Economy Watch: New Homes Sales Slightly Better than Terrible
New home sales inched back from the edge of abyss in March; Japan may be in for a recession this quarter; and the Fed prepares for its first press conference.
By Dees Stribling, Contributing Editor
New home sales inched upward by 11.1 percent in March compared with February, according to the U.S. Census Bureau and HUD on Monday. That’s an improvement, but then again February’s revised annualized rate of 270,000 units was the worst monthly rate since the government started tracking new home sales a half-century ago. The March 2011 annualized rate of 300,000 units is 21.9 percent below the March 2010 rate of 384,000 units.
The median sales price of new houses sold in March 2011 was $213,800, and the average sales price was $246,800, notes the report. A year ago the median was $224,800 and the average was $262,000.
As of the end of March, some 183,000 new houses were on the market nationwide, the lowest number since 1967. Still, at the current glacial pace of sales, that figure represents a supply of 7.3 months, according to the government.
Japan’s economy also slightly better than terrible
It’s been a hard year so far for Japan, and economic growth for that nation–now generally referred as the “third largest” in the world, after the United States and China–is going to suffer, according to a report by Moody’s Investors Service released on Monday. The ratings agency now forecasts Japanese economic growth for 2011 to be 0 percent to 1 percent, “with a negative bias,” down from a previous estimate of 1.5 percent to 2.5 percent, “with a positive bias.”
Most of the damage to the economy will be in the first half of 2011, according to Moody’s. “Our current baseline scenario assumes that the shock from the earthquake will cause the economy to go into recession in the first half of 2011, but expects that growth will return in H2 2011,” the report says. “Overall for 2011, real GDP growth is likely to be closer to 0.5 percent for the year … while reconstruction efforts are expected to support stronger growth in 2012.”
The global impact of the disaster will be limited, posits Moody’s, unless the nuclear aspects of the crisis get a lot worse. Some international supply-chain disruptions are already well underway, along with a decline in Japanese industrial activity that will affect consumer markets in other countries, most famously Toyota’s acknowledgment that its production will be down so much this year that GM will once again be the world’s largest automaker.
The Fed’s first press conference
The Federal Reserve is busy this week preparing for its first-ever press conference (Wednesday, 2:15 Eastern), and there are still plenty of unknowns at this juncture. Will the chairman admit that inflation is back and it’s bad? Or will he still call it “transitory?” Will he make pronouncements on QE2? What will the color of his tie signify? The world is waiting.
Meanwhile, the Fed’s arch-nemesis, Rep. Ron Paul (R.-TX), has announced plans to run for president in 2012. He’s a long-shot–even the best odds from London oddsmakers say 33-1, though most put the odds at above 50-1–and it isn’t clear what a president could do to dismantle the Fed and restore the U.S. economy to its pre-1913 state. Perhaps he would use the office as a bully pulpit to argue his case. (President Obama is the favorite among London oddsmakers, incidentally, followed by Mitt Romney; but Ron Paul is ahead of the likes of Chris Christie, Rand Paul, Rick Santorum and Rudy Giuliani, as of Monday.)
Wall Street wobbled around all day on Monday and ended up mixed. The Dow Jones Industrial Average lost 26.11 points, or 0.21 percent, and the S&P 500 was down 0.16 percent. The Nasdaq gained 0.2 percent.