Economy Watch: More Evidence of Residential Strength

By Dees Stribling, Contributing Editor

Another measure of the U.S. residential market, coming on the heels of strong Case-Shiller numbers last week, came in positive on Tuesday. According to CoreLogic, home prices nationwide, including distressed sales, increased 12.2 percent in May compared to the same month in 2012. That’s the largest annual increase since February 2006, and the 15th month in a row in which home prices were up nationally, by the company’s calculation. Month-over-month, the increase was 2.6 percent.

Take out distressed sales, and the increase was almost as much since this time last year: 11.6 percent. Month-over-month, excluding distressed sales, home prices were up 2.3 percent in May. For the purpose of CoreLogic’s report, distressed sales include both short sales and REO transactions.

“It’s been more than seven years since the housing market last experienced the increases that we saw in May, with indications that the summer months will continue to see significant gains,” Mark Fleming, chief economist for CoreLogic, noted in a press statement. “As we approach the half-way point of 2013, home prices continue to respond positively to the reductions in home inventory thus far.”

Factory orders up in May

U.S. factory orders were up in May, according to the Census Bureau on Tuesday, pointing to continuing expansion in the manufacturing sector of the economy. The increase was $9.9 billion, or 2.1 percent compared with April. It’s the fourth month in a row in which factory orders for the entire range of manufactured goods were up.

New orders for transportation equipment—airplanes, mainly—led the way among durable goods, up $7.3 billion or 10.9 percent. Total durable goods orders increase 3.6 percent in May, with businesses also ordering more computers, machinery and household appliances; new orders for non-durable goods (such as chemicals and paper) were up only 0.7 percent.

Take transportation and defense-related goods out of the equation (which tend to be volatile month by month), and factory orders were still up for May, rising 1.5 percent. That’s the third month in a row in which this particular measurement of growth has been up, something that hasn’t happened in over two years.

Despite the good news, Wall Street skidded a bit on Tuesday, perhaps upset with the sudden surge in the price of oil purportedly because of the political unrest in Egypt, with the Dow Jones Industrial Average down 42.55 points, or 0.28 percent. The S&P 500 was off a slight 0.05 percent and the Nasdaq was down even less, at 0.03 percent.