Economy Watch: New Home Sales Drop in June; Mortgage Delinquencies Edge Up; Some Food Prices to Rise in '13
- Jul 26, 2012
Dees Stribling, Contributing Editor
The mild exuberance that the housing market was feeling in previous months may have come to an end, as new worries about the economy infect the potential pool of home buyers. The Census Bureau reported on Wednesday that new home sales fell to an annualized rate of 350,000 units in June, down from a revised (upward) total of 369,000 units in May.
The June total was off 8.4 percent from May, but still up 15.1 percent when compared with the same month in 2011 (which saw sales at an annualized rate of 304,000 units). Still, the totals for both 2011 and 2012 are well below historic averages going back to 1963, when the government began tracking new homes sales. 2012 is still on track to surpass 2011, but considering how awful last year was for new home sales, that’s no great trick.
The bureau also reported that the supply of new homes increased to 4.9 months in June from 4.5 months in May. Both figures are in the normal range, but June’s higher total shows that a bit of homebuilder optimism is expressing itself in a bit more building, though (considering the economy and the sales drop), it might not last.
Mortgage Delinquencies Edge Up
Lender Processing Services reported, in its First Look Mortgage Report on Wednesday, that the percentage of U.S. residential loans delinquent increased in June compared with May, but declined year-over-year. Loans in the foreclosure process decreased in June, but their overall rate remains high.
Loans 30 or more days past due, but not in foreclosure, increased to 7.14 percent from 6.91 percent in May, noted LPS. The increase was mostly in the less-than-90 days delinquent category.
The highest percentage of delinquent loans ever was 10.57 percent, so delinquencies have dropped closer to a “normal” of 4.5 percent to 5 percent, but are still high.
The number of properties that are 30 or more days past due, but not in foreclosure, is a bit more than 3.6 million, while the number of properties 90 or more days delinquent, but not in foreclosure, is nearly 1.6 million, said LPS. The states with highest percentage of non-current (delinquent and in actual foreclosure) are Florida, Mississippi, Nevada and New Jersey.
Some Food Prices Will Rise in ‘13
The U.S. Department of Agriculture said on Wednesday that the current drought in large parts of the Midwest is going to catch up with U.S. consumers in 2013 in the form of higher prices for a number of foods. Beef prices will probably receive the largest upward kick, up 4 percent or 5 percent next year compared with this year. Dairy prices may rise as much as 4.5 percent, while poultry and egg prices are forecast to rise 3 percent to 4 percent, and pork by as much as 3.5 percent.
Beef prices will rise so much because cattle producers are already taking their herds to market in greater number this year, since feeding them has because considerably more expensive lately. At the heart of the problem is the wilting corn crop, the basis of much animal feed, which is also why vegetable and fruit prices won’t be much affected by the drought (since they’re largely irrigated crops). Until the drought caught everyone by surprise, predictions had called for a record corn crop, and lower prices.
Though still vexed by euro-worries, Wall Street ended mixed on Wednesday. The Dow Jones Industrial Average gained 58.73 points, or 0.47 percent. The S&P 500 lost a scant 0.03 percent, and the Nasdaq was down 0.31 percent.