Tag Archives: January

Naroff Economic Advisors — January Existing Home Sales

Posted on by

NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: January Existing Home Sales

KEY DATA: Sales: +4.3%; 1-Family: +3.8%; Condo: 8.3%

IN A NUTSHELL: “Housing sales improved in January but the level is still quite low and a lot of the demand is for distressed homes.”

WHAT IT MEANS: The housing market is not being looked at as a major source of growth but it is a place that we would like to see some improvement. That is happening, though not at a great pace.

Existing home sales did rise solidly in January, but as the National Association of Realtors pointed out, a growing share of the sales were for distressed homes. Nearly a quarter of the homes sold went to investors. That is good as it shows that homes are being recycled into the rental market where demand is growing. But we really need regular buyers to come back at a robust pace if the sector is to get back to normal.

The changing demographics are helping power better condo sales. However, while demand for single-family dwelling was up over the January 2011 rate, it was down fairly sharply in the condo/coop segment. The supply of homes is tight, being roughly six months. Normally that would be a positive sign for the market.

If it is result of non-distressed homeowners being unwilling to sell their homes at the market price and the limited foreclosures, that isn’t an indication of a market that is getting ready to pick up speed. With the recent mortgage company settlement, look for supply of distressed homes to rise. That should keep prices soft. They were down about 2% over the year. Regionally, all parts of the nation showed gains but the biggest increase was in the West.

MARKETS AND FED POLICY IMPLICATIONS: While the housing market is slowly improving, there is little reason to think that the non-distressed segment of the market is poised to take off. Mortgages are still not easy to get, the appraisal process creates impediments to sales and is adding to the large number of failed contracts, equity is tight for many who would like to move and the decline in prices have caused a lot of homeowners to give up trying to sell their homes.

While this was a good report, the level of sales is still disappointing. Until the housing problems are resolved, which could take another three or more years in some regions, don’t expect sales or construction to pick up rapidly. That means construction job gains, which are finally added to payroll increases, should be okay but not a major source of new hiring.

# # #

RE/MAX Connection Realtors is not a licensed financial advisor and is not providing any financial advice. You should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors only is providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.

Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

RE/MAX Connection Realtors, 1000 Lincoln Drive East, Suite Two, Marlton, NJ 08053 www.goconnectionnj.com.

Naroff Economic Advisors — January Employment Report

Posted on by

NAROFF ECONOMIC ADVISORS, Inc.

Joel L. Naroff
President and Chief Economist

INDICATOR: January Employment Report

KEY DATA: Payrolls: +243,000; Private Sector: +257,000; Unemployment Rate: 8.3% (down 0.2 percentage point)

IN A NUTSHELL: “The economy is starting to turn the corner and the labor market is finally becoming a beneficiary of the improving economic conditions.”

WHAT IT MEANS: For months the data were coming in stronger than expected but it was not clear that businesses were willing to loosen the hiring strings. Well, that may be changing. Private sector firms hired a ton of new workers in January and the gains were across the board.

We were not just talking about service sector positions, though there were a lot of those. But while retailers added only about 10,000 workers, manufacturers hired an additional 50,000 people. Construction, wholesale trade, health care, transportation, professional services, temporary help and restaurants all joined in on the hiring binge.

There was some weakness in finance and information services. The biggest cutbacks, though, were in the public sector, as usual. Local education is still suffering the largest brunt of the budget cutbacks. With hours worked and wages rising, income should be up solidly as well. That will add to spending power, which is badly needed.

But the really good news was on unemployment front. The unemployment rate hit its lowest level in three years. There have been three consecutive declines of 0.2 percentage point, a drop that is much faster than anyone expected but not likely to be sustained.

In January, the improvement came despite a sharp rise in the labor force. That was offset by a huge increase in the number of people who say they are employed, showing it was the economy not statistics that are driving down the rate. (Note: The unemployment rate and payroll numbers come from a different survey.)

MARKETS AND FED POLICY IMPLICATIONS: This is the first time in a long time I can talk effusively about an employment report. It was strong in all components. Payroll gains were across the board. The unemployment rate decline resulted from rising employment not a declining labor force. Wages rose as did hours worked. What was not to like? Nothing!

Since the bottom was hit in February 2010, the private sector has brought back almost 3.7 million workers. Clearly, the jobless recovery is no longer jobless. Still, can we expect the good news to persist? Maybe not at the pace we saw in January, but conditions are such that solid payroll gains and a slow steady decline in the unemployment rate are likely to continue.

Unemployment claims are low enough to support further declines in the rate. Improving conditions in the manufacturing and services sector as reported by the Institute for Supply Management argue that the payroll increases can be sustained.

We still face the restraints of weak housing and limited credit so don’t expect economic or employment growth to surge. But it is likely we will see at least 2.5 million new jobs created this year. The unemployment rate could go below 8% by the fall. Those are not spectacular numbers but just a few months ago not very many people had that in their forecasts (I did, which is why I am saying that.)

Investors should love this report but Mr. Bernanke should be wondering why he insisted on saying that rates will stay low for another three years. If this labor market improvement continues, that is not likely to happen.

# # #

RE/MAX Connection Realtors is not a licensed financial advisor and is not providing any financial advice. You should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors only is providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.

Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

RE/MAX Connection Realtors, 1000 Lincoln Drive East, Suite Two, Marlton, NJ 08053 www.goconnectionnj.com.