Economy Watch: New Home Sales Up Too
- May 24, 2012
Immediately on the heels of the NAR’s report of an existing home sales spike in April, the Census Bureau reported on Wednesday that new home sales were up as well, to an annualized rate of 343,000 units. That compares with 332,000 units in March, which itself was revised upward by 4,000 units.
The new sales rate is an improvement over most of 2010 and ’11, when the rate tended to be around 300,000 units. But historically speaking, it’s still very low. Besides the last two years, the only other time the rate has been this low since the start of record keeping in 1963 was during the tough recession of the early 1980s. Even during the equally tough recessions of the 1970s, construction was usually more than 400,000 units (and in a country with fewer people).
The Census Bureau also reported that the supply of new houses totaled 5.1 months in April, down a tick from 5.2 months in March. This is considered a normal range, and in fact during most decades back to the early ’60s, the supply has been higher. On the other hand, until the housing bubble started inflating in the mid-2000s, the supply was closer to four months during the early 2000s (it peaked at 12.1 months in Jan. 2009).
FHFA Home Price Index edges up
One measurement of U.S. home prices grew modestly in the first quarter of 2012: the Federal Housing Finance Agency’s purchase-only house price index (HPI). The FHFA HPI was up 0.6 percent since the fourth quarter of 2011. This is the first time that a quarterly FHFA HPI has shown a year-over-year increase since 2007.
The agency also reported that the index for March was up 1.8 percent from February. The HPI is calculated using home sales price information from Fannie Mae and Freddie Mac mortgages, so it describes a large but limited pool of mortgages.
FHFA’s expanded-data house price index, a metric introduced in August 2011 that adds transactional information from county recorder offices and the Federal Housing Administration to the HPI data sample, rose 0.2 percent between the fourth quarter and the first quarter. Over the latest four quarters, the index is down 1.3 percent.
EU meeting inconclusive
An assortment of EU panjandrums, meeting in Brussels on Thursday (EU time), made announcements to the effect that the euro zone wants to keep Greece in the common currency. They offered little more detail about how to achieve that end, however, which seems to grow more difficult with each passing mutter from Greece officials and rumble from the streets of Athens.
Various media reports also said that the EU leaders, some of them at least, were making contingency plans for a “Grexit.” Investors made their own statement on the matter on Thursday, driving the euro and European stock markets down (and the price of oil as well).
Wall Street fretted a great deal itself on Wednesday (US time), with the exchanges down most of the day. But in the end, they almost broke even, with the Dow Jones Industrial Average losing only 6.66 points, or 0.05 percent, while the S&P 500 and the Nasdaq gained 0.17 percent and 0.39 percent, respectively.