Young People not Buying Homes.

Chicago Federal Reserve National Activity Index (January 2015)

– Level  +0.13. Previous was -0.07
– 3 Month Moving Average +0.33. Previous was +0.34

This index is national and is a weighted average of 85 different pieces of data.  January was strong in comparison with a weak December.

 
Existing Home Sales (January 2015)

– Existing Home Sales (seasonally adjusted, annualized)  4,820,000. Previous was 5,070,000
– Existing Home Sales year/year +3.2%

The cause of anemic Home Sales is based on the fact that young people cannot afford to purchase. The following is from Zillow: “Most young adults are living with their parents or living with friends in order to defray housing costs rather than cohabitating with a significant other. Low wages, minimal employment opportunities and the high cost of rent has forced many young adults to pack into fewer households, increasing household size but negatively impacting the rate of household formation. Between 2000 and 2013, the percentage of 23 to 34 year olds living with family increased 46% whereas the share of 23 to 34 year olds living with a significant other fell 21%. Zillow also found that the rate of young adults living with two or more roommates has increased at a higher rate and that a greater share of working adults are living with family rather than their partners.”

Government policy acted to support home values based on the belief that having them fall absent support would creates disaster. One consequence is less affordable housing, fewer Sales of Existing Homes and fewer Housing Starts.

 

Dallas Federal Reserve Manufacturing Survey (February 2015)

– Business Activity Index -11.2. Previous was -4.4
– Production Index  +0.7. Previous was +0.7.

This is likely caused by the drop in oil prices.