August 2011 U.S. Economic Fundamentals

[Ally]

July sales up as investors turn to real estate








Panicked investors are taking money out of the stock market and putting it into another recently distressed investment ` real estate.




`We`re seeing more all-cash offers from people who have money sitting in accounts,` said John Heaney, a real estate agent at Century 21 Annex Realty in Quincy. `People are nervous, they want to invest in something they can feel and touch.`





Karl Case, a Wellesley College economics professor and co-creator of the S&P/Case-Shiller home-price index, said he`s seen the same phenomenon.





`Foreign buyers are doing that more than we are,` he said. `They`re seeing value in American real estate."





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[Ally]

U.S. mortgage applications hit 15-year low




U.S. home mortgage applications for purchases fell to a nearly 15-year low last week as resurgent worries about the strength of the economy kept buyers at bay, an industry group said Wednesday.




The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.4 per cent in the week ended Aug. 19.





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[Ally]

Economists doubt another U.S. recession within 12 months, but see weakness in 2012




WASHINGTON ` Another U.S. recession is not likely over the next 12 months. Neither is any meaningful improvement in the economy.




That`s the picture that emerges from an Associated Press survey of leading economists who have grown more pessimistic in recent weeks. They say high unemployment and weak consumer spending will hold back the U.S. economy into 2012.




Their gloominess comes at a time when Europe`s debt crisis threatens to infect the global financial system. It also coincides with an annual economic conference late this week in Jackson Hole, Wyoming, and speculation about whether Federal Reserve Chairman Ben Bernanke will unveil any new steps there to help the economy.





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[Ally]

U.S. economists see weakness, no recession





Another U.S. recession is not likely over the next 12 months. Neither is any meaningful improvement in the economy.



That`s the picture that emerges from an Associated Press survey of leading economists who have grown more pessimistic in recent weeks. They say high unemployment and weak consumer spending will hold back the U.S. economy into 2012.




Their gloominess comes at a time when Europe`s debt crisis threatens to infect the global financial system. It also coincides with an annual economic conference late this week in Jackson Hole, Wyoming, and speculation about whether Federal Reserve Chairman Ben Bernanke will unveil any new steps there to help the economy.





Read the full article here.

 

[Ally]

U.S. consumer spending makes biggest gains in 5 months




WASHINGTON ` U.S. consumer spending rebounded strongly in July to post the largest increase in five months on strong demand for motor vehicles, a government report showed on Monday, supporting views the economy was not falling back into recession.




The Commerce Department said consumer spending increased 0.8%, the largest gain since a matching increase in February, after slipping 0.1% in June.




Economists polled by Reuters had expected spending, which accounts for about 70% of U.S. economic activity, to rise 0.5%.




When adjusted for inflation, spending rose 0.5% last month, the largest gain since a matching increase in December 2009, after being flat in June.





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[Ally]

U.S. July pending home sales fall



WASHINGTON ` Pending sales of existing U.S. homes fell in July from June in the latest sign of weakness in the housing industry, data from a real estate trade group showed on Monday.





The National Association of Realtors Pending Home Sales Index, based on contracts signed in July, was down 1.3% to 89.7 from 90.9 in June.







Economists polled by Reuters ahead of the report were expecting pending home sales to fall 1.3%.





In a sign of how much the sector has recovered from a year ago, the index was up 14.4% from July of 2010.





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[Ally]

Demand for apartments surges, despite economy




Rising renter demand is filling apartment buildings around the U.S., in defiance of the economic malaise.




Vacancy rates are shrinking all over, in tight markets such as Minneapolis and loose ones like Phoenix.




It's an unusual situation. Job creation typically drives apartment demand. But this time the tenant top-up is largely about a lack of new supply ` in the face of paltry employment growth. Meanwhile, demographic trends and the single-family housing slump are creating tenants, says Hessam Nadji, a managing director at Marcus & Millichap Real Estate Investment Services.





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[Ally]

Foreign buyers see value in U.S. real estate



In fact, parts of the U.S. residential market look so beaten up that investors from emerging markets have begun to snap up properties, with Brazilian buyers particularly interested in Miami recently.



`The basic idea [of buying U.S. real estate] makes sense for Canadians. The dollar is strong and the U.S. market has had a major collapse,` says Scott Baker, portfolio manager at MacNicol & Associates Asset Management, a Toronto-based investment firm.




For the first time since the property market cracked in 2007, some popular markets, such as upscale neighbourhoods in Los Angeles and Miami appear to have bottomed out.



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[Ally]

All twenty metro areas with monthly house price increases in Case-Shiller




On a month-to-month basis, all metro region in the Case-Shiller Home Price Index for June 2011 showed price increases. On the other hand, we saw year-on-year housing declines across 20 major US metro areas of 4.5%. This is slightly better than the 4.6% registered last month. In the narrower Composite-10 series, year-on-year declines also declined slightly to 3.8% from 3.9%.





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[Ally]

U.S. consumer confidence tumbles




NEW YORK ` U.S. consumer confidence plunged in August to its lowest level since the 2007-2009 recession, after a bruising battle over the U.S. budget slammed stock prices and pushed the nation to the brink of default.




Tuesday`s data kept alive concerns the nation could slide back into a recession and spurred investors to buy government bonds on bets the Federal Reserve would try something new to help growth.




`What we are effectively going through is a crisis of confidence,` said Tom Porcelli, an economist at RBC Capital Markets in New York.





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[Ally]

U.S. home prices dip




NEW YORK ` U.S. single-family home prices dipped in June from May as the market continued to crawl along at depressed levels, a closely watched survey said Tuesday.




The S&P/Case-Shiller composite index of 20 metropolitan areas slipped 0.1% on a seasonally adjusted basis. A Reuters poll of economists had expected prices to be unchanged. On a non-seasonally adjusted basis, the index rose 1.1%.




`This month`s report showed mixed signals for recovery in home prices. No cities made new lows in June 2011, and the majority of cities are seeing improved annual rates,` David Blitzer, chairman of the index committee at Standard & Poor`s, said in a statement.





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[Ally]

Further easing remains on Fed's policy table




Members of the U.S. Federal Reserve`s policy committee are pushing for new stimulus measures, increasing the odds of further action by the central bank to support the faltering economic recovery, minutes of the committee`s latest meeting show.




On Aug. 9, the Federal Open Market Committee said it expected to keep interest rates exceptionally low until the middle of 2013, an extraordinarily explicit guidance that prompted three of 10 voting members to dissent.





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