eye on economy - july 10, 2014

Eye on EconomyHome Sales Surge after Slow First Quarter

July 10, 2014

www.eyeonhousing.org

Home sales posted the biggest month-over-month increase in four years

Pending Home Sales Index increased 6.1% in May

PHSI increased in all regions of the country

Existing Sales Rebound

Healthy increase in existing home sales

All four regions increased

Total housing inventory increased

Distressed sales dropped to 11%

First quarter continued to disappoint as the Bureau of Economic Analysis released its third estimate of real GDP

Real GDP contracted 2.9% (seasonally adjusted)

Largely due to declining:

Inventories

Exports

Fixed Investments

Housing contributed 15.6% to Real GDP

Expected to grow in second quarter

Latest estimate of Residential Construction Spending shows slight decrease

In May, private residential spending fell 1.5%

Was up 7.5% from May 2013

Three-month spending average basis:

Single-family — up 12.3%

Multi-family — up 33%

The employment situation improved

Growth in:

Professional & Business Services

Retail

Healthcare

Payroll employment grew 288,000

June unemployment fell to 6.1%

Improvements in labor market are reflected in recent gains in consumer confidence

Consumer Confidence Index reached highest score since January 2008

Rose three points to 85.2

Improved from prior month

Builders remain cautious due to supply constraints including a persistent shortage of labor

Acute shortage of carpenters

Shortage of framing crews

Volatility in employment in specialty trades

Multi-employee companies — decreased 19.4%

One-person firms — declined 3.7%

McGraw Hill Construction surveyed NAHB members about green building

Single-family & Multi-family asked about cost and prevalence of green building

More than 15% of projects are green

Due to increasing consumer interest

Incremental cost to construct green homes was 8% in 2013