Economy Watch: Home-Price Slump Not Over Yet
Zillow reports that home values were down 3 percent in the first quarter; April's Conference Board index points to negative employment indicators; and congressional leaders ram heads over the debt ceiling.
By Dees Stribling, Contributing Editor
Zillow, which tracks home prices nationwide, reported on Monday that U.S. homes were down in value 3 percent during the first quarter of 2011, to an average of $169,600. That average is also 8.2 percent lower than during April 2010. The company cited the continuing flood of foreclosures and short sales as drivers of the price contraction.
Naturally, some markets were bigger losers than others. Year-over-year, for example, metro Ocala, Fla.lost 19.3 percent in home value, according to Zillow, while such large markets as metro Atlanta and metro Detroit both lost 17.3 percent in value since this time last year.
Only one market tracked by Zillow posted a year-over-year gain, and that was Honolulu, coming in for a fairly modest gain of 1.8 percent. A few other markets had modest losses since April 2010, such as metro Pittsburgh (down only 0.1 percent), Fort Myers (down 1.3 percent) and metro Fayetteville, N.C. (down 1.5 percent).
Conference Board not so optimistic about jobs
The official jobs numbers might have been strong lately, but not every employment indicator is pointing upward, according to the latest Conference Board Employment Trends Index, which declined 0.6 percent in April to 100.5, down from March’s revised figure of 101.1. Though the index is up 6 percent from a year ago, that’s nevertheless the largest monthly decline since April 2009.
This month’s decline in the index was spurred by negative contributions from five out of the eight components. The weakening indicators include Initial Claims for Unemployment Insurance; Percentage of Firms with Positions Not Able to Fill Right Now; Number of Temporary Employees; Part-Time Workers for Economic Reasons; and Job Openings, which is a forecasted component.
“While employment is growing at the fastest rate in years, the leading indicators for employment are decisively flashing yellow,” Gad Levanon, associate director, macroeconomic research at the Conference Board, notes in a statement. “It is unlikely that the current pace of job growth can be maintained in the months ahead.”
Just don’t call it chicken
In a speech before the Economic Club of New York on Monday, House Speaker John A. Boehner (R-OH) demanded that “trillions” be cut from the federal budget as part of a deal to keep the United States from defaulting on its debt for the first time in history. The Speaker said that “it’s true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process.”
By contrast, Sen. Charles Schumer (D-NY) said during a conference call a few hours earlier–and presumably meant as a preemptive retort to the speaker–that “Mr. Boehner needs to have that adult moment. … This next speech by the speaker will be a litmus test on whether House Republicans plan to finally approach the debt ceiling as adults. So far many of them have not been responsible about this issue at all.”
Wall Streett, which isn’t worried about the debt ceiling just yet, chalked up a reasonably positive day on Monday, with the Dow Jones Industrial Average gaining 45.94 points, or 0.36 percent. The S&P 500 was up 0.45 percent, and the Nasdaq advanced 0.55 percent.