Daily Forecast Update: Jobless Claims, FHFA Home Price, Beige Book, Conference Board Indicators

October 22, 2009

By Danielle Hale, Research Economist

Yesterday, the Federal Reserve's Beige Book noted that the real estate sector is one of the few bright spots in the economy. The Beige Book attributed much of the brightness to the first-time home buyer tax credit.
Today's FHFA price index release shows that price declines are moderating and prices are increasing in some areas. The future price pattern depends on the extension home buyer tax credit and the translation of improved economic performance into more jobs and job stability.
Today, jobless claims show that the employment sector is still weighing on the economy. Notes in the beige book provide anecdotal evidence of the same weakness. In the Conference Board's summary of the economy, most leading indicators are positive and coincident indicators are unchanged suggesting continuing improvement in the near term. Since today's data is mostly backward looking, there is no change to the forecast.

Initial jobless claims were higher than expected at 533,000 for the week ending October 17. While this is an increase of 11,000 over the previous week, weekly claims are volatile. The 4-week moving average declined by 750 to 532,750. While this is still considerably higher than the year ago figure of 479,000, improvement is welcome.
Continuing unemployment for the week ending October 10 was 5,923,000, and the 4-week average was 6,030,750. The easing is a positive sign despite the fact that continuing unemployment remains elevated relative to year ago levels when it was 3.7 million.

The FHFA reported that national home prices declined 0.3 percent in August. This was after a 0.3 percent increase in July. For the year ending in August, prices declined 3.6 percent and ranged from a 0.4 percent increase in the West South Central census division to a 7.8 percent decline in the Mountain census division.
The National Association of Realtors® also keeps track of prices. By comparison, the median price reported by NAR declined 12.5 percent for the year ending in August.
As mentioned above, today's FHFA release is for data from the month of August. Tomorrow, the National Association of Realtors® will release Existing Home Sales data that will include a median price series based on September transactions. Case Shiller, another oft-cited house price series, will release August data on October 27.

The Federal Reserve's Beige Book is an anecdotal summary of economic activity in the 12 Federal Reserve districts that was released yesterday afternoon. In this survey which is based on information collected before October 13, most areas indicated stable or slightly improving conditions, though it was often noted that improvements were from low levels.
By industry, residential real estate was a bright spot in many regions due, in large part, to the first-time home buyer tax credit. A few districts reported concern over the looming expiration of the credit should Congress fail to extend it.
Commercial real estate was highlighted as an area of weakness due to declining demand for space. Many areas saw a lack of financing available to businesses seeking to purchase or build space.
Among other industries, manufacturing improved in most areas. Agriculture and natural resource industries and non-financial services industries reported mixed conditions. Banking and financial services and consumer spending and tourism reported weak conditions, employment conditions were weak or mixed, wage and prices were generally under little pressure

The Conference Board's leading, coincident, and lagging indicators compile various economic measures into a series of indexes that tend to mimic changes in overall economic performance either ahead of, at the same time as, or following those changes, respectively.
The leading indicators index increased 1 percent in September and has seen 6 months of increase. The coincident indicators index was unchanged. The lagging indicators index decreased 0.3 percent in September.

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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