Economists' Outlook

Housing stats and analysis from NAR's research experts.

Economic Indicators: Weekly Update for June 03, 2011

Every week the Research staff analyzes key data releases and explain what they mean for you and your business. In this update, we give the highlights of the most important data releases for the week of May 16-May 20, 2011, along with graphs that show the latest movement and overall trends.

At a glance, this table shows the forecast for some of the most pertinent weekly data for REALTORS® to keep in mind. This changes from week to week as new data becomes available. The directional shift notes the trend from last week’s numbers. For the full forecast from the latest Pending Home Sales release, click here (PDF).

Highlights for Tuesday, May 31, 2011:

  • Home values fell in March according to theCase-Shiller price index.  The decline of 0.8 percent reflects conditions of 20 large metro markets.  Compared to one year ago, the prices are down by 3.6 percent.
  • The data, though stated as March, is not purely March data.  It is a 3-month moving average of January, February, and March numbers.  The data is a rear-view mirror look at price conditions that partly capture what happened 5 months back (January data now being revealed while we are nearing June).
  • The Case-Shiller data also does not capture many smaller metro markets and rural areas.
  • NAR and other price measurements also have shown price weakness  - about 5 percent lower prices from one year ago in the national aggregate.  But clearly, this second round of decline is softer.  Consider: prices fell about 30 percent from 2006 to 2009.  Then prices actually rose  by 1.3 percent in 2010 according to Case-Shiller data.  Now prices have been weakening, dipping into the low single-digits.  Price declines may in fact be over as of May, but it won’t be possible to know either way until well into November if using the Case-Shiller lagging data.

Highlights for Wednesday, June 1, 2011:

  • wfu060311b
    Mortgage applications declined 4.0 percent for the week ending May 27.
  • The Purchase index remained unchanged from the previous week. The seasonally unadjusted Purchase Index was 7.6 percent higher compared with a year ago.
  • Employment has slowed significantly in May, in tandem with other economic indicators.
  • The ISM Index declined 6.9 percentage points in May, to a value of 53.5. While the value remains expansionary, May’s data points to a slowdown in manufacturing.
  • Construction spending posted a slight increase in April 2011 due to growth in private and public residential completions. However, the overall construction spending is still 9.3 percent below a year ago.

Highlights for Thursday, June 2, 2011:

  • wfu060311c
    Jobless claims are slightly down again this week — by 6,000 — though this is not helping much with demoralizing trend of increases in the few weeks prior.
  • If jobless claims stays up like the past week and do not trend down, NAR expects less than 1.5  million net new jobs in the next 12 months, which would barely lower the unemployment rate.
  • Factory orders fell 1.2 percent in April, largely driven by a drop in demand for durable items such as motor vehicles, machinery, metals, computers, electrical equipment, and aircraft and parts.
  • The transportation sector saw the largest drop as orders fell 9.3 percent. The auto industry has been hit particularly hard due to supply disruptions, price increases, high fuel costs and general economic anemia.

Friday, June 3, 2011:

  • wfu060311d
    Like much recent data, today’s employment situation shows that the economy took a pause this spring.  May payrolls grew by 54,000, which is lower than the 200,000+ growth of the past three months and lower than the expected 100,000 to 200,000 monthly growth.  This causes the forecast for job growth in 2011 to be downgraded slightly.
  • Private jobs increased by 83,000 and government jobs continued to trend down, mostly at the local government level.  As a result of modest job growth, the unemployment rate crept up to 9.1 percent as more people rejoin the labor force looking for work.
  • The ISM’s Non Manufacturing Index (NMI) is in line with other tepid releases.  While the Non-Manufacturing Index grew in May at a faster rate than April, the rate of expansion was less than that of the November 2010 to March 2011 time frame.
  • The NMI employment index showed better growth in May over April whereas the Manufacturing Index released earlier this week showed the opposite.  Those trends are also seen in today’s employment data.
  • One potential positive is that the new orders component of the NMI grew at a faster rate in May than April.  This suggests that the current lull may be a temporary pause that can be overcome once price escalation stabilizes.
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