July 22, 2011
Eye on the Economy
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. 

Latest Postings

Video: NAHB Economist Robert Denk comments on the 14.6% rise in housing starts in June. Posted: July 20

Single-family detached homes account for a surprisingly large share — 27% — of the rental housing stock. Still, only 14% of single-family homes are for rent, compared to more than 80% of multifamily housing. Posted: July 20 

Existing homes sales remained soft in June, due partly to an unexpected spike in contract cancellations. Posted: July 20 

Video: NAHB Economist Robert Denk comments on the two point gain in the Housing Market Index in July. Posted: July 19 

The Consumer Price Index was down 0.2% in June, ending an 11-month run-up. Posted: July 15

The Producer Price Index shifted down 0.4% in June, as the recent decline in oil prices was finally felt. Posted: July 14 

Bureau of Labor Statistics jobs data confirm that the U.S. economy has hit a soft patch, but recovering construction jobs seems unaffected thus far. Posted: July 12

With a net increase of only 18,000 jobs in June, employment growth is well below the 150,000 per month needed to hold the unemployment rate steady at its current level. Posted: July 8

Analysis by NAHB estimates that 25% of the price of a built-for-sale single-family home stems from costs associated with government regulations. Posted: July 8

A proposal in the current deficit talks to arbitrarily redefine carried interest as non-capital income that would be taxed as ordinary income instead of capital gains would have a large and harmful impact on multifamily project developers. Posted: July 8

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