In the News
Last week presented a mixed bag of real estate news with a dip in existing home sales for June, but increased activity in new home permits and construction. Starting with existing homes, sales of single-family houses, townhomes, condominiums and co-ops dropped 0.8 percent in June to an annual rate of 4.77 million from May’s 4.81 million. This was 8.8 percent below the 5.23 million unit level in June 2010, according to the National Association of REALTORS® (NAR).
NAR chalked up June’s faltering to an unexpected spike in contract cancellations. Also, the Association noted that while the Midwest and South saw sales gains, that positive activity was offset by declines in the Northeast and West. Single-family home sales were stable, while the condo sector weakened. All in all, any recovery in real estate has been uneven, said Lawrence Yun, NAR’s chief economist.
“Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market, including an unusual spike in contract cancellations in the past month,” he explained. “The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16 percent of NAR members report a sales contract was cancelled in June, up from 4 percent in May, which stands out in contrast with the pattern over the past year.”
While the existing home market saw poor performance, there was reason for optimism for June’s new home market. Building permits issued for private homes in June rose to an annual rate of 624,000, marking a 2.5 percent increase over May’s revise rate of 609,000, the Census Bureau reported. Permits for single-family homes hit a rate of 407,000, which was 0.2 percent over May’s revised rate of 406,000. June 2011 permits for all homes were 6.7 percent over the June 2010 estimate of 585,000.
Starts on construction of private housing for June were at a rate of 629,000, which was a whopping 14.6 percent over the revised May estimate of 549,000 and was 16.7 percent above June 2010′s rate of 539,000. Construction starts for single-family homes in June hit a rate of 453,000, which was 9.4 percent over May’s revised figure of 414,000.
While permits were up, completions on housing construction were down for June, posting a rate of 535,000. This was 1.7 percent below May’s revised estimate of 544,000 and was 39.3 percent below June 2010′s rate of 881,000. Single-family housing completions for June were at a rate of 436,000, which matched May’s revised rate of 436,000.
Initial claims for jobless benefits were up for the week ending July 16, after a decrease the previous week, according to the latest data from the Employment and Training Administration. Claims for the week hit 418,000, a jump of 10,000 from the previous week’s revised figure of 408,000. The four-week moving average was 421,250, a decrease of 2,750 from the previous week’s revised average of 424,000.
The total number of insured unemployed workers during the week ending July 9 was 3,698,000, the Administration reported, a decrease of 50,000 from the preceding week’s revised level of 3,748,000. The four-week moving average was 3,720,500, a decrease of 4,000 from the preceding week’s revised average of 3,724,500.
While any recovery might be uneven, consumer sentiment was up for June, but by a smaller margin. The Leading Economic Index (LEI) for June increased 0.3 percent to 115.3 (2004 = 100), following a 0.8 percent increase in May, and a 0.3 percent decline in April, the Conference Board reported last week. (The LEI is a composite index of various leading, coincident and lagging economic indexes designed to give a better picture of the overall economy.)
This week’s financial calendar brings new home sales data for June from the Census Bureau. Also on Tuesday will be consumer confidence data for July from the Conference Board.
Wednesday will see durable goods order data for June from the Census Bureau, and the Employment and Training Administration follows on Thursday with initial jobless claims data for last week.
Friday will close out the week with Q2 gross domestic product data from the Bureau of Economic Analysis and consumer sentiment data for July from the University of Michigan.