Economy Watch: Residential Prices Continue to Moderate

By Dees Stribling, Contributing Editor

Trulia reported on Tuesday that asking prices nationally for residential properties rose 1 percent in August, up a bit from 0.7 percent in July. Asking prices rose 7.8 percent year-over-year, slower than a year ago when they were up 9.9 percent. At the local level, asking prices rose year-over-year in 96 of the 100 largest U.S. metros.

The company noted that foreclosures shape where and when home prices recover, but once most of the foreclosures in a market are sold, then overall inventory tightens—especially at the low end—giving home prices a boost. In states with a “non-judicial” foreclosure process (such as California, Michigan and Texas), the foreclosure wave cleared faster than in judicial states, and housing markets in those states got an earlier and sharper price boost.

But now, even judicial states are getting their own price boost, Trulia asserts, because the foreclosure wave has nearly worked its way through. In August 2014, asking prices on for-sale homes (excluding foreclosures) were up 6 percent year-over-year in metros in judicial states, only slightly behind the 7.8 percent increase in non-judicial states. By contrast, in August 2013 the year-over-year price gain was 14.1 percent in non-judicial states, but just 5.1 percent in judicial states.

The company also reported on rents. In five of the 25 largest rental markets, rents rose more than 10 percent year-over-year, with three of those five markets in northern California: Sacramento, San Francisco and Oakland, which have the highest rent increases in the country, followed by Denver and Miami. Rents rose faster year-over-year in August than three months ago, in May, in 20 of the 25 largest U.S. rental markets.

Job openings up again in July

There were 4.7 million U.S. job openings on the last business day of July, up a little from 4.67 million in June, the Bureau of Labor Statistics reported on Tuesday in its Job Openings and Turnover Summary (JOLTS). Still, that’s the highest level in more than a decade.

The BLS also reported that there were 4.6 million total separations in July, an uptick from 4.5 percent the month before. The total number of separations was unchanged for both private employers and in government. By the BLS’ reckoning, separations include quits, layoffs and discharges, and other separations. Total separations is referred to as turnover.

Quits are generally voluntary separations initiated by the employee, meaning that the quits rate is an indirect measure of the health of the employment market, since it’s a measurement of workers’ willingness or ability to leave jobs. Quits came in at 2.5 million in July, about the same as in June, the BLS said.

Small businesses more optimistic in August

The National Federation of Independent Business reported on Tuesday that its Optimism Index rose 0.4 points to 96.1 in August, the second-highest reading since Oct. 2007. NFIB also noted that members increased employment by an average of 0.02 workers per firm in August; not much of a gain, but better than nothing.

Wall Street was down on Tuesday, with the Dow Jones Industrial Average losing 97.55 points, or 0.57 percent. The S&P 500 was off 0.65 percent and the Nasdaq dropped 0.87 percent.