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Economic Indicators for week of September 20-24, 2010


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

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Economic Indicators for week of September 20-24, 2010

  1. 1. Week of September 20–September 24, 2010 Produced by NAR Research
  2. 2. Weekly Economic Forecast <ul><li>NAR's monthly official forecast as of September 2 </li></ul>Produced by NAR Research Indicator Updated Forecast Past Week’s Forecast Directional Shift GDP 2010 Q3: 1.8% 1.8% ↔ GDP 2010 Q4: 2.6% 2.5% ↑ GDP 2011 Q1: 2.7% 2.6% ↑ Unemployment rate by the year-end 2010: 10% 10% ↔ Average 30-year fixed mortgage rate by the year-end 2010: 4.6% 4.7% ↓
  3. 3. Monday, 09/20/10 <ul><li>The NAHB/Wells Fargo Housing Market Index stayed unchanged since last month, at 13. A reading above 50 would suggest that sales expectations as perceived as positive, however the index has not been above 50 since April 2006. The traffic of prospective buyers fell one point to 9, reflecting home buyers limited strength. The sales expectations for next six months also remained unchanged, at 18. </li></ul><ul><li>Flow of Funds data released on Friday by the Federal Reserve indicated household wealth fell 2.8 percent in the second quarter 2010. Household net worth, which is the difference between the value of assets and liabilities, was estimated at $53.5 trillion, down $1.5 trillion from the previous quarter. This was the first decline since March 2009. Declines in the value of financial assets, particularly stocks and mutual funds, accounted for much of the decline. Stocks alone were down $1.9 trillion to $14.9 trillion. </li></ul>Economic Updates Produced by NAR Research
  4. 4. Tuesday, 09/21/10 <ul><li>The Census announced a 10.5% increase in housing starts in August. This is a strong improvement over July’s tepid rise of 0.4%. The bulk of growth in starts remains in the multifamily sector, but single family starts rose 4.3% after falling 6.7% in July. </li></ul><ul><li>Permits for new construction rose 1.8% in August after falling 4.1% in July, but the bulk of the improvement here also came from multifamily as single family eased 1.2% from July. </li></ul><ul><li>Permits on structures with 5 or more units are up 38.9% on a year-over-year basis compared to a 16.8% decline in single-family permits. Builders are likely targeting an expanded rental market. </li></ul><ul><li>Construction is historically low and will not add significantly to single family housing inventories limiting downward price pressure. However, it will add to payrolls, which is very important for a robust economic recovery and the health of the housing market. The construction industry accounts for a significant number of jobs, thus it is important that this sector get back on its feet. </li></ul>Economic Updates Produced by NAR Research
  5. 5. Tuesday, 09/21/10 (cont’d) <ul><li>The National Bureau of Economic Research announced yesterday that the recession ended in June 2009. The NBER looks at changes in GDP or the economy’s total production to determine when recessions have ended. While GDP is up, it has done so by extending output per worker by those who are employed. There remains a large reserve of unemployed and under employed workers and consumer confidence is low. Increases in productivity and GDP typically precede expanded hiring during an expansion. NAR is currently projecting that the unemployment rate will remain above 9% through 2012. </li></ul>Economic Updates Produced by NAR Research
  6. 6. Wednesday, 09/22/10 <ul><li>Mortgage purchase applications fell 3.3 percent for the week ending September 17 th . Applications are slightly up from July and August but remain near 13-year lows. Purchase applications do not take into consideration all-cash purchases which according to the July REALTORS® Confidence Index made up 30 percent of transactions. </li></ul><ul><li>Year-over-year purchase applications were down 38 percent. </li></ul><ul><li>Refinances which fell 0.9 percent made up 81.1 percent of mortgage activity as mortgage rates remain near historic lows at an average rate of 4.44 percent for a 30-year fixed mortgage. </li></ul><ul><li>House prices declined slightly in July (0.5 percent) according to the FHFA Home Price Index released today. Prices are 3.3 percent down year-over-year. The FHFA data covers only Freddie/Fannie backed homes, and it lags NAR’s existing home sales which come out tomorrow for the month of August. </li></ul>Economic Updates Produced by NAR Research
  7. 7. Thursday, 09/23/10 <ul><li>Existing Home Sales numbers for August were released today. For more, read the news release > </li></ul>Economic Updates Produced by NAR Research
  8. 8. Friday, 09/24/10 <ul><li>New home sales were unchanged in August at a 288,000 annual unit rate and unchanged from July (revised up from 276,000).  </li></ul><ul><li>The supply of homes on the market is swollen after the end of the buyer tax credit. However, newly constructed home inventory remains at historic lows.  </li></ul><ul><li>Factory orders for durable goods in August dropped 1.3 percent, less than anticipated.  </li></ul><ul><li>Year-over-year, durable goods in August rose 11.2 percent and excluding transportation, orders were 12.9 percent higher than one year ago.  </li></ul>Economic Updates Produced by NAR Research