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Archive for August, 2013
Economic Advisor: August 28, 2013
August 28, 2013


Real estate sales for July were a mixed bag and then some, with sales of existing homes seeing a massive jump, while sales of new homes took a massive dive, according to last week’s news.

Sales of existing homes skyrocketed to their highest spot in three years thanks to a substantial spike in July, according to last week’s report from the National Association of Realtors. Transactions of existing single-family homes, townhomes, condominiums and co-ops, grew 6.5 percent to an annual rate of 5.39 million for the month from June’s 5.06 million-unit pace, and were 17.2 percent over June 2012’s 4.60 million-unit rate.

Tighter inventories helped push prices up. Total housing inventory rose 5.6 percent in July to 2.28 million existing homes for sale, which represents a 5.1-month supply. The median price for existing homes of all types hit $213,500 in July, which was 13.7 percent over July 2012. This marked 17 consecutive months of year-over-year price gains, which hasn’t occurred since the January 2005-to-May 2006 period.

Also helping push prices up was the fact that distressed homes, which include heavily discounted foreclosures and short sales, comprised only 15 percent of July’s sales, marking the lowest amount since monthly tracking began in October 2008. By comparison, distressed homes made up 24 percent of July 2012’s sales.

Meanwhile, sales of new single-family homes in July plummeted to an annual rate of 394,000, which was a dramatic 13.4 percent below June’s revised rate of 455,000, the Census Bureau and the Department of Housing and Urban Development reported last week. Still, this was 6.8 percent higher than July 2012’s estimate of 369,000.

The median sales price for new homes sold in July was $257,200 and the average sales price was $322,700. Last week’s reports put July’s estimated inventory of new homes for sale at 171,000, which represented a 5.2-month supply at July’s sales rate.

Turning to employment, first-time claims for unemployment insurance benefits filed the week ending Aug. 17, hit 336,000, an increase of 13,000 claims from the previous week’s revised figure of 323,000, the Employment and Training Administration reported last week. However, the four-week moving average dipped to 330,500, a decline of of 2,250 from the prior week’s average of 332,750.

The total number of unemployed Americans covered by unemployment insurance during the week ending Aug. 10 hits 2,999,000, a 29,000-person gain from the previous week’s revised level of 2,970,000, the Administration also reported. The four-week moving average ticked down to 2,985,750, a dip of 1,000 people from the previous week’s revised average of 2,986,750.

Despite these mixed economic reports, The Conference Board reported last week that its leading economic indicator index for July saw a 0.6 percent gain in July to hit 96 (a baseline of 100 was set in 2004). The LEI combines various pieces of data such as stock market performance, monthly unemployment scores, new home construction and manufacturer’s orders, for example, to summarize key trends and signal economic turning points.

This week, we can expect:

  • Monday — July durable goods orders from the Census Bureau.
  • Tuesday — August consumer confidence scores from The Conference Board.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; second quarter gross domestic product, second estimate, from the Bureau of Economic Analysis.
  • Friday — Personal income and spending for July from the Bureau of Economic Analysis; August consumer sentiment from the University of Michigan.

Posted in Economic Advisor

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