Economy Watch: Existing Home Sales Surge in December
- Jan 21, 2011
Existing-home sales spiked upward unexpectedly in December by 12.3 percent compared with November, according to the National Association of Realtors on Thursday. The annualized December sales rate was 5.28 million units, up from 4.7 million the month before, though not quite–2.9 percent lower–than the 5.44 million pace in December 2009, back in the days of the federal homebuyer tax credit. Annual sales in the 5 millions isn’t as much as during the bubble years, but that rate was considered a reasonably good year before the housing market overheated in the mid-2000s.
What’s going on? January had been a month of unremitting gloom for the housing industry (for sale housing, that is, since multifamily’s going gangbusters), with lower value and lower housing starts and building confidence low as well. The always optimistic NAR chief economist Lawrence Yun posited in a statement that “the pattern over the past six months is clearly showing a recovery. The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level.”
It could be that the economy now has enough momentum to encourage would-be homebuyers previously on the fence to enter the market–especially while both prices and interest rates are both relatively low. A few more months of positive data like December would confirm that a housing recovery may in fact be under way.
Jobless Claims Down, Leading Indicators Up
The home sale news came at roughly the same time on Thursday that the U.S. Department of Labor reported that the number of Americans applying for jobless benefits fell by 37,000 to a seasonally adjusted 404,000 for the week ending Jan. 15. The decline came after an unsettling spike in claims the week before, but then again the four-week moving average for claims, which smoothes out some of the week-to-week volatility, declined by 4,000 to 411,750 for the week ending Jan. 15.
Also on Thursday, the Conference Board said that its Leading Economic Index rose 1 percent to 112.4 in December. The month’s gain was led by housing permits, interest rate spread, initial claims for unemployment insurance and consumer expectations.
“The four-month rise suggests the economy now has some wind in its sails,” noted Ken Goldstein, an economist at the Conference Board, in a statement. “However, it still faces some strong headwinds in the medium-term. Overall economic activity is likely to continue to gain momentum in 2011.”
Walmart’s Health Initiative
Where Walmart goes, so goes retail. The company’s announcement on Thursday–in the company of First Lady Michelle Obama–that it will improve nutrition in its private-label branded foods, will likely inspire other retailers to copy the move. The reason: Walmart has about 15 percent of the entire grocery business in the United States, almost twice as much as its nearest competitor in food sales, Kroger.
Specifically, the retail behemoth plans to reformulate its private brands to contain less sodium and sugar and no partially hydrogenated fats and oils; squeeze down the cost of fresh fruits and vegetables; simplify labeling so that healthier food choices are easier to spot; and build more stores in “food deserts” in rural and urban areas, a move that dovetails nicely with Walmart’s ambition to expand its footprint still further.
Wall Street had a down day on Thursday, but not by much, at least for the Dow Jones Industrial Average, which dropped 2.49 points, or only 0.02 percent. The S&P 500 lost 0.13 percent and the Nasdaq, perhaps nervous about the direction of Google under a new CEO, dropped 0.77 percent.