January 2011 U.S. Economic Fundamentals

[Ally]

U.S. housing starts lowest since late 2009




WASHINGTON ` Groundbreaking on new U.S. home construction fell more than expected in December to its lowest in over a year, suggesting the battered housing sector remains a major roadblock to economic recovery.




U.S. housing starts dropped to an annual rate of 529,000 units, the Commerce Department said on Wednesday, down from November`s 553,000 and well below forecasts around 550,000 in a Reuters poll. At current levels, starts account for less than a quarter of their boom-time peaks.




At the same time, building permits soared, a hint of optimism about future demand. Permits jumped 16.7 percent to 635,000, far above a median forecast of 560,000 and the biggest jump since June 2008. Changes to state building codes may have boosted permits in California, Pennsylvania and New York, the report said. For example, permits surged 80.6 percent in the Northeast.



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[Ally]

U.S. home sales surge, jobless claims decline





WASHINGTON ` U.S. home resales jumped more than expected in December despite bad weather as sellers cut prices while jobless claims fell sharply last week, offering some hope for the economy`s two key trouble spots.




Existing home sales soared 12.3% to an annual rate of 5.28 million units, the National Association of Realtors said on Thursday, far surpassing forecasts for a rise to 4.85 million. However, sales were down 2.9% from a year earlier.




In another report, applications for new jobless benefits posted their biggest decline in nearly a year, erasing a holiday-related spike to show a steady if slow improvement in the labor market. Claims retreated to 404,000 from 441,000 in the prior week, the Labor Department said.




"Most of the reports today were fairly good. For anyone skeptical about the U.S. recovery, these should ease concern," said Kathy Lien, director of research at GTF Forex in New York.




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[Ally]

The best and worst cities for home values in 2011




Poor Florida. The state that is home to Disney World, key lime pie and the Daytona 500 hasn't had much to crow about when it comes to real estate in recent years. Sorry to break it to Sunshine Staters, but they shouldn't be expecting a rebound anytime soon either.










That's according to Local Market Monitor (LMM), a Cary, N.C.-based real estate research firm that crunched the numbers for our list of the best and worst cities for home values in 2011. One list includes the 10 cities where home values are expected to rise the most in 2011, and the other the 10 cities where they are expected to fall the most.




LMM tracks 315 American real estate markets, assessing values and applying Investment Suitability ratings based on multiple factors. For the Forbes lists, LMM President Ingo Winzer and his researchers started with a U.S. Census-defined list of Metropolitan Statistical Areas with populations of 500,000 residents or more. They then analyzed key economic factors that directly affect housing markets: unemployment and job growth rates, as reported by the Bureau of Labor Statistics. LMM tracks real estate markets' valuations based on the theory that markets go through cycles.





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[Ally]

U.S. home prices keep weakening as eight cities reach new lows in November





S&P/Case-Shiller released the monthly Home Price Indices for November (actually a 3 month average of September, October and November).







This includes prices for 20 individual cities and and two composite indices (for 10 cities and 20 cities).





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[Ally]

Graphic: U.S. debt becoming 'unsupportable'





Just one day after President Barack Obama`s state of the union address, it was announced on Wednesday that the U.S. federal budget deficit would soar to almost US$1.5-trillion this year. Click to enlarge the graphic below.




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[Ally]

Home prices less affordable across Canada





The dream of owning a home in Canada continues to get hazier as housing prices in some of the country's largest markets skyrocket while income growth lags behind, results of a 325-city international survey of housing affordability suggest.







"There are a lot of people that tend to be squeezed out of the housing market," said David Seymour, a policy analyst with the Frontier Centre for Public Policy which compiled the survey's findings. "Owning your own little patch of Canada is a dream for a lot of people that is getting tougher."







The annual International Housing Affordability Survey, released Tuesday, compared home prices and household income in 325 cities in Canada, Australia, Hong Kong, Ireland, New Zealand, Britain and the United States.




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[Ally]

Exports to grow 5.8% on renewed U.S. strength





The strong Canadian dollar won't stop exports from playing a key role in driving economic growth this year as demand from the United States accelerates due to tax cuts and increased savings, says the chief economist at Export Development Canada.




Peter Hall is set to upgrade his original economic outlook from the fall on Thursday, and the economist--who has been cautious about the recovery's strength -- said encouraging signs are beginning to emerge.




"Early signs of a true recovery are emerging, and new [U. S.] stimulus will bridge the economy to balance. The waiting game just got a little easier, and Canadian exporters can anticipate rising momentum," Mr. Hall said.




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