by Calculated Risk on 3/20/2013 08:46:00 PM

The focus on Thursday (well, other than Cyprus) will be on the existing home sales report.

The key number in the existing home sales is inventory, not sales.   It doesn't matter if the sales rate declined in February since this might be because there are fewer distressed sales - while the number of conventional sales are increasing.  That would be a positive for housing.  What matters is inventory.

And on inventory, Trulia economist Jed Kolko looked at the normal seasonal pattern:

Inventory typically has a big seasonal jump between January and February – 6% is the norm. As we watch inventory numbers closely to spot the inventory turnaround, it’s critical not to mistake seasonal jumps for an underlying upward trend. In tomorrow’s NAR existing-home sales report, inventory is likely to increase because of seasonality, but unless the month-over-month increase is bigger than 6%, the jump will be entirely due to seasonality and not the beginning of a sustained inventory turnaround. Over the course of the year, inventory is typically lowest in January and highest in July and August, rising 17-18% between the winter trough and the summer peak. With the February inventory report, we are entering the half of the year when inventory typically expands.

Thursday economic releases:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 340 thousand from 332 thousand last week. The "sequester" budget cuts might start impacting weekly claims this week.

• At 9:00 AM, the Markit US PMI Manufacturing Index Flash will be released. The consensus is for a decrease to 55.0 from 55.2 in February.

• At 10:00 AM, Existing Home Sales for February from the National Association of Realtors (NAR). The consensus is for sales of 5.01 million on seasonally adjusted annual rate (SAAR) basis. Sales in January were 4.92 million SAAR. Economist Tom Lawler is estimating the NAR will report a sales rate of 4.87 million.

• Also at 10:00 AM, the FHFA House Price Index for January 2013. This was original a GSE only repeat sales, however there is also an expanded index that deserves more attention. The consensus is for a 0.7% increase in house prices.

• Also at 10:00 AM, the Philly Fed manufacturing survey for March. The consensus is for a reading of minus 1.5, up from minus 12.5 last month (below zero indicates contraction).