Investor Intel: No Fear for the Housing Sector
The U.S. has avoided default (again), China abandoned its one-child policy, the Fed has decided not to raise rates, the new Bond movie is about to come out, and Halloween is tomorrow.
Let’s jump right in: Jobless claims increased by a less-than-expected 1,000 to a seasonally adjusted 260,000 in the week ended Oct. 24, a Labor Department report showed Thursday. The four-week average of applications dropped to the lowest level since December 1973, while the number of Americans on benefit rolls shrank. While payrolls advanced at a slower pace than forecast in August and September, employment this year has averaged monthly gains that make it better than seven of the 10 years through 2014, according to Bloomberg. This is some slight good news after finding out the U.S. economy’s third quarter GDP inched up only 1.5 percent, somewhat disappointing seeing as the average growth rate was 2.3 percent in the first half of 2015. But there’s always a silver lining, and in this case it was consumer spending climbing 3.2 percent, exceeding the average of the prior five years. Income gains, however, are weak, due to lack of inflation.
This slow growth is a concern to the Fed, which decided Wednesday that it is not going to raise the federal funds rate this month. Maybe at its next meeting in December, but only if the conditions are right. Currently the news is not so rosy: Consumer confidence retreated to a five-week low in the period ended Oct. 25 as Americans became less enthusiastic about their personal finances and the buying climate, the Bloomberg Consumer Comfort Index found. Further, pending home sales continued to cool off in September, dropping for the second-straight month and to its second lowest index reading in 2015, according to the National Association of Realtors. The Pending Home Sales Index fell 2.3 percent to 106.8, granted this is still 3 percent above September 2014’s reading of 103.7. These are trends to watch, but altogether not alarming, as the economy is still recovering from the volatility in late August.
On the flip side, fix-and-flippers appear to be doing well. RealtyTrac’s U.S. Home Flipping Report found the average gross ROI was 33.8 percent for completed home flips in the third quarter 2015, down from 34.4 percent in the previous quarter, but up from 32.7 percent in the third quarter of 2014. The top counties for flipping to millennials were Philadelphia, Saint Louis and Baltimore, while the top counties for flipping to boomers were all in Florida: Charlotte and Hernando counties in southwest Florida, and Volusia, Brevard and Marion counties in central Florida. More on this next week when we post a full report here on the B2R blog.
The U.S. economy may be growing at a tortoise’s pace, but home prices continue to sprint ahead. Home price growth was strong in August, according to the S&P/Case-Shiller Home Price Index released Tuesday. The index, which covers the entire nation, rose 4.7 percent in the 12 months ended in August, slightly greater than a 4.6 percent increase in July. Hopefully this means the market has momentum to carry it through the final months of the year, and pull the economy along with it.
Now to the most important question: Is your renter a vampire or witch? RENTCafé has put together this handy infographic to finally settle that lingering question. Happy Halloween!
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