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Weather puts chill on new-home sales in Northeast

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WASHINGTON (2/26/15)--The overall climate for new-home sales remained steady in January, despite a plummeting month for the Northeast, according to the Commerce Department.
While new single-family home sales ticked downward 0.2% in January to 481,000 annualized units, they still came in above the expected, and much larger, decline of 3.5%, according to Wednesday's numbers.  Compared with January a year prior, sales were up 5.3%.
Figures for December were revised up to 482,000 from an initial estimate of 481,000, making December the strongest month since June 2008 ( The Wall Street Journal Feb. 25).
With colder weather and severe snowstorms in play, new-home sales fell 51.6% in the Northeast. This was the largest monthly decline and put sales in the Northeast at a record low, said Moody's analyst Ryan Sweet ( Feb. 25). The Northeast accounted for 3% of U.S. new-home sales in January, down from 6% in 2014 and the lowest on record. In other regions, sales rose 19.2% in the Midwest and increased 2.2% in the South. Sales in the West fell 0.8%.

News of the Competition (2/25/15)

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  • NEW YORK (2/25/15)-- JPMorgan Chase, the largest bank in the United States, announced plans recently to charge large institutional customers for some deposits, a move driven by new banking rules that increase the cost for banks to hold money for clients ( The Wall Street Journal Feb. 24). According to a recent bank presentation, JPMorgan hopes to shave off $100 billion of non-operating deposits by the end of the year. The change reportedly will target excess cash held by financial institutions, such as hedge funds and foreign banks, but not individual account holders ( Yahoo Feb. 24). JPMorgan and other big banks in the United States recently have been discussing taking steps to discourage certain deposits in response to new regulations and low interest rates, according to The Journal . "We'll reshape the business over time by shrinking certain exposures," Marianne Lake, JPMorgan chief financial officer, told The Journal ...

Conference Board: Consumer confidence dips in Feb.

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WASHINGTON (2/25/15)--Consumer confidence took a step back in February, as the Conference Board Consumer Confidence index slipped by 7.4 points during the month to a reading of 96.4 ( Feb. 24).

The stumble knocked the index well below the 103.8 recorded in January, a seven-year high, according to Moody's.

"More pessimism over the future fueled the majority of the decline, which was more than forecast, but weaker assessments of current conditions also contributed," said Nate Kelley, Moody's analyst ( ). "Still, the index has been choppy over the past six months or so, and the three-month moving average is 97.8, the highest since July 2007."

The present situation subindex dropped by 3.7 points to 110.2 in February, and the future conditions subcomponent fell by nearly 10 points to 87.2.

Fewer shoppers said business conditions were good during the month--26% after 28.2% in January--though the share that said conditions were bad also fell to 17% from 17.3%.

Further, 57% of respondents said business conditions were normal, a slight improvement over last month's reading.

Other key findings from the report:
  • The share of respondents who said jobs are "hard to get" rose by 1.6% to 26.2%, while the share who believe jobs are plentiful inched down to 20.5% from 20.7%;
  • The share of those who believe business conditions will remain unchanged over the next six months climbed to 75.2% from 72.9%, the highest number since July 2007, while the share who believe conditions will improve fell to 16.1% from 18.9%, the smallest number since October 2013; and
  • Plans to buy a home were largely unchanged from January to February, with those planning to buy a home rising to 5.6% from 5.4% for the month. Those who plan to buy a car, however, fell to 11% from 13.1%.

Existing-home sales pace drops to 9-month low in Jan.

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WASHINGTON (2/24/15)--Existing-home sales continue to underwhelm as sales declined again in January--this time falling to their slowest pace in nine months, according to numbers released Monday by the National Association of Realtors.
Seasonally adjusted annualized home sales fell 4.9% to 4.82 million. However, that was still 3.2% above their year-ago levels ( Feb. 23).
Weak condo-and-co-op sales led the decline with its third-straight poor month, dropping 3.5% from December to January, and 1.8% year-over-year. Single-family home sales also fell, dropping 3.5% to 4.27 million units annualized.
"The housing market took a step back in January," said Thomas McCartin, Moody's analyst ( ). "Existing-home sales dropped to the lowest level since April. The current pace is soft" and January's performance did not alter that trend much.
By region, existing-home sales fell 2.7% in the Midwest, 4.6% in the South, 6% in the Northeast and 7.1% in the West.
The median price of existing single-family homes dropped to $199,600 for the month, a 4.1% decrease from December and the lowest average price since March 2014, according to Moody's. The price is 6.2% higher on an annual basis, however.

News of the Competition (2/23/15)

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  • NEW YORK (2/23/15)-- A federal judge ruled last week that American Express' practice of prohibiting merchants from encouraging customers to make purchases with lower-cost cards violates antitrust laws ( The New York Times Feb. 19). American Express charges merchants higher fees than companies such as Visa, MasterCard and Discover, making it cheaper for merchants when customers use those cards instead of Amex. But prohibiting merchants from asking customers to use different credit cards constitutes "an unlawful restraint on trade," the judge said. American Express said the practice actually protects its customers from "anti-consumer practices," such as being told to pay with another card, The New York Times reported. "Eliminating these protections would inhibit consumers' choice to pay with their preferred payment method and allow merchants who have agreed to honor our cards to then discriminate against them when our card members choose to pay with American Express" ...

Subprime lending highest since financial crisis: Equifax

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WASHINGTON (2/23/15)--Nearly four in 10 loans made in the United States during the first 11 months of 2014 went to subprime borrowers, the highest number since the economic downturn, according to data from Equifax ( The Wall Street Journal Feb. 18).

More than 50 million consumer and credit card loans were made over the stretch totaling more than $189 billion, the highest number since 2007 when subprime lending accounted for 41% of consumer lending outside of home mortgages, the data revealed.

The return of subprime lending could signal that Americans are willing to take on more debt. The Federal Reserve Bank of New York unearthed hints of this last week when it found that household debt had climbed 2.7%, or $306 billion, annually in the fourth quarter last year, the largest expansion since the third quarter of 2010.

"We're going from an era where for many years credit was extremely tight to an era where credit is now looser," said Gabriel Dalporto, chief marketing officer for Lending Tree, a nonbank lender similar to many others that have entered and helped re-expand the subprime market ( The Journal ).

On average, borrowers with a credit score below 650 owed $48,000 across all debt obligations, including mortgages, in October 2014, according to San Jose, Calif.-based Fair Isaac Corp. In October 2012, that number was $55,000, and in October 2008 it was $61,000.

Despite the recent increase in subprime lending, however, mortgage lending has remained an exception, The Journal said.

News of the Competition (2/20/15)

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  • WASHINGTON-- The Treasury Department's portal for collecting online payments-- --is now accepting PayPal and Dwolla as payment options . "The goal of these partnerships is to provide greater choice and convenience to customers who transact business with the federal government," the department said in a release. In fiscal year 2014 the Treasury Department's fiscal service bureau collected $3.7 trillion in revenue through 400 million transactions using and other programs. Nearly 98% of those transactions were settled electronically. The move follows President Barack Obama's announcement that chip-and-PIN technology would be added to new and existing credit cards issued by the General Services Administration to government employees as well as debit cards issued as part of federal benefit programs such as Direct Express ...