The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
The year starts with reporting on the last bits of data from 2015. According to the Conference Board, consumer confidence closed out the year slightly above its 2014 level, driven almost entirely by a large increase in consumer confidence among those under age 35. Confidence in 2015 also grew the most among the poorest and the wealthiest households, those making less than $25,000 and those making more than $75,000, because most job growth occurred in low-wage and high-wage jobs.
In addition, the Conference Board reported that the growing pessimism over business conditions is an item to keep an eye on. Fewer survey participants expect business conditions to improve in the near term, likely a factor of the lackluster economic news out of Europe and China in the past six months.
Lastly, the Conference Board indicated that the new interest rate environment after the announcement that came out may already be softening consumers’ purchase intentions on autos, which are down over last year. However, home purchase intentions are up over last year, despite the news over interest rates, potentially signaling a shift in priorities among the large millennial population. Time will tell.
For Arizona, the data points to continued improvement in economic conditions, including lodging performance, unemployment and home prices.
U.S. Snapshot:
- Initial claims for unemployment insurance increased from the previous week to the highest levels experienced since the July 4 holiday week. It should be noted that this particular report is historically volatile during holiday weeks. At 287,000 claims for the week ending December 26th, claims are still down 2.0% from a year ago.
- Consumer confidence is rebounding from a notable drop last month. The Conference Board Consumer Confidence Index rose to 96.5 from a revised 92.6 in November. With unemployment continuing to trend downward, more consumers believe jobs are plentiful. In addition to the optimism around labor and income, consumers are also willing to spend, with 5.8% planning to buy a new home and 10.5% planning to buy a car.
- 30-year fixed-rate mortgages averaged 4.01 percent with an average 0.6 point for the week ending December 31, 2015. This is an increase from last week when it averaged 3.96 percent. A year ago at this time the rate averaged 3.87 percent. Expectations are for the interest rate to continue to increase modestly over the coming year.
- Home prices according to the U.S. S&P/Case-Shiller Home Price Indices are 5.5% higher than one year ago among the 20-metro composite. San Francisco, Denver and Portland continue to report the highest year-over-year gains.
- Pending home sales in November declined slightly for the third time in four months. The National Association of Realtors indicate that buyers continue to battle both rising home prices and limited homes available for sale. According to NAR chief economist Lawrence Yun, with existing housing inventory already below year ago levels and new home construction still deficient, it’s likely supply constraints and faster price appreciation will reappear once the spring buying season begins.
- NAR reports that existing-home sales are forecast to finish 2015 at a pace of around 5.25 million, which is the highest since 2006, but approximately 25% below the previous peak set in 2005 (7.08 million).
- NAR also reports that the national median existing-home price for all of 2015 will be close to $220,700, an increase of 6.0% from a year ago.
Arizona Snapshot:
- Statewide lodging performance continues to improve. Occupancy rose to 61.0% in November. That compares to 59.1% a year ago. Demand was up 3.6% over a year ago and supply was up 0.3% over the same period.
- Arizona unemployment claims came in at just over 25,760 for the last week in December. This is down on both a week over week basis by 5.3% and down by 11.1% from a year ago.
- Greater Phoenix has seen a 5.7% increase in home prices according to the latest S&P/Case-Shiller Home Price Indices from October. Greater Phoenix had the longest streak of year-over-year increases. After reporting a gain in October 2015, this is the eleventh consecutive increase in annual price gains (see chart below).
