New Home Constructions Improved, Builder Confidence Edge Up

22 10 2010

Housing starts improved slightly in September, rising 0.3 percent from the revised August estimate of 608,000, and they were 4.1 percent above the September 2009 rate of 586,000, the U.S. Commerce Department reports. Permits for new construction fell 5.6 percent in September from August to a seasonally adjusted rate of 539,000, and they were 10.9 percent below the September 2009 estimate of 605,000.

Builder confidence has also improved, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The index rose three points in October, which marks the first gain in five months and returns the index to a level last seen in June 2009. “Builders are starting to see some flickers of interest among potential buyers, and are hopeful that this interest will translate to more sales in the coming months,” says NAHB Chairman Bob Jones.

Source: U.S. Census Bureau

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Economic Growth Trudges Ahead

22 10 2010

The nation’s economy grew modestly in recent weeks, with nine of 12 districts expanding, according to a Federal Reserve report released Wednesday. The economic picture was mixed in the Cleveland and Richmond areas, and it weakened in the Atlanta region.

On the bright side, auto sales and travel and tourism perked up, and lackluster lending markets improved slightly, according to the Fed’s beige book, named for the color of its cover.

Overall, the survey portrayed an economy that continued to plod along in September and early October – after expanding fairly robustly early this year – as many nervous businesses put off capital investment and hiring.

“On balance, national economic activity continued to rise, albeit at a modest pace,” it stated.

Manufacturing and retail sales were up moderately, while housing and commercial real estate were still in the doldrums. The job market remained listless.

Still, the report, which provides a ground-level snapshot of every region in the country, amounted to an improvement on the Fed’s July-August survey, which showed “widespread signs of deceleration.” Economists said the latest report did nothing to dampen speculation that the Fed will launch a new round of government bond purchases at its Nov. 3 meeting to lower long-term interest rates and spark the economy. Brian Bethune of IHS Global Insight anticipates $500 billion to $750 billion in purchases, less than the $1.7 trillion the Fed snapped up in late 2008 and early 2009.

Factories continued to be a bright spot last month. Makers of semiconductors boosted output in Boston, Dallas and San Francisco. Auto production surged in the Cleveland and Chicago areas. And Chicago metal makers reported their strongest sales this year. But activity slackened in the Philadelphia and Richmond areas. And freight shipments slowed in the Cleveland and Atlanta regions.

Retail sales were “flat to moderately positive” in most areas. Purchases were stronger than expected in Kansas City, and back-to-school spending provided a lift in Philadelphia and Dallas. Sales of both new and used cars were robust in most regions. But traffic eased some in the Richmond and Atlanta areas.

“Retailers said consumers are slowly regaining confidence, but remain price-conscious and were largely limiting purchases to necessities and non-discretionary items,” the beige book says.

The assessment was more subdued than last week’s monthly retail sales report from the Commerce Department. The 0.6 percent jump in retail sales beat estimates, and marked the third-consecutive monthly increase.

Manufacturers and retailers have been hit by higher commodity and shipping costs lately but generally have not been able to pass them through to frugal customers, the report said.

Travel, meanwhile, picked up in San Francisco as a result of a brisk business and convention trade, while Minneapolis and Kansas City saw more tourists.

While hotel occupancy was still high in New York, “October bookings were somewhat weaker than expected.” Atlanta was still feeling the effects of the Gulf oil spill, but that led to increased tourist activity in northeast Florida, Georgia and Tennessee. The outlook for the rest of the year was “positive.”

Housing “remained weak.” Philadelphia saw a jump in existing home sales, while Richmond, Kansas City and Dallas saw sales of higher-priced homes tick up. But Atlanta home builders cited rising foreclosures and “downward price pressure” on prices.

Meanwhile, commercial real estate rents continued to fall, though apartment leasing has picked up recently.

While lenders remain tight-fisted, credit conditions improved in Chicago, and Richmond and Chicago lenders are more zealously competing for “quality loans.” But demand for commercial loans was still weak as businesses put off capital spending “because of economic and public policy uncertainties.”

Hiring, meanwhile, was still “limited.” Many firms are hesitant to hire, “given economic softness,” though demand for temporary workers continued to grow in some areas. Wages were stagnant, as “firms anticipated increased costs of employee benefits as a result of health care reform.”

Source: USA TODAY, a division of Gannett Co. Inc., Paul Davidson.





Economists Say Housing at Bottom

18 10 2010

Beacon Economics analyzed home affordability and came away feeling optimistic.

Beacon Economics founding principal Christopher Thornberg, whose firm advises a variety of business clients, says the high level of affordability is likely to drive demand and reduce the stock of excess inventory, ultimately resulting in the need for new housing, a rise in prices, and a pickup in new construction.

“While prices may fluctuate modestly over the next several months, we believe the worst of the housing crisis is behind us,” says Beacon Economics Research Manager Jordan G. Levine. “We expect prices to stabilize around current levels and likely be higher in the next 12 months.”

Source: Beacon Economics (10/11/2010)





Foreclosures Played A Big Role in Second-Quarter Home Sales

18 10 2010

Foreclosed homes accounted for 24 percent of all residential sales in the second quarter of 2010, and the average sale price of these homes was more than 26 percent below the average price of homes sold that were not in the foreclosure process, according to the latest quarterly report by RealtyTrac. A total of 248,534 homes in some stage of foreclosure – default, scheduled for auction or bank-owned – were sold in the second quarter, up 5 percent from the previous quarter but down 20 percent from the second quarter of 2009.

Nevada had the highest percentage of foreclosed sales in the country in the second quarter of 2010 with 56 percent, even though that marks a decrease in foreclosure sales from both the previous quarter and the previous year. Foreclosure sales accounted for 47 percent of all sales in Arizona in the second quarter, and California posted the third-highest rate of 43 percent.





Existing home sales in August rose 7.6%

3 10 2010

Existing home sales rose 7.6% to a seasonally adjusted annual rate of 4.13 million units in August, according to the National Association of Realtors. That’s up from 3.84 million in July, but down 19% from a year ago.

Analysts had expected sales to edge up to an annual rate of 4.10 million units.

The gain in August was a welcome change after last month’s dismal report, which showed that home sales sank 27% to the lowest level.

And a single upbeat reading doesn’t mean a recovery in the housing market has taken hold, said Lawrence Yun, NAR chief economist.

“Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual because of lingering economic uncertainty,” said Yun.

Inventory and prices: After steadily rising in previous months, the inventory of homes on the market edged down 0.6% in August to 3.98 million units.

But that’s enough supply to last 11.6 months. To hit a balance between supply and demand, inventory should only last 4.5 to 6 months.

Such swollen inventory levels will continue to pressure home prices.

The median price of homes sold in August was $178,600, down 1.9% from the previous month and up a slight 0.8% from a year ago, the report showed. About a third of homes sold during the month were in foreclosure.

“Home values have shown stabilizing trends over the past year, even as the economy shed millions of jobs, because of the home buyer tax credit stimulus,” said Yun. “Now that the economy is adding some jobs, the housing market needs to steadily improve and eventually stand on its own.”

Sales by property and region: Sales of single-family homes rose 7.4% in August compared to the prior month, but were down 19.2% from a year ago, while condominium and co-op sales jumped 8.5% in the month.

Regionally, the West fared the best last month, with sales soaring 13.8%. Sales in the Midwest, the Northeast and the South all rose at least 5%.

Source: National Association of Realtors and CNNMoney.com





Jacksonville jobs grow for first time in 3 years

2 10 2010

Jacksonville area private-sector jobs grew in August by about 200 over the August the year before — the first showing of positive growth since October 2007 — according to preliminary data from the U.S. Bureau of Labor Statistics.

That good news, although small, is another indication that there’s been stabilization in the area’s job market since the free-fall of job losses that struck the area between December 2007 and September 2009. And looking at Jacksonville job market statistics since January 2000, another potentially bit of encouraging information can be observed: job force levels since September 2009 have mirrored the levels in the pre-boom period between March and September 2004.

University of North Florida economist Paul Mason said the intervening boom, during which the number of those employed in the Jacksonville area swelled by 11 percent between September 2004 and December 2006, when it hit a peak of 562,400, can be attributed to the industries that the real estate boom directly benefited. And in the 10.5 percent job market losses experienced between December 2007 and September 2009, the reverse was true in those industries, he said.

“I think you can put a great deal of emphasis on the growth in construction and home building, and there as also growth in financial services,” Mason said. “A good deal of those construction workers have simply left. As a consequence, it’s back down to where it was.”

The growth in August, Mason and strategic planning consultant Henry Luke agreed, was cyclical, but better than what was seen in August 2009 or August 2008.

“Things were strengthening some; we were drawing people in the workforce. I don’t think anything long-lasting caused that effect,” Mason said.

Luke said there’s usually labor market growth in August because summer is giving way toward back-to-school and holiday season ramp-ups. The reason 2010 looked better is because 2010 seems to be past the free-fall job losses seen in 2008 and 2009, he said.

“It seems to have stabilized over the last year. Has it stabilized totally? I don’t know if we know that,” Luke said. “I hope it will increase. I hope the Christmas season between now and the end of the year will show total gain year over year. We’ll have to wait and see.”

Mason said that any growth in Jacksonville’s job market will be slow and steady unless there is a large infusion of employment.

“I think in the future, you’re not going to see a climb unless you see an employer bring lots of jobs to Jacksonville,” he said.

Source: The Florida Times-Union








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