|Housing Shows Some Positive Signs Despite Soft Economy|
Providing yet more evidence of the weak state of the U.S. economy, employment growth slowed to a trickle in May and June, with an average monthly net increase of only 21,500 jobs — well below the 150,000 needed to hold unemployment steady at its current level.
Inflationary pressures are easing now that oil prices have ended their rapid rise. Both the Consumer Price Index and the Producer Price Index shifted down modestly in June. The price index for inputs into residential construction remained flat in June, easing the pressure on builders’ margins that have been steadily increasing over the past year.
The housing sector is showing some positive signs. Housing starts were up a respectable 14.6% in June and NAHB’s Housing Market Index (HMI) rose in July, although both remain at exceedingly low levels. Having lost the momentum that was building in last year’s second half, existing home sales softened further in June — their fourth decline of the past five months.
As the national debt continues to dominate media attention, policymakers are targeting housing on a number of fronts. With negative ramifications for the profitability of multifamily developments and their supply, the latest proposal takes aim at carried interest, arbitrarily redefining it as non-capital income that would be taxed as ordinary income instead of capital gains.