From Fidelity National Title:
The Week In Review
MONDAY, January 24th
This week brings a mix of economic data, everything from home price indexes to manufacturing activity and consumer attitudes. New home sales and the advance estimate for Q4 GDP round out the calendar. Also, the Fed gets together for a two day monetary policy meeting and the President will deliver the State of the Union Address.
TUESDAY, January 25th
The S&P/ Case-Shiller 20-city home price index fell 0.5% to 142.7 in November from October and was down 1.6% from November 2009. As recently as May home prices were 4.7% above their year ago level but weakness set in again in the post tax credit period. Only 4 of the 20 metro areas tracked posted year over year price gains in November. The biggest gain of 3.5% was in Washington DC while the largest price decline of 7.9% was in Atlanta. Given the level of foreclosure activity in the market it may be a year or so before home prices stabilize and start climbing once again.
The consumer confidence index increased to 60.6% in January from a level of 53.3% in December. The size of the gain and the level of the index suggest that consumer confidence in the economy improved with the start of the New Year. Gains were broad based across most all components of the survey. Confidence is now in the upper part of its range of the last several years. Confidence needs to break to the high side of its current range to really indicate the return of optimism.
WEDNESDAY, January 26th
The FOMC policy statement released after their two day policy setting session today was little changed except for the acknowledgement that input costs or commodity prices have risen and that consumer spending picked up late last year. Those factors did not alter the current policy trajectory; the Fed will hold key rates near zero for an extended period of time and will purchase $600 billion in longer-term Treasuries by the end of June 2011.
New home sales jumped 17.5% in December to an annual rate of 329k, better than expectations for a 300k pace and furthering the idea that the fourth quarter ended on a strong note. This was the best pace of new home sales since the expiration of the homebuyer tax credit in April. Despite the increase however, new home sales remain 7.6% lower than last year and are still off a stunning 76.3% from the July 2005 peak. For all of 2010, new home sales declined for the fifth consecutive year to their lowest level on record which goes back to 1962. Stronger demand linked to job growth combined with high affordability and low inventories bode well though, for the 2011 housing outlook.
The MBA mortgage applications index dropped 12.9% to 441.8%, its lowest level since November 2008. Mortgage activity has fallen 43.9% since early October as a result of slightly higher rates that have managed to quash home buying and refinancing activity. A broader economic recovery will help lead the housing market back. Also, housing demand will return in earnest when home prices stop declining and the bulk of foreclosure processing has taken place.
THURSDAY, January 27th
Jobless claims surged 51k to 454k for the week ending January 22. Severe winter weather in many parts of the country could be lending to week to week volatility in claims figures. Smoothing out the weekly fluctuations shows that initial claims for unemployment have moved into a new lower range that suggests some improvement in labor market conditions.
The pending home sales index which tracks the number of signed contracts climbed 2.0% in December to 93.7%. The index gain suggests modest gains in existing home sales over the next month or two.
FRIDAY, January 28th
The economy grew at an annualized 3.2% rate in the fourth quarter, stronger than a 2.6% rate in the third quarter but less than estimates for 3.6% growth. For all of 2010, GDP grew 2.9%, the best rate of growth since 2005. Q4 growth was led by consumer and business spending and net export gains. Slow inventory investment was the major drag. Even though the rate of growth was disappointing, details in the data suggest the economy is poised for stronger growth this year.
Another week, another batch of good and not so good news. I guess depending on how you want to spin this, you could make it look rosy, or not. I am biased toward the good as being a Realtor in the Metro Denver area, I really believe that having a healthy housing market only benefits the city as a whole and a slew of other businesses. Hopefully we will continue to see small strides in the right direction (baby steps) - I think we are on our way, albeit not too far out of the gate.
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