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Economist's Outlook

The Latest on Unemployment Insurance Claims

Thu, 10/03/2013 - 09:34

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses unemployment insurance claims.

  • Initial claims for unemployment insurance filed in the week ending September 28 totaled 308,000, a minor increase of 1,000 claims from last week’s level. Weekly claims data register some volatility, but the trend has been one of a solid decline, an indication of an improving job market.
  • Relatedly, furloughed federal employees are eligible to file for unemployment insurance, so some temporary spike may be likely in the coming weeks.
  • What this Means for REALTORS®: Employment conditions have been improving solidly, although modestly. At the current pace of growth and job creation, NAR expects existing home sales to hit a level of 5.2 million in 2012, an 11 percent year-on-year gain.

Did You Know: Pent Up Demand Among Young Adults Could Boost Home Sales by 200,000

Tue, 10/01/2013 - 11:36

  • In 2012, there were more than 71 million young adults aged 18 to 34 living in the US—more than the roughly 69 million when the baby-boomers were in this age group in the mid-1980s.
  • The share of adults under age 35 living at home, especially among those aged 25 to 34, is at the highest level since 1981. More than 30 percent of those 18 to 34 lived with parents [1]; the historical average is 28 percent.
  • The share was 13.6 percent among those aged 25 to 34. The historical average for this group is only 11.7 percent. While a 2 percent difference sounds like a small amount, this translates into roughly 800,000 individuals.
  • The share among those aged 18 to 24 was 56.2 percent compared to a 52.9 percent long term average. This translates into roughly 1 million individuals.
  • At the same time, nearly 26 million households were headed by those under age 35. This group has a homeownership rate that has declined dramatically from its peak of over 43 percent in 2004 and 2005. In 2012 the homeownership rate was roughly 37 percent—the lowest level since publication of this data in the early 1980s.
  • Breaking it down further, households headed by those aged 25 to 34 have a homeownership rate of 41.5 percent compared to 21.7 percent for those under 25. While both rates represent a decline from recent years, ownership rates for those households headed by an individual under 25 actually remain above the long-term average of 19.6 percent. For those aged 25 to 34, however, the current homeownership rate is at an all-time low, well below the 45.8 percent historical average.
  • Assuming consistent population to household ratios and homeownership ratios, the 1.8 million individuals currently living at home would translate into an additional 590,000 households and roughly 200,000 additional home owners—roughly a boost of about 4 percent to the projected level of sales in 2013. In fact, existing home sales have made significant gains in 2013 over 2012, the most recent frame of reference for most of this government data, so it is possible that 2013 data will show considerable improvement over 2012 measures [2].
  • Note that there is a striking difference between predominant ownership rates and living at home rates among the 18 to 24 age group and the 25 to 34 age group. This is because many coming-of-age milestones happen in this time period. Age at first marriage is typically 25 to 29 in recent years [3], and the age of the first home purchase is 30 to 32 [4].

  • In addition to the fact that more individuals of this age are living with parents and that homeownership rates are currently lower than the longer term average for 25 to 34 year olds, one further reason for the lower household to population ratio is that the 18 to 34 age group is younger than at any time since the early 1980s. The average share of 18 to 24 year olds among the 18 to 34 year old age population cohort is 39.9 since 1983. In 2011 and 2012, 18 to 24 year olds were 42.2 percent of the total age group. This means that the average for the entire 18 to 34 year old group will be more representative of 18 to 24 year olds than is typical. A similar trend is seen among households.

  • In fact, adjusting for the higher share of 18 to 24 year olds in the group, the story is the same, but more or less dramatically so depending on the statistics. The share of adults aged 25 to 34 living at home holding constant the shares of each age sub-group is at a record-high 30.6 percent—even higher than the unadjusted figure—while the homeownership rate is somewhat better due to the higher homeownership rate among 18 to 24 year olds now compared to other times in history.
  • For more information on home buyers and home buying and selling trends among generations, both young and old, visit http://www.realtor.org/reports/home-buyer-and-seller-generational-trends

[1] Note: In CPS data, unmarried college students living in dormitories are counted as living in their parent(s) home.
[2] All data is subject to sampling and non-sampling error. These point estimates have been presented without corresponding margins of error that would account for sampling error and may not be comparable to other survey measures due to nonsampling error. A technical discussion of these errors in the CPS and CPS/HVS is available here: http://www.census.gov/prod/techdoc/cps/cpsmar13.pdf and here: http://www.census.gov/housing/hvs/files/qtr213/source_13q2.pdf
[3] http://www.census.gov/newsroom/cspan/family/20130906_cspan_family_4.pdf
[4] Data from the Profile of Home Buyers and Sellers, National Association of Realtors®

REALTORS® Expect Modest Price Growth in the Next 12 Months

Tue, 10/01/2013 - 07:12

About 92 percent  of  REALTOR®  respondents  in the August REALTORS® Confidence Index Survey expect prices to remain stable or to continue to increase in the next 12 months although at a rate of about 4 percent[1], significantly lower than recent experience.   Tight inventory, pent-up demand, and the drop in foreclosure inventory have provided much of the lift in prices, but the increase in interest rates in recent months is raising the prospect of softer demand.

Across the states, the median expected price changes  based on data from the June-August surveys are most upbeat in the Western states  as well states like Florida where inventory is extremely low. See report at http://www.realtor.org/reports/realtors-confidence-index

[1] This is the median expected increase. A median expected price change of 4 percent means  that 50 percent of respondents expect prices to increase above 4 percent while the other 50 percent expect prices to increase (or decrease) at less than 4 percent.

Sellers With Previous Foreclosure or Short Sale: Access to Mortgage Financing

Mon, 09/30/2013 - 11:33

Homeowners who had experienced a foreclosure or short sale are starting to return as homeowners, although access to financing is posing a constraint, according to information in the August REALTORS® Confidence Index Survey report.

  • About 23 percent of respondents reported working with a buyer who previously experienced a foreclosure or short sale since 2005.
  • About 46 percent of responding REALTORS® reported that these buyers they worked with could not obtain mortgage financing.
  • In reference to these buyers who did not obtain mortgage financing, 65 percent of respondents reported that the reason was related to the previous foreclosure or short sale.

Household Net Worth

Mon, 09/30/2013 - 07:19
  • The net worth of households and non-profits is now more than $5 trillion above its pre-recession peak at $74.8 trillion in the second quarter of 2013 according to data from the Federal Reserve Flow of Funds.
  • This level indicates a sharp recovery—growth of 11.5 percent from a year ago. This is the 4th consecutive quarter of year over year growth exceeding 9 percent and the 15th consecutive quarter of positive year over year growth.
  • While a reduction of debt led to some increase in net worth earlier in the recovery, the last 3 quarters have showed that total liabilities were roughly stable after 16 consecutive quarters of year over year decline.
  • The bigger driver of increases in net worth now is the recovery of home and stock prices.  Household real estate accounts for $18.6 of the $88 trillion in household assets and owner’s equity in household real estate is $9.3 trillion of the $70 trillion in net worth.  In fact, in the recent quarter, gains were split roughly equally between real estate and financial assets, with each seeing growth between $600 and $700 billion.
  • During the recession, the net worth of households and non-profits—the sum total of tangible assets such as real estate and financial assets such as savings and equities minus liabilities such as mortgages and other debt—took a beating, declining by roughly $13 trillion from the first quarter of 2007 to the first quarter of 2009..
  • Households and non-profits are grouped together because current data collection by the Fed is not at a level of detail that would make separation of the two groups possible.

Distressed Sales Continue to Fall

Sat, 09/28/2013 - 13:08

In line with the broad decline in foreclosure inventory, distressed sales continue to make up for a smaller share of overall residential sales. Approximately 12 percent of respondents who reported a sale in the August REALTORS® Confidence Index Survey sold a distressed property, substantially down from levels seen a few years ago.

For the past 12 months, properties in “above average” condition have been discounted by an average of 10-11 percent, while properties in “below average” condition were discounted at an average of 15-20 percent.

2013 Firm Survey: Franchised Firms

Fri, 09/27/2013 - 10:50
  • Fifteen percent of firms are franchised firms.
  • The typical firm has been affiliated with their current franchise for 11 years.
  • Eighty-seven percent of firms reported their current franchise affiliation improved their firm name recognition.
  • Many franchised firms have the capability to offer in-house ancillary services to real estate clients. The most common in-house service is business brokerage.
  • For more on the 2013 Firm Survey, click here.

Homeowner Equity

Fri, 09/27/2013 - 09:10
  • Housing equity rose 30% or more than $2 trillion over the past year as prices rose, home purchases rebounded, and mortgages outstanding continued to decline according to second quarter data from the Federal Reserve’s Flow of Funds.
  • Mortgage debt outstanding fell by slightly less than $200 billion while the market value of household real estate surged 12 percent, topping $18.6 trillion.
  • The rise in the value of household real estate is welcome relief to owners, but as prices rise and affordability starts to wane, some wonder whether we are seeing a return of a housing bubble.  Here are some reasons that is unlikely the current case.
  • In spite of the rise in house prices, the total value of household real estate remains roughly 18 percent below the peak in 2006.  Additionally, mortgage debt has been on the decline.
  • The housing market has rebounded in spite of falling mortgage debt in large part because of all-cash or high cash purchases.  Scholastica Cororaton discusses the latest results from the Realtors® Confidence Index here, which show that 29 percent of recent transactions in July were all-cash purchases.  This trend has been quite consistent over the last few years in spite of low mortgage rates.

Demand for Residential Rental Properties Still Strong

Thu, 09/26/2013 - 12:49

The demand for rental units appears to remain strong, judging by rental price trends. Approximately half of REALTORS® responding in the REALTORS® Confidence Index Survey reported higher residential rents compared to 12 months ago. About 23 percent of REALTORS® reported conducting an apartment rental.

There have been reports that Millenials (the generation born approximately 1978/9 and subsequently) may be unable or unwilling to participate in homeownership to the same degree as previous generations–based on tough job markets and higher levels of student debt. This conclusion is not substantiated by a recent survey—but the Millenial generation is still evolving in preferences and age. In the July REALTORS® Confidence Index survey, approximately 52 percent of transactions went to clients aged 35-55 years old. Those aged 20 to 34 and under (that part of the Millenial generation currently of home-buying age) accounted for 26 percent of reported sales and numbered 28 percent of the over age 20 population.

Latest New Home Sales

Wed, 09/25/2013 - 13:10

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses new home sales.

  • Sales of new homes jumped 8.3% from July to August to a seasonally adjusted annualized rate of 421,000.  This was an important, though soft improvement from last month’s sharp downward movement and revisions to the two prior months.  While there were again downward revisions to the estimates for July and June, they were not as large as the re-estimates done in July.
  • Sales of new homes have been constrained by low inventories for several quarters, though.  The months’ supply of new homes jumped in July, but eased to 5 months in August, well below the 6.5 months that would be more indicative of a market in balance.
  • Low inventories place upward press on the median price, which was $254,600 in August, the 14th consecutive year-over-year increase.   The median existing home price was 20.0% lower at $212,200, above the historical average spread of a 12.3%, suggesting that existing homes are a bargain by historical standards.
  • The sharp increase in mortgage rates during the late spring has had an impact on new home sales.  New sales remain constrained by low production though, which in turn weighs on job creation and creates price spikes in some markets where inventories are particularly low.  Still, this month’s movement upward in sales and steady in prices suggests that consumers are adjusting to the higher rate environment and sales will continue at a more subdued level that is stronger than recent years and more in line with historical norms.

Latest Consumer Confidence

Tue, 09/24/2013 - 13:19

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s second update discusses consumer confidence.

  • Consumers felt slightly less confident about the economy in September compared to recent months.  But broadly speaking, consumers are in a much better mood this year compared to the past 5 years.
  • The September gauge of 79.7 is still well under 100 – historical normal and the point where more than half of America would say things are moving in the right direction.  It is this sub-100 reading that leads many to think that we are still in a recession even though the economy has been growing the past 3 years with nearly 7 million net new job creations.
  • Consumer confidence needs to rise to America into a virtuous self-feeding circle:
    • higher confidence leads to more spending
    • more spending leads to more jobs
    • more jobs leads to even higher confidence
    • Cycle repeats
  • Confidence and optimism, at times, can be lifted by great leaders and is the cheapest stimulus to economic activity.  FDR’s effort to turn the country around with “You have nothing to fear but fear itself,” and Ronald Reagan’s “It’s morning again in America” were effective in lifting country’s mood and thereby automatically inducing people and companies to spend more.  These quotes did not cost a single penny of taxpayers’ money.
  • There is a large amount of cash on the sidelines.  Business spending in relation to company profits is very sub-par at the moment.  Historically, total business spending should be measurably higher than profits since many small start-up companies are borrowing to spend and expand (i.e., the blue line in the chart below should be much higher than the red bar charts).  That is not happening right now.
  • It is unclear what Angela Merkel, the newly re-elected German leader, had said to the country in boosting its economy.  Germany was one major holdout in not implementing a stimulus measure after the financial crisis of several years ago.  As a result, it does not have a budget deficit.  Yet, Germany’s economy grew and grew, from the evident boost to German confidence, thereby driving the unemployment rate to very low levels.
  • The only significant European leaders of the past 50 years that come to mind are two ladies: Margaret Thatcher of Britain and Angela Merkel of Germany.  It’s been the Maggie and Angie show, if you will, in the otherwise diminished European power over the past half century.  They also set a good example of a woman’s ability to be a fine powerful leader.  Is America ready?  Hilary Clinton will be speaking at NAR’s annual convention in November.  She is popular and also divisive as have been other past speakers at NAR events such as George Bush and Condoleezza Rice.  Will Hilary come out and say something that will excite and get the support of REALTORS®, such as when Ronald Reagan told the crowd “never mess with mortgage interest deduction?”  REALTORS® will wait and see.

Latest Home Price Data

Tue, 09/24/2013 - 11:26

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses home price measures.

  • FHFA and Case Shiller data today both confirmed that home price increases continued in July.  Previously, NAR released median price data that showed a gain of 12.9 percent for the year ending in July.  Data from FHFA today showed a gain of 8.8 percent while CaseShiller estimated the gain for the year ending July to be 12.4 percent for the 20-city index—nearly exactly in line with CoreLogic’s earlier estimate.  Case Shiller’s 10-city index showed a year over year gain of 12.3 percent.  This is the 5th consecutive month of double-digit year over year gains in both Case Shiller indexes.
  • NAR reports the median price of all homes that have sold while Case Shiller, CoreLogic, and FHFA report the results of a weighted repeat-sales index.  Because home sales among higher priced properties have been growing more than among lower price tiers, the NAR median price has risen by more than the weighted repeat sales index—which computes price change based on repeat sales of the same property.
  • FHFA differs primarily from Case Shiller and CoreLogic because it sources data primarily from Fannie and Freddie mortgages, transactions using prime conventional financing, and misses out on cash transactions as well as jumbo, subprime, and government backed transactions such as those using VA or FHA financing.  Case Shiller and CoreLogic use public records data which offer very comprehensive data in most areas, but sometimes have a reporting lag.
  • To deal with the lag, Case Shiller data is based on a 3 month moving average, so reported July prices include information from repeat transactions closed in May, June, and July.  For this reason, the changes in the NAR median price tend to lead Case Shiller.  NAR data showed continued double-digit growth in August, so expect repeat prices to follow suit.
  • By market in the 20 cities covered by Case Shiller, metros in the West lead the pack.  Las Vegas posted the biggest year over year increase with a gain of 27.5 percent followed closely by San Francisco at 24.8 percent.  Los Angeles and San Diego rounded out the top 4.  The slowest growing metro in the last year according to Case Shiller was New York where home prices increased only 3.5 percent.  Still, all 20 metros showed year over year gains, and 11 of these were double-digit gains.
  • FHFA releases data at the regional level and it confirms the trend seen in other measures.  The most robust gains were in the West.  Year over year prices rose 20.8 percent in the Pacific division which includes Hawaii, Alaska, Washington, Oregon, and California and 12.7 percent in the Mountain division which includes Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, and New Mexico.

2013 Firm Survey: Benefits, Education, and Training

Tue, 09/24/2013 - 08:42
  • The most common benefit that firms offer to independent contractors, licensees, agents is errors and omissions/liability insurance at 79 percent.
  • Firms reported that 72 percent of their staff has academic degrees.
  • Thirty percent of firms report that all of their employees have a designation or certification in real estate.
  • Firms typically require 21 hours of training for new sales agents, 12 hours of training for experienced sales agents, and two hours of training for other staff.
  • For more on the 2013 Firm Survey, click here.

REALTOR® Confidence for the Next 6 Months Eases in August

Mon, 09/23/2013 - 13:06

REALTORS’® confidence about market conditions for the next six months remains “above moderate”, but weakened for all markets in August compared to July. The index for single family homes fell to 65 (69 in July). The index for townhouses went below moderate to 48 (51 in July), while the index for condominiums further slid to 43 (46 in July).

The prospect of further increases in interest rates, the continued difficulties in accessing mortgage financing, appraisal problems, modest job growth, and higher flood insurance rates in some areas were the main concerns reported by respondents in the August REALTORS® Confidence Index Survey.

Although all real estate is local, real estate markets around the country have experienced good price and sales growth in the past 12 months. REALTOR® confidence is still high compared to previous years, so some leveling off to slower growth rates will help to avoid speculative behavior—the type of behavior that created major problems a few years ago.

2013 Firm Survey: Business Activity of Firms

Fri, 09/20/2013 - 09:05
  • Firms with only one office had a median brokerage sales volume of $3.6 million in 2012, while firms with four or more offices had a median brokerage sales volume of $145.6 million in 2012.
  • Firms with one office had a total of 15 real estate transaction sides in 2012, while firms with four or more offices typically had 750 real estate transaction sides in 2012.
  • Firms typically had 10 percent of their sales volume generated through their website.
  • Forty-five percent of firms do use a secure or encrypted web platform and 33 percent encrypt their e-mail.
  • For more on the 2013 Firm Survey, click here.

Latest Diffusion Index of Foot Traffic

Thu, 09/19/2013 - 10:02

Foot traffic is a strong leading indicator of future trends in contracts and closing for home sales. NAR Research monitors foot traffic patterns in roughly 170 markets. Traffic has been expanding in most markets since the spring of 2011. However, relative to August of 2012, foot traffic fell in the majority of markets in August of 2013, though the magnitude of the decline is not clear. This change likely reflects the recent increase in mortgage rates and tight inventories.

Every month SentriLock, LLC. provides NAR Research with data on the number of properties shown by a REALTOR®. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future. For the month of August, the diffusion index for foot traffic fell 24.9 points to 34.1.

Mortgage rates have risen roughly 1.2% since May and stood above 4.5% at the end of August. This trend coupled with strong price appreciation has eroded affordability. However, inventories have been on the decline as well, limiting the top end of the foot traffic index to band between 60 and 70 since the fall of 2012.

This month’s reading is the first decline in the index since March of this year. March of 2012 was a particularly strong month for traffic, so that decline reflects the strength of the market in 2012. The index fell below the important “50” mark in August, which indicates that more than half of the markets in this panel had stronger foot traffic in July of 2013 than the same month a year earlier. This reading does not suggest how much of an increase in decline there was, just that the majority of markets experienced more foot traffic in August of 2012 compared to last month.

On a metro level, the decline appears widespread from high priced coastal markets to the Midwest and Southwest. It is not clear though whether tight inventories, higher mortgage rates or a combination of factors was the driver of this trend. While the decline in traffic from 59 to 34.1 was large, it is important to remember that this decline was from a high level a year ago during an atypically strong end of summer. By comparison, the decline in traffic that followed the expiration of the home buyer tax credit was much larger falling from 64.8 to 19.3 in a single month.

Foot traffic fell sharply in August likely reflecting the strong increase in mortgage rates, tight inventories, and strength of last year’s market. Consumers are likely to take a pause and to reevaluate affordability conditions this fall, but rates remain well below levels during much of the market expansion in the early 2000s and prices have yet to reach those peaks. A reversion to historic price growth would benefit the long-term stability of the market.

2013 Firm Survey: Characteristics of Real Estate Firms

Wed, 09/18/2013 - 13:25
  • Eighty percent of real estate firms have a single office, typically with two full-time real estate licensees.
  • Seventy-nine percent of firms specialize in residential brokerage.
  • 32 percent of firms are LLCs, 29 percent are sole proprietorship, 27 percent are S-Corps, and 10 percent are C-Corps.
  • The typical residential firm has been operating for 12 years, while the typical commercial firm has been operating for 18 years.
  • For more on the 2013 Firm Survey, click here.

Latest Consumer Inflation

Tue, 09/17/2013 - 13:42

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses consumer inflation.

  • Rents continue to climb higher even as broad consumer prices remain tame. Rents rose 3.0 percent over the past 12 months (August 2012 to August 2013), the fastest increase in nearly five years.
  • The broader consumer price index rose much more modestly, by 1.5 percent, thanks to a slight decline in energy prices this year compared to last.
  • Food prices rose 1.4 percent. Clothing prices rose 1.8 percent. Gasoline prices were down 2.4 percent. House related costs of window and floor covering, appliances, and furniture all experienced a slight fall in prices.
  • Home prices are not considered in computing consumer price index. It is considered an asset, and like stock prices, the changes in home prices impact people’s wealth but not cost of living changes. However, a strangely funny component called the “owner’ equivalency rent” is included. It is what the homeowner would pay in rent if the house is rented. This component rose by 2.2 percent, also the highest increase in nearly five years.
  • Apartment owners and small time landlords should be mindful that the cost of running a home, such as water, trash, and sewage costs, increased by 3.5 percent. Many landlords in the high income category will also be subject to a new 3.8 percent tax starting this year (that is, in the next year’s tax return forms) arising from the need to fund health care. Rents may need to rise further to compensate for these rising costs. Moreover, low vacancy rates across most of the country assure continuing pressure for rising rents going into next year.
  • The “Rents are Too Damn High” party is unlikely to win the mayoral race in New York City. Only more new construction can alleviate the rent pressure over time. However, the difficulty of obtaining construction loans, where many lenders are attributing to the onerous and confusing Dodd-Frank financial regulation, is preventing more new supply from reaching the market.
  • Based on this year’s consumer price trend, social security recipients can expect a cost-of-living-adjustment of about 2 percent next year.
  • Core inflation – price changes after excluding the volatile food and energy components – rose 1.8 percent. This measure is what the Federal Reserve monitors to fine tune its monetary policy. As long as it is rising less than 2 percent, an ultra-loose monetary policy can be expected. Should it rise above 2 percent, then inflation will start to become a concern for the Fed. If above 3 percent on core inflation, interest rates on everything will be rising.

Latest Producer Prices

Fri, 09/13/2013 - 10:26

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest producer price index.

  • Inflation at the producer level is not concerning. The producer price index rose a tame 0.3 percent in August and by 1.4 percent over the past 12 months. This inflation measure captures the price pressure that producers are paying to buy stuff.
  • Consumer prices generally follow the trends from producer prices. Both measures move similarly in terms of ups and downs, though not necessarily by the same magnitude. Over the past decade, producer prices increased 38 percent while consumer prices rose 26 percent. The difference in magnitude arises largely because many service items, like getting a haircut or paying college tuition, are accounted for in consumer prices but not in producer prices.
  • Little inflation provides more room to maneuver for the Federal Reserve. The bond buying program (by printing money) can continue for a longer period. Some degree of ‘tapering’ of bond buying will occur soon, which is the main reason for the rise in mortgage rates over the past 3 months, but the pace of tapering can be slow rather than abrupt so long as inflation does not pop out.
  • A complete end of bond buying will have to occur at some point, probably by the spring of next year. Printing of money forever is not a sustainable policy. When Germany did just that after the First World War, hyperinflation was the result. One widow farmer, aloof to economic data, sold a cow and then deposited the money in the bank. After a month, to her utter dismay, the retrieved money could only buy a can of sardines. Extreme politicians would have an easy time getting votes from people who feel cheated out of hard work.
  • Fortunately in America today, the bond-buying program has not led to any degree of inflation. Consumer prices are up only 2 percent from one year ago. In the worst case scenario, consumer price may rise at a 4 to 5 percent rate in a few years. That is not hyperinflation and is not even the 1970s style double-digit rate of inflation.

Claims for Unemployment Insurance Drop to Lowest in 13 years

Thu, 09/12/2013 - 10:26

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses unemployment insurance claims.

  • Initial claims for unemployment insurance filed in the week ending September 7 dropped to 292,000, the lowest in 13 years. The first release of the data is preliminary and is generally upwardly revised the following week, although on a minor scale. Weekly claims data for unemployment insurance also fluctuates widely. Despite the caveat, the report is positive and claims have generally been on the downtrend in 2013, with the latest 4-week moving average at 321,250, a level close to what most analysts consider normal.
  • What this means to REALTORS®: A lower level of initial claims indicates greater job stability and security for those currently employed, which is important to the housing market that relies on a steady and reliable stream of long-term income growth.

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