Economic indicators for week of June 28-July 02


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The Research staff analyzes the week's key data releases and tells you what they mean for you and your business.

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Economic indicators for week of June 28-July 02

  1. 1. Week of June 28 – July 2, 2010 NATIONAL ASSOCIATION OF REALTORS® Research Produced by NAR Research
  2. 2. Weekly Economic Forecast <ul><li>NAR's monthly official forecast as of July 1 st </li></ul>Produced by NAR Research Indicator This Week Last Week GDP 2010 Q2: 3.1% 3.0% ↑ GDP 2010 Q3: 2.5% 2.7% ↓ GDP 2010 Q4: 2.6% 2.8% ↓ Unemployment rate by the year-end 2010: 9.8% 10% ↓ Average 30-year fixed mortgage rate by the year-end 2010: 5.1% 5.2% ↓
  3. 3. Monday, 06/28/10 <ul><li>Personal income grew and people spent most of that income. The aggregate income grew by 0.4 percent in May. From one year ago, it grew by 1.6 percent. Not good, not bad. The typical annual growth rate should be closer to 5 percent. Employee compensation expanded by 1 percent over the year. Entrepreneurs' income grew faster at near 6 percent, but this gain follows large declines in 2009. Unemployment insurance income is now running at $160 billion annually, which is about four times larger than would be the case in a more normal economy. People are saving 4 percent of their disposable income. </li></ul><ul><li>Overall, this income and spending news implies moderate economic expansion. </li></ul>Economic Updates Produced by NAR Research
  4. 4. Tuesday, 06/29/10 <ul><li>Consumers felt awful in June. The measurement of consumer confidence fell to 53 from 63 in the prior month. Continuing difficulty in the labor market and stock market declines likely added to the woes. The figure generally would be above 100 during economic expansionary times. At the depth of the recession last year, the confidence averaged 45. </li></ul><ul><li>A correlation with past election cycles suggests that a reading of below 95 spells trouble for the incumbent ruling political party. </li></ul>Economic Updates Produced by NAR Research
  5. 5. Tuesday, 06/29/10 (Cont’d) <ul><li>Home prices in 20-metro markets, as measured by the Case-Shiller index, rose 0.8 percent in May and are now up by 3.8 percent from one year ago. </li></ul><ul><li>Prices in San Diego and San Francisco soared by double-digits in the past 12 months. </li></ul><ul><li>Other price measurements - such as NAR, FHFA, Core Logic price index - have all shown stabilizing patterns in recent months. </li></ul><ul><li>Stabilizing prices can remove the consumer fear factor about home purchase. However, consumers still need a good dose of confidence, which today's data did not show. </li></ul>Economic Updates Produced by NAR Research
  6. 6. Wednesday, 06/30/10 <ul><li>Mortgage purchase applications fell 3.3 percent for the week ending June 25 th . Mortgage purchase applications are down 36 percent from same week a year ago, near 13-year lows. This data signals that home sales in June will be down; however, the MBA data does not include all-cash purchases which were roughly 25 percent of the market according to the latest REALTORS® Confidence Index </li></ul><ul><li>On a positive note, refinances were up 12.6 percent from the previous week, and accounted for 76.8 percent share of all mortgage activity. This is largely due to historically low mortgage rates. According to the survey the average rate on a 30-year fixed mortgage was 4.67 percent. </li></ul>Economic Updates Produced by NAR Research
  7. 7. Wednesday, 06/30/10 (Cont’d) <ul><li>An increase in median existing home prices in May, led to a slight decline in NAR's Housing Affordability Index. However, affordability conditions are still very favorable with historically low interest rates > </li></ul><ul><li>The private sector added a less-than-expected 13,000 jobs in May according to an ADP report. This is negative news on the employment sector, especially since it was expected that the report would show upwards of 50,000 new jobs in the private sector to offset the layoffs of temporary Census workers. Friday’s report from BLS will shed further light on the employment sector as it includes private and government employment numbers. </li></ul>Economic Updates Produced by NAR Research
  8. 8. Thursday, 07/01/10 <ul><li>Following a surge driven by the home buyer tax credit, pending home sales fell with the expiration of the deadline for qualified buyers to sign a purchase contract. </li></ul><ul><li>The Pending Home Sales Index falloff comes on the heels of three strong monthly gains as home buyers rushed to take advantage of the tax credit. </li></ul><ul><li>As many as 180,000 buyers who signed contracts by April 30 may have missed the June 30 closing deadline for the tax credit. However, Congress passed legislation yesterday to extend the deadline for delayed contracts and President Obama is expected to sign. </li></ul><ul><li>Read the full press release here . </li></ul>Economic Updates Produced by NAR Research
  9. 9. Friday, 07/02/10 <ul><li>The total payroll jobs fell by 125,000 in June due to some of the Census-related jobs going away. The private sector job creation is much more important for the economy, and in providing support for housing demand and the private sector, jobs expanded by 83,000. The historical healthy figure of job expansion would be about 150,000 to 200,000 each month. </li></ul><ul><li>Since the beginning of the year, 593,000 private sector jobs have been added. The manufacturing sector has added jobs for the sixth straight month. The construction sector is still struggling. </li></ul>Economic Updates Produced by NAR Research
  10. 10. Friday, 07/02/10 (Cont’d) <ul><li>Despite a lower overall number of people with jobs, the unemployment rate fell to 9.5 percent. That's because the size of the labor force shrank by a large amount for the second straight month. Cumulatively in past two months, one million fewer people are looking for jobs. These people will not get counted as officially unemployed. </li></ul><ul><li>The current private sector payroll employment of 108 million is 8 million below the level from just 2-3 years ago and matches levels seen 10 years ago. </li></ul><ul><li>The job market has turned the corner but it will be a very long climb back. At least 4 years will be needed to create 8 million jobs. At least 6 years will be needed to bring the unemployment rate down to 6%. </li></ul>Economic Updates Produced by NAR Research