This week, a fairly sparse lineup of economic reports moves the housing sector into the starring role.
Both the swoon into the economic crisis and the ascension out of it demonstrate the importance of a healthy housing market. So, in a sense, we all have a stake in seeing the housing market stay on the mend.
In some ways, this week is the calm between information storms. Last week, we had testimony from Federal Reserve Chairman Ben Bernanke, who sought to allay concerns that the central bank might prematurely wind down its economic stimulus program. Later, coming up in the first week of August, the monthly jobs report is due.
Reports this week
- The National Association of Realtors reports on June existing home sales, Monday at 10 a.m. (All times Eastern.)
- The Commerce Department reports on June new home sales, Wednesday at 10 a.m.
- The Labor Department reports on new claims for unemployment benefits, Thursday at 8:30 a.m.
So, where are we now?
Many economists believe growth was lackluster in the second quarter, perhaps running at an annual rate of about 1.2 percent or so. These same experts are fairly confident that growth will accelerate by the end of the year. The job market has been improving slowly, despite what the gross domestic product numbers are telling us.
"It's been in the GDP accounts where we've seen the most weakness," says economist Bob Brusca, with Fact and Opinion Economics. "But consumer confidence has been rising. Other metrics of future economic performance and current performance are actually performing a lot better than GDP. And those are the things that the Fed is looking at."
Housing remains a positive overall
Housing is giving the economic recovery a foundation, despite a setback in June housing starts. The recent reading on new construction was weighed down by the sometimes volatile multifamily portion, which includes apartments and condominiums. On the other hand, builder sentiment, as reported by the National Association of Home Builders, rose to the highest level since January 2006.
Brusca says while the housing recovery appears to be quite sustainable, there are some factors below the surface that indicate it isn't as robust as it could be. For starters, buyers "still need to have a very high credit score," he notes. "The unemployment rate nationally is still very high. And when you look more deeply into the statistics, what you see is that this housing recovery has been built a lot on the participation of investors in the residential housing market. And you haven't really brought a higher proportion of first-time homebuyers into the market."
What's expected from the numbers
The consensus among economists is for gains in both new and previously owned home sales for June, part of a continuing pattern of mostly positive news. Stuart Hoffman, chief economist for The PNC Financial Services Group, says he expects "pretty solid increases," which will continue through the next months. "I think we will see that home sales have been quite strong and house prices probably will continue to rise better than 10 percent from a year ago. We think this year they are up 10 (percent) or 12 percent again."
And even if the housing market is not "hot," Hoffman says it's still a "major plus" helping the U.S. economy accelerate in the summer and the second half of the year.
This week in business history: An aviation first
It was on July 22, 1933, or 80 years ago, that an important aviation milestone took place. Wiley Post completed the first solo flight around the world. He did it in a little more than just seven days and 18.5 hours. Post also is credited with helping to discover the jet stream.
Just a couple of years later, Post and humorist Will Rogers were killed in a plane crash in Alaska as they attempted to fly to the North Pole.
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