Economic Roundup: November 1, 2010

In the News

Home sales enjoyed a solid surge in September, leading some to suggest a real estate recovery was in effect, according to new and existing home sales data released last week.
Sales of existing single-family homes, townhomes, condominiums and co-ops in September shot up 10 percent to a seasonally adjusted rate of 4.53 million from August's downwardly revised 4.12 million, the National Association of REALTORS® (NAR) reported last week.
That said, the real estate market still has some catching up to do. September's solid figures remained 19.1 percent below September 2009's 5.60 million-unit pace, which benefited from the rush of first-time buyers angling to get in before the initial deadline for the new buyer tax credit last November. NAR chief economist Lawrence Yun describes the September surge as the early stages of a recovery.
"A housing recovery is taking place but will be choppy at times, depending on the duration and impact of a foreclosure moratorium," he said. "But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions."
New home sales also enjoyed gains for September. Sales of new single-family homes for the month were at a seasonally adjusted annual rate of 307,000, bumping up 6.6 percent over August's revised rate of 288,000, according to the latest data from the U.S. Census Bureau. New home sales still have a way to go before they reach 2009 performance levels, however; September's rate was still 21.5 percent below September 2009's estimate of 391,000.
In terms of prices, the median sales price of new houses sold in September was $223,800 and the median price for existing homes sold during the month was $171,700.
In terms of supply, September's existing home inventory fell 1.9 percent to 4.04 million homes available for sale, representing a 10.7-month supply, according to NAR. The Census Bureau estimated the number of new houses for sale at the end of September was 204,000, representing an eight-month supply at the current sales rate.
The good news in the real estate market must have hit home with consumers, as the Conference Board's Consumer Confidence Index increased slightly in October. The Index rose to 50.2, up from 48.6 in September. The index is based on a representative sample of 5,000 U.S. households, with an original baseline reading taken in 1985 at 100.
The Board's Present Situation Index, a survey of how consumers feel about their current situation, increased in October to 23.9 from 23.3, and its Expectations Index, measuring how consumers feel the economy and their finances are headed, improved to 67.8 from 65.5.
What will take consumers' opinions closer to a 100 score? Jobs, says Lynn Franco, director of the Conference Board's Consumer Research Center. "Consumers' assessment of the current state of the economy is relatively unchanged, primarily because labor market conditions have yet to significantly improve," she said. "And, despite the uptick in [the] Expectations [index], consumers continue to be quite concerned about the short-term outlook."
This week will see a plethora of financial news, starting today with personal income and spending data for September from the Bureau of Economic Analysis. Analysts are hoping for a slight gain of 0.2 or 0.3 percent. Also out today is the Census Bureau's data on September's construction spending, which is expected to tick down after showing some slight gains for August.
Other data coming out this week include factory orders for September from the Census Bureau and October car and truck sales from the auto manufacturers on Wednesday; payroll, earnings, and workweek data for October from the Bureau of Labor Statistics on Friday; and consumer credit data for October from the Federal Reserve on Friday.

Mark Ott

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