Jack Dunn - Reclaiming Common Sense

This column focuses on the economy. The data that comes out is often fast and furious. The problem is that the mainstream media has an attention span shorter than a gnat. Do you remember the dog from "Up?" Squirrel. The data that is release is almost always seasonally adjusted. The data is almost always advance data. Do they care about the preliminary data, the final data, or the revisions to the final data? If it bleeds it leads - If it is good news, it goes to seed.


All of the data is connected. It starts with the Jobs Data, or the Employment Situation Report. Retail sales flow from jobs. Housing construction and sales flow from jobs. Retail sales flow from new home and existing home sales. Sales can rise due to inflation or due to real sales. The revenue situation for the government comes primarily from personal and corporate taxes. If people make money then they pay taxes. Ditto corporations. If corporations make money they hire more workers or make capital investments. More investments, more jobs. More hiring, more jobs. More jobs more sales.


The March Existing Home Data is Solid, Strong Data.There are a number of ways to examine the data. Average Sales Price, Median Sales Price, Units sold, Dollar volume and inventory are but a few of the metrics. What is important to the home owner is the days on market, the list price, the sales price, and the competition. All real estate is local. Some markets heat up, or cool down, before others. School districts, neighborhoods, and condominium associations matter. The only weakness in this market is the existing home inventory supply.


The Average Sales Price hit a March All-Time High. The average sales price is $278,500. This is the sixth straight year of increasing average sales price. We are exceeding the all-time high set prior to the recession. This should free up some home sellers to sell their homes they purchased during 2000-2007.


March Units Sold were the highest since 2007. The only years where we had March sales higher were 2004, 2005, and 2006 as the housing market was surging to record levels.


We have seen 5.5 Million Units sold during the past 12 months. This is a pace faster than 2003 and 2009. This pace is also slower than 2004 through 2008. We are not accelerating at the pace we did between 2003 and 2004. The steepness of the curve is not there.


Inventory is holding us back. We saw inventory in the range of 2.0 million to 2.5 million units a month during the housing boom. We have been struggling to get between 1.7 and 2.2 million  homes since 2011. The excess in inventory during the recession curbed sales prices. The reverse is happening now. We have a lower March inventory of existing homes this month than March 2013-2016. We have roughly the same inventory now as we did during March 2000.


It's the economy, and it is good and getting better. We saw strong Current Population Survey (Household) data this past month. It was seasonally adjusted down. We have added over 2 million jobs during the past two months. That was followed up with a solid March Retail Sales Report - growing at a faster rate than last March even with massive February downward revisions. The Consumer Price Index report indicated that instead of inflation possibly exceeding 3% this month that it moderated to roughly 2.5%. The rate of inflation is being impacted by shelter costs and energy costs.


It is all related. People need full-time jobs in order to qualify for mortgages. We are seeing a surge in full-time jobs right now. Are they permanent or temporary? Time will tell. Will employers give cost of living increases? Time will tell. Will the rest of the media report the good news we are seeing? Time will tell. Yesterday's weekly unemployment claims data was the best for this time of year since April of 2000. Crickets.  What if the economy is on the road to expansion, not just recovery, and the rest of the world is looking at the wrong map or maps?


It's the economy.