Economy Watch: Homebuilders a Little More Optimistic
- Apr 16, 2014
The National Association of Home Builders reported on Tuesday that that the NAHB/Wells Fargo Housing Market Index, which gauges builder confidence in the market for newly built, single-family homes, rose one point to 47 in April from a downwardly revised March reading of 46. The threshold for optimism is above 50, so the homebuilders are still a bit sour on the market (but not nearly as much as during the recession).
The index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” The index component gauging current sales conditions held steady at 51 in April, or just barely optimistic, while the component gauging traffic of prospective buyers was likewise unchanged, but at a glum-ish 32. The component measuring expectations for future sales rose four points to a chipper 57.
“Job growth is proceeding at a solid pace, mortgage interest rates remain historically low and home prices are affordable,” NAHB chief economist David Crowe notes. “While these factors point to a gradual improvement in housing demand, headwinds holding up a more robust recovery include ongoing tight credit conditions for home buyers and the fact that builders in many markets are facing a limited availability of lots and labor.”
CPI edges up in March, inflation still muted
Inflation, which is a tame cat these days compared with the tiger than nearly ate the U.S. economy in the 1970s, showed a little more life than expected in March. According to the Bureau of Labor Statistics on Tuesday, the Consumer Price Index for All Urban Consumers was up 0.2 percent for the month, and 1.5 percent since this time last year.
Increases in the price of shelter and food accounted for most of the all-items increase. The food index was up 0.4 percent in March, with several major grocery store food groups increasing. The energy index, by contrast, dropped slightly in March as decreases in the gasoline and fuel oil indexes more than offset increases in the indexes for electricity and natural gas (as of April, gasoline is rising again, which will probably affect next month’s CPI on the upside).
The CPI for all items not counting food and energy also rose 0.2 percent in March. Besides the 0.3 percent increase in the price of shelter, prices for medical care, apparel, used cars and trucks, and airline fares also increased. The indexes for household furnishings and operations, and for recreation, both declined in March.
Gas prices upward bound as weather improves
Gas prices, which have been lower on average than a year ago until recently, have started to climb. AAA reported that on Tuesday the average nationwide for a gallon of regular gas was $3.643, the highest level since last July. A month ago, the average was $3.517 per gallon, and a year ago, it was $3.526 per gallon.
The rise is apparently being driven by straightforward supply-and-demand dynamics, rather than nebulous geopolitical worries or the latest crisis in an oil-rich corner of the world. According to the U.S. Energy Information Administration, domestic gasoline stocks are now down to 210 million barrels, the lowest level since November, which is affecting supply. Warmer temperatures are also inspiring people to hit the road, meaning more demand.
Wall Street was down most of the day on Tuesday, but made a comeback by the end of the trading day, with the Dow Jones Industrial Average gaining 89.32 points, or 0.55 percent. The S&P 500 was up 0.68 percent, and the Nasdaq—down nearly 2 percent at one point—rallied to a 0.29 percent rise.