THE BASIS POINT

‘Record Rate’ Headlines Wrong. Rates Up Today On Lots Of Improving Data.

Thanks a lot Freddie Mac for reporting expired ‘record rate’ data on the one day this week rates are rising.

There are a lot of great housing journalists out there, but this is a point most miss: Freddie Mac’s every-Thursday rate report uses data collected from lenders Mondays through Wednesdays. The rates posted include points that the overwhelming majority of journalists never mention. And the rates are for owner-occupied single family home loans to $417k. So zero-points rates are higher, condos are usually higher and loan above $417k are higher.

That said, news that the Greece bailout is on track, the lowest U.S. jobless claims since March 2008, highest level of U.S. home construction since November 2008, a fifth month of higher manufacturing activity, and flat producer inflation have caused rates to rise about .125% today.

Rates rise when mortgage bonds sell, and the FNMA 3.5% benchmark coupon is down 34 basis points to 103.41.

Here’s a rundown of today’s U.S. data with charts.

Initial Jobless Claims
-348,000 for week ended February 11, seasonally adjusted
-Down 13,000 from previous week’s revised 361,000 (was 373k)
-4-week moving average was 365,250, down 1,750
-This is the lowest level of Initial Claims in almost four years.
Details here from Labor Department.

This is seasonally adjusted data. Unadjusted totaled 361,928, a decrease of 39,328 from the previous week. There were 424,400 initial claims in the comparable week in 2011.

The adjusted data may be lower because the adjusted data allows for adding in an allowance for people laid off by bad weather. Since the weather had been mild over most of the country there likely have been fewer weather related layoffs.

These charts from Bespoke tell a positive story.

Housing Starts (January 2012)
-Housing Starts 699k seasonally adjusted, annualized. Dec revised from 657k to 689k.
-Construction (measured by Starts) up 1.5% in January
-Three-month moving average 697k, highest since November 2008
-Outlook better but Briefing.com chart below shows we’ve got a long way to go
-Need to be at 1.5m to keep pace with population growth, scrappage

-Single family starts down from 513k Dec to 508k Jan, but Dec was revised up from 470k
-Multifamily home constructions up 8.5% from 176k (Dec) to 191k (Jan)
-Building permits 676k seasonally adjusted, annualized vs. 697k Dec.
-Again because of good weather, seasonal adjustments may be inflating the data.

Philadelphia Fed Manufacturing (February 2012)
-Index of manufacturing activity in Philly region rose to 10.2 for February
-Region is: Eastern Pennsylvania, Southern New Jersey, Deleware
-This is up from a from 7.3 in January
-Zero is the dividing line between expansion and contraction
-Fifth straight monthly gain, and highest since October 2011
Full report

Inflation: Producer Price Index January
-PPI, Month/Month change +0.1%
-PPI, Year/Year change +4.1%
-Core PPI (less food & energy), Month/Month change +0.4%
-Core PPI (less food & energy), Year/Year change +3.0%

This data may seem odd at first. There were inconsistent changes in energy prices which blunted the increase in overall. The cost of electrical power was down 1.7%. Natural Gas prices were lower. Gasoline was +2.0%. Food was down 0.3%.