Economy Watch: Single-Family Sales Rate Down, Fed Says No to B of A
- Mar 24, 2011
March 24, 2011
By Dees Stribling, Contributing Editor
New single-family home sales slid to an annualized rate of 250,000 in February, according to the U.S. Department of Commerce, down 16.9 percent from January. That’s the lowest annual rate since the government first took an interest in tracking new home sales, which was during the last year of the Kennedy administration.
Compared with February 2010, the sales rate was off 28 percent. But then again, late 2009 and early 2010 are now acknowledged as a dead-cat bounce for housing sales, one inspired by government intervention, so year-over-year numbers represent something of a distorted comparison.
Commerce also reported that the median sales price for a new home in February was $202,100, down 13.9 percent from January. That’s the lowest median price since December 2003. The question now is how these numbers bode for the traditional home-selling season in spring, which is just around the corner, and most industry-watchers aren’t sanguine about the spring. Not only is there no light at the end of the tunnel, the roof of the tunnel has collapsed.
Fed Says No to Bank of America
Bank of America Corp. acknowledged on Wednesday that the Federal Reserve vetoed its plan to increase its dividend during the second half of 2011. The bank didn’t spell out the exact reasons for the Fed’s move, but it probably has something to do with the Fed’s recent second round of stress tests of the nation’s 19 largest banks, the results of which were told to the banks last week under the condition that they couldn’t say much about them.
The dividend-denial left investors wondering about the health of one of the largest banks in the country, and its share price declined 1.66 percent on Wednesday, a modest up day for the equities markets. But the bank also said, in a filing with the SEC, that it’s going to ask the Fed again. “The corporation will continue to work with the Federal Reserve and intends to seek permission for a modest increase in its common dividend for the second half of 2011, through the submission of a revised comprehensive capital plan to the Federal Reserve,” the filing said.
Bank of America isn’t the only bank that the Fed has denied dividend increases, it seems. Though they haven’t acknowledged it, Capital One Financial, MetLife and Morgan Stanley are reportedly in the same boat, but remarkably enough Citigroup Inc.–which has been bailed out by the government more than once since 2008 (three time’s an unlucky charm)–has been allowed to pay a dividend, albeit a microscopic one of one-tenth of a penny.
The Block 37 Curse Strikes Again
Bank of America was also in the news on Wednesday as the purchaser of the retail component of the ill-starred Block 37 in downtown Chicago, which it got at a sheriff’s sale for $100 million. A judge is expected to approve the sale in a few weeks, which will formally transfer the property from developer Joseph Freed and Associates L.L.C. to the bank. The office portion of the property, which is owned by Golub & Co., wasn’t part of the sale.
Block 37–formally called 108 N. State St.–has been a graveyard of developer ambitions for two decades now. The site was cleared of older structures in the late 1980s, but until the mid-2000s, bad turns in the economy, poor developer planning, and bad real estate juju have stymied every effort to building something there. Even now only part of the mixed-use property has been completed, with some retail and office tenants in place, including CBS and Morningstar’s global headquarters.
Wall Street bounced back on Wednesday, with the Dow Jones Industrial Average edging up 67.39 points, or 0.56 percent. The S&P 500 gained 0.29 percent and the Nasdaq advanced 0.54 percent.