Economy Watch: Existing Home Sales Spike in April
- May 23, 2012
Existing home sales saw a welcome boost in April, up 3.4 percent to an annualized rate of 4.62 million units, according to the National Association of Home Builders on Tuesday. The annual rate was the highest since May 2010, back when the first-time homebuyer tax credit was about to end, a circumstance that goosed the market for a short time. Compared with the same month last year, sales in April 2012 were 10 percent higher.
Also according to NAR, total U.S. housing inventory at the end of April rose 9.5 percent to 2.54 million existing homes available for sale, a largely seasonal increase that represents a 6.6-month supply at the current sales pace, up from a 6.2-month supply in March. Still, listed inventory is 20.6 percent below a year ago, when there was a 9.1-month supply. (The all-time high for unsold inventory was 4.04 million in July 2007.)
The national median existing-home price for all housing types jumped 10.1 percent to $177,400 in April from a year ago, notes the Realtors. “This is the first time we’ve had back-to-back price increases from a year earlier since June and July of 2010, when the gains were less than 1 percent,” the always-optimistic NAR chief economist Lawrence Yun said in a statement. “For the year we’re looking for a modest overall price gain of 1 percent to 2 percent, with stronger improvement in 2013.”
OECD predicts growth downtick worldwide on euro-worries
The Paris-based Organisation for Economic Co-operation and Development (OEDC) warned the world on Tuesday, in its semiannual economic outlook, that the world’s “fragile” recovery, led by the United States and Japan, is in danger of foundering in the gale-force winds blowing from Europe. When all is said and done, the organization predicts that global economic growth will see a downtick in 2012, dropping to 3.4 percent compared with 3.6 percent growth in 2011.
The wealthiest economies in the world are mostly not leading the way in growth. The organization’s 34 members, which generally speaking represent the top tier of wealthy nations, will only grow 1.6 percent, the OECD says. That’s down from 1.8 percent growth for members in 2011. The main drag on expansion is, and will continue to be, the situation in Europe. The economies of the 17 members of the euro-zone, as a collective entity, will shrink 0.1 percent this year, the organization predicts (it says the U.S. will, by contrast, see 2.4 percent growth).
What to do about Europe? Lately suggestions that the European Central Bank take a more aggressive role in tamping out the fire—like the Federal Reserve and other central banks have done—have grown louder, including rumblings from the new French president. Such actions would include ECB-sponsored euro bonds to fund such initiatives as recapitalization of Spanish banks; ECB purchases of national sovereign debt, a la Fed-style QE1 and QE2; and more liquidity injections into euro-zone banks by the ECB. The Germans are not known to be fond of these ideas, but presumably they wouldn’t be fond of the euro falling apart chaotically either.
Trucking Index edges down in April
The American Trucking Associations’ For-Hire Truck Tonnage Index decreased 1.1 percent in April after increasing 0.6 percent in March. The latest drop put the index at 118.7 (2000 = 100), down from March’s level of 120. Compared with April 2011, however, the index was up 3.5 percent.
“While just one month, the April’s decrease also matches with an economy that is likely to grow slightly slower in the second quarter than in the first quarter,” ATA chief economist Bob Costello noted in a press statement. According to the ATA, the index serves as a barometer of the U.S. economy, since it represents 67.2 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, so as the index goes, so goes the economy.
Wall Street was up most of the day on Tuesday, buoyed by the decent housing numbers, but investors couldn’t sustain the enthusiasm in the face of the Greek and Facebook fiascos, thus ending almost at break-even. The Dow Jones Industrial Average was down a Lilliputian 1.67 points, or 0.01 percent, while the Nasdaq dropped 0.29 percent. The S&P 500 eked out a 0.05 percent gain.