Economic Week In Review

• Retail Sales - down .2%, less autos it was up .5% which was unexpected. Business Inventories- up .1% reflecting that fact that most businesses are trying to keep inventories low during the slow down. (Tuesday)

• Consumer Price Index - up .2% which was much better than expected, energy came in almost flat which is a mystery to me! (Wednesday)

• Jobless Claims -371,000 reflecting poor conditions in the labor arena.
• Industrial Production,-down .7%, worse than expected and again pointing to more widespread weakness in manufacturing.
• Philidelphia Fed Survey-continues to show weakness in manufacturing and came in down 15.6%.
• Empire State Manufacturing Survey-down 3.2%
• Housing Market Index-came in at 19 with the component for buyer traffic being very weak in May.(Thursday)

• Housing Starts- at 1.032M reflected an increase of 8.2% in May.
• Consumer Sentiment fell from 62.6 in April to 59.5 in May, lowest level in 28 years. Not surprising as inflation continues to be a top concern for consumers and rising gasoline and food prices are hurting wallets everywhere.(Friday)

• Bonds…2 year 2.45%, 5 yr. 3.11% and the 10 yr. 3.85%.
• Crude oil had a high of $127.82 and closed at $126.29 per barrel. President Bush’s visit to Saudi Arabia yielded a token increase in production of 300,000 barrels, not enough to make a meaningful difference.

Of note this past week:

Housing starts had a very unexpected increase of 8.2% which appears to have come from multi-family dwellings, apartment buildings etc. which jumped by 40.5%! Single family home starts were at their lowest level since 1991, down 1.7%, reflecting twelve months of declining numbers. Right now weakness among homebuilders shows no signs of an immediate turn around. The CEO of Toll Brothers said this week that buyer traffic is the worst they’ve ever seen.

Clearly the devil is in the details, but the continuing tight money situation is not helping as buyers are struggling to obtain loans. Add the lightness of wallets due to gas and food prices and it’s no surprise that buyers may be more hesitant to commit to a mortgage. At the same time I’m seeing a clear hesitancy among buyers who think prices will go lower yet. This may be a mistake as all markets behave differently and more importantly many price points are behaving differently based on inventory levels and available buyers for those properties. I’m still of the opinion that if you find your dream home and it’s adequately priced for this market, buy it, because we really don’t know when prices will start to go back up and this may be a missed opportunity for many hoping to get into their first home.

Dow closed down 6 points for the day, at 12987.  At one point it was down 100 due to oil prices but the bulls managed to climb back.

The Economic Week Ahead:

• Leading Indicators,(Monday)
• Producer Price Index (Tuesday)
• FOMC Meeting Minutes (Wednesday)
• Jobless Claims (Thursday)
• Exisiting Home Sales(Friday)

Have a great week!

This entry was posted on 19. May 2008 at 00:07 and is filed under Housing Information/Stats, Blogroll. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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