Recapping the latest news for real estate and the economy, including reports on home prices, construction spending, unemployment, Quantitative Easing and more…
Looks like we may be experiencing some wintry weather in Upstate South Carolina. I laugh sometimes at how people freak out in this area when we have snow or ice. And don’t get me started on the way some people can’t drive in the snow.
I am sure most of you didn’t come to get the latest weather update so let’s dive into recapping the big news for real estate!
Residential Construction Spending Up
I included the latest news about construction spending in last week’s Looking Forward Looking Back. In case you are not one of the cool kids that has signed up to get FREE Updates from the Ugly But Honest Blog, let me recap:
The U.S. Census Bureau of the Department of Commerce reported that construction spending during December 2013 was estimated at a seasonally adjusted annual rate of $930.5 billion, 0.1 percent above the revised November estimate of $929.9 billion. The December figure is 5.3 percent above the December 2012 estimate of $883.6 billion.
Spending for private sector projects rose by 1%; of this amount, residential construction spending increased by 2.60% and private sector spending for non-residential construction fell by -0.70%.
I will be the first to admit this is NOT a spectacular report. BUT the good news is that construction spending is currently dominated by residential construction. I am sure there will be some that say the bad weather is the cause for the low numbers…
There were several reports last week about unemployment:
First was ADP reporting that only 175,000 new private sector jobs were added in January 2014. This is the lowest reading in five months. Month-to-month job reports can be unpredictable but ADP’s quarterly results did give us some positive news.
For the three month period ending in January 2014, they reported average monthly job growth of 230,000 jobs which is slightly better than the same time period a year ago.
New Jobless Claims came in lower than the prior week and below expectations. Analysts said that these readings supported gradual improvement in the economy.
The next reports was from the Bureau of Labor Statistics (BLS). They released their Non-Farm Payrolls report for January 2014 and it showed 113,000 new jobs were added during the first month of 2014. This was better than the December 2013 numbers.
With lower job growth, a higher unemployment rate would seem likely, but the national unemployment rate dropped to 6.60% from last week’s reading of 6.70%. This is due to how the government fudges the unemployment numbers.
Gallup also released a report saying job creation was flat in January.
We obviously have a long way to go.
The Fed Said
In case you missed the news, the Fed announced another cut to the current Quantitative Easing program. This is the 2nd time the Fed has cut QE. The Federal Reserve’s FOMC Committee has said they want unemployment to drop to a 6.5% before they completely stop the easy money from flowing.
The economy and housing depend on each other and affect each other greatly. This is one of the reasons I talk about all the various economic news or national housing reports. They are important parts of the BIG picture.
Plus some of these reports will help to shape consumer attitudes or affect their confidence levels. If people are worried about losing their job then they are NOT likely to buy a home any time soon.
We got several reports about US home prices last week:
- CoreLogic Report US Home Prices up 11% YOY
- Clear Capital Says No Bubble But Prices Won’t Return to Peak Level Until 2021
- Trulia Reports Asking Prices Up 11.4% YOY
As usual I posted the average mortgage rates for last week on Friday. Rates once again dipped due to the still weak economy. Mortgage rates are much higher than this time last year but are still VERY attractive.
The stuff to watch this week:
- NFIB Small Business Optimism Index for January
- Weekly Jobless claims
- Mortgage Rate reports from Freddie Mac’& the MBA
- Retail sales report
- New Fed Chair Yellen Supposed to Talk to Congress (could be interesting)
- The University of Michigan Consumer Sentiment Report
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