Economic Update

The National Association of Home Builders/Wells Fargo monthly housing market index was unchanged in May at 16. An index reading below 50 indicates negative sentiment about the housing market. The combined construction of new single-family homes and apartments in April fell 10.6% to a seasonally adjusted annual rate of 523,000 units. Single-family starts decreased 5.1%. Multifamily starts fell 24.1%. Applications for new building permits, seen as an indicator of future activity, fell 4% to an annual rate of 551,000 units. Industrial production at the nation's factories, mines and utilities was unchanged in April, following a revised 0.7% increase in March. Compared to a year ago, industrial production is up 5%. Capacity utilization was 76.9% in April. The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending May 13 rose 7.8%. Refinancing applications increased 13.2%. Purchase volume fell 3.2%. Existing home sales fell 0.8% in April to a seasonally adjusted annual rate of 5.05 million units from a revised 5.1 million units in March. The inventory of unsold homes on the market increased 9.9% to 3.87 million, a 9.2-month supply at the current sales pace, up from an 8.3-month supply in March. The index of leading economic indicators — designed to forecast economic activity in the next three to six months — fell 0.3% in April, following a revised 0.7% increase in March. Initial claims for unemployment benefits fell by 29,000 to 409,000 for the week ending May 14. Continuing claims for the week ending May 7 fell by 81,000 to 3.7 million. Upcoming on the economic calendar are reports on new home sales on May 24 and pending home sales on May 27.