
Since 1988, when DataQuick’s statistics begin, February sales have ranged from a low of 3,989 in 2008 to a high of 8,901 in 2002. Last month’s sales were 19.9 percent below the average number of February sales – 6,194 – since 1988. Sales haven’t been above average for any month in more than seven years.
“A number of factors can keep a lid on sales. Affordability, for example. Or hard-to-get mortgages. These factors certainly play a role today, but clearly the main culprit is an inadequate supply of homes for sale. It’s going to be fascinating to watch how things play out between now and June. At some point rising home prices will trigger a more significant increase in the number of homes on the market. It’s just a question of when,” said John Walsh, DataQuick president.
Distressed property sales – the combination of foreclosure resales and “short sales” – made up about 12.5 percent of last month’s resale market. That was down from 14.0 percent in January and down from 34.1 percent a year earlier.
Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 5.4 percent of resales in February, up from a revised 5.2 percent the month before, and down from 13.9 percent a year ago. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 17 years is 9.9 percent.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 7.0 percent of Bay Area resales last month. That was down from an estimated 8.8 percent in January and down from 20.2 percent a year earlier.
Nationally, asking home prices rose 10.4% year-over-year in February 2014, down slightly after peaking in November 2013. But the year-over-year change is an average of the past twelve months and therefore obscures the most recent trends in prices. Looking at quarter-over-quarter changes instead, it’s clear that price gains have been slowing for most of the last year: asking home prices rose just 1.9% in February – a rate similar to those recorded in January and December – compared with increases near 2.5% from July 2013 to November 2013 and over 3% from April 2013 to June 2013. The quarter-over-quarter change in asking prices topped out at 3.5% in April 2013 and now, at 1.9%, the increase is just over half of that peak.
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The 10 U.S. metros with the biggest year-over-year price increases in February 2014 all experienced a severe housing bust after the bubble popped (by “severe,” we mean a price drop from peak to trough of at least 30%, according to the Federal Housing Finance Agency index). Why? After prices fell in these markets, homes looked like bargains to investors and other buyers. At the same time, price drops also spurred foreclosures, which forced many families to become renters. Price drops and stronger rental demand together create the ideal conditions for investors to buy and rent out single-family homes, which helped boost home prices.
In February, rents rose 3.4% year-over-year nationally. In 20 the 25 largest rental markets, February’s increase was larger than the year-over-year rent increase from three months earlier, in November. emphasis added
Incoming data has tended to disappoint. While weather impacts are taking part of the blame, I tend to think that part of the blame should fall on overly optimistic interpretations of data patterns at the end of 2013. ...
Bottom Line: Data disappointment in part is driven by excessive optimism. In any event, data are not sufficiently disappointing to derail the Fed's tapering plans. Unless activity lurches sharply downward, I think the tapering process is pretty much on autopilot. It is now all about interest rates.
"While our first quarter is always the slowest seasonal period for net contracts, the strong recovery trajectory from the spring selling season of 2013 has softened on a year-over-year basis. Net contracts in the months of December, January and February have not met our expectations. In addition to the lull in sales momentum, both sales and deliveries were impacted by poor weather conditions and deliveries were further impacted by shortages in labor and certain materials in some markets that have extended cycle times," stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer.
"We are encouraged by the fact that we have a higher contract backlog, gross margin and community count than we did at the same point in time last year. Furthermore, we have taken steps to spur additional sales in the spring selling season, including the launch of Big Deal Days, a national sales campaign during the month of March. Our first quarter has always been the slowest seasonal period and we expect to report stronger results as the year progresses. We believe this is a temporary pause in the industry's recovery, and based on the level of housing starts across the country, we continue to believe the homebuilding industry is still in the early stages of recovery," concluded Mr. Hovnanian.
emphasis added
