Economist's Commentary: June 30, 2008
Quick Take on the Economy: June 30, 2008
By Lawrence Yun, NAR Chief Economist
Chicago Purchasing Manager Index
- Business activity inched higher in June according to purchasing managers in the Chicago region. The latest reading of 49.6 is an increase from 49.1 in the previous month, and marks the highest activity since January of this year.
- This measure is a prelude to the national ISM index to be released tomorrow.
- A reading of 50 implies neutrality. Above 50 implies an expansion and below 50 a contraction.
Farmland Values
- The farmland value in Illinois, Indiana, Iowa, Michigan, and Wisconsin increased 14 percent in the first quarter of 2008 according to the Federal Reserve Bank of Chicago.
- The rental rates rose even faster at 21 percent.
- The commodity price boom, including those related to corn production for ethanol, have driven up land prices.
- The underlying real estate values for commercial buildings and homes are also tied to land values over the long haul. So the rise in farmland values could imply a stronger than normal home price increase once the housing market returns to normal conditions.
What does today's data mean for REALTORS® and consumers?
- The economy is sluggish but not out.
- There is no real estate slump in agriculture land. In fact, farmland values are booming.
Daily Forecast Update
- NAR's monthly official forecast as of June 9th (48K PDF)
- GDP Q2: 0.7%
- GDP Q3: 2.1%
- Unemployment rate by election time: 5.7%
- Average 30-year fixed mortgage rate in December: 6.6%
- Average 30-year fixed mortgage rate by mid-2009: 6.7%
- The next Fed policy change: a rate hike in December 2008.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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