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ECONOMIC NUGGETS – July 31, 2012

0 943 Market Intelligence

Bernie Markstein

Positions: Chief Economist
Well known for his work as Senior Economist and Vice President of Economic Forecasting and Analysis for the National Association of Home Builders (NAHB), Dr. Markstein has provided analysis on national and regional housing issues; tracking developments, trends in the multifamily housing market and forces affecting building materials prices.

Economists

Economic nuggets from the past two weeks/' news headlines and industry publications.

Here are some economic nuggets from the past two weeks’ news headlines and industry publications.

  1. The U.S. economy continues to grow, albeit at a slow pace. The Bureau of Economic Analysis (BEA) reported in its advance estimate of second quarter real (inflation-adjusted) gross domestic product (GDP) grew 1.5% at a seasonally adjusted annual rate (SAAR), down from 2.0% growth in the first quarter (revised up from the previously reported 1.9%).
  2. The BEA also released its annual benchmark revisions of GDP data. The revisions go back to first quarter 2009. The basic story over that period remained the same although some of the details are slightly different.  Here is a quick look at the changes in real GDP growth on an annual basis for 2009-2011. The decline in 2009 was not quite as bad as originally reported, the rebound not as strong in 2010, and 2011 was slightly better.
  3. Single-family housing is experiencing some bumps in its recovery, but is generally on a modest upward trajectory. June new home sales fell 8.4% to 350,000 SAAR, down from May’s 382,000 (revised up from 369,000). Nonetheless, June sales were 15.1% higher than last year. Also, the March through May numbers were revised up a total of 33,000 sales.
  4. The June inventory of new homes for sale at 144,000 remained near the previous month’s record low of 143,000. As a result, any uptick in sales will quickly translate into additional single-family construction activity.
  5. Both the 20-city and 10-city May S&P/Case-Shiller® Home Price indexes were up, their fourth consecutive monthly increase. Both were still down modestly on a year-over-year basis, 0.7% and 1.0%, respectively.
  6. Single-family housing starts advanced for the fourth month in a row, up 4.7% in June to 539,000 (SAAR) from May’s 515,000. Single-family building permits rose slightly to 491,000 from May’s 490,000.
  7. The July NAHB/Wells Fargo Housing Market Index (HMI) jumped 6 points to 35, its highest reading since March 2007, indicating that home builders are increasingly confident that the single-family housing market is improving. Increases in the HMI often are followed by higher single-family housing starts within one to two months. 
  8. Multifamily housing starts rebounded 12.8% to 221,000 (SAAR) from 196,000 in May. Given the notorious volatility of the measure, the 3-month moving average provides a better picture of new activity. The average was still down from May, but a slight 0.6% to 220,000.
  9. It is troubling that June’s 3-month moving average of multifamily building permits of 268,000 was down 4.9% from May, the first decline for the average since February.
  10. Nonetheless, the outlook for multifamily construction looks bright for the near term. The second quarter seasonally adjusted (SA) rental vacancy rate fell to 8.6% from first quarter’s 8.9% and is the lowest vacancy rate since second quarter 2002.
  11. The AIA Billings Index edged up to 45.9 in June from May’s 45.8, but leaves the index below 50, indicating decreased billings. 
  12. The June Producer Price Index (PPI) for finished goods inched 0.1% (SA) higher after falling 1.0% in May and was up 0.7% from June 2011. (To read more about construction materials prices, go to Bernie/'s commentary.)
  13. An index that measures inputs used in nonresidential construction (excluding capital equipment) fell 0.6% on a not seasonally adjusted (NSA) basis for the second month in a row. On a year-over-year basis, the index was up a slight 0.2%.
  14. The Consumer Price Index (CPI) was flat in June after sliding 0.3% in May, and was up 1.7% from a year earlier. Excluding food and energy (the so called core rate), it was up 0.2% for the month and 2.2% from June 2011.

by Bernie Markstein

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