Economy Watch: Homes See Significant Annual Increase in July
- Sep 05, 2012
CoreLogic reported on Tuesday that home prices nationwide, including distressed sales, increased by 3.8 percent in July 2012 compared to July 2011. This was the biggest year-over-year increase since August 2006, back at the end of the bubble days, and another indication that the housing market has passed the bottom, coming after last week’s Case-Shiller report on price increases in June.
On a month-over-month basis, including distressed sales, home prices increased by 1.3 percent in July 2012 compared to June, notes CoreLogic. That, too, is a positive development, since the July 2012 figure marks the fifth consecutive increase in home prices nationally on both a year-over-year and month-over-month basis.
Excluding distressed sales—that is all short sales and REO transactions—home prices nationwide increased year-over-year by 4.3 percent in July 2012. Excluding distressed sales, home prices increased 1.7 percent in July 2012 compared to June, the fifth consecutive month-over-month increase.
ISM Manufacturing Index indicates contraction
The Institute for Supply Management’s August 2012 “Manufacturing ISM Report On Business,” released on Tuesday, reported that the organization’s Purchasing Managers Index dropped slightly in August to 49.6 from 49.8 in July. It’s the third month in a row that the PMI was below 50, signifying a contraction (albeit not much of one). August’s reading is also the lowest one since July 2009.
The organization’s New Orders Index registered 47.1 percent, a decrease of 0.9 percentage points from July, indicating contraction in new orders for the third month in a row. The Production Index registered 47.2 percent, a decrease of 4.1 percentage points and meaning contraction in production for the first time since May 2009.
On the other hand, the ISM’s Employment Index for the month remained in growth territory at 51.6 percent, but it was still the lowest reading since November 2009. The Prices Index increased 14.5 percentage points from its July reading to 54 percent. “Comments from the panel generally reflect a slowdown in orders and demand, with continuing concern over the uncertain state of global economies,” the report noted. That is, the troubles in Europe and even China, or at least apprehension of them, seem to be affecting manufacturing in this country.
Construction spending drops
U.S. construction spending was down in July as well. The Census Bureau reported on Tuesday that construction spending during July 2012 was at an annualized rate of $834.4 billion, 0.9 percent below the revised June total of $842.2 billion. Still, the July 2012 figure is 9.3 percent above the July 2011 annualized total of $763.5 billion.
Both private and public construction spending dropped month-over-month. Spending on private construction in July was at an annualized rate of $558.7 billion, 1.2 percent below the revised June total of $565.6 billion, while the annualized rate for public construction spending totaled $275.7 billion, 0.4 percent below the June’s tally of $276.7 billion.
Wall Street was mostly down on Tuesday but ended mixed. The Dow Jones Industrial Average lost 54.9 points, or 0.42 percent, while the S&P 500 was off 0.12 percent. The Nasdaq managed to gain 0.26 percent.