Pollack: Arizona revenue well above expectations

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September 26th, 2016
The Monday Morning Quarterback
A quick analysis of important economic data released over the past week
Data for the U.S. and Arizona focused mainly on the housing market.  The positives are that household incomes are rising, builders are seeing more serious buyers, mortgage rates are still historically low, and both building activity and prices are on the rise.  The negatives are that existing home sales are slowing due to those price increases paired with low inventory.
U.S. Snapshot:
  • Initial claims for unemployment insurance are down 8,000 for the week of September 17th, representing a 3.1% decline from a week ago and a 7.0% decrease from last year. This is a sign of a general lack of layoffs and solid improvement in the job market for the month of September. Jobless claims are at historic lows and trending lower.
  • Leading indicators decreased 0.2% in August after a 0.5% increase in July and a 0.2% increase in June.  The index is 1.1% above a year ago.
  • Mortgage rates for a 30-year fixed-rate mortgage stood at 3.48% for the week of September 22.  This is just under the previous week of 3.50% and well below 3.86% a year ago.
  • Privately owned housing units authorized in August were at a seasonally adjusted annual rate of 1,139,000.  This is 0.4% below July’s revised levels and 2.3% below August 2015. Single family permits were up 3.8% from a year ago but single family starts are now 1.2% below a year ago.
  • Builder confidence for new single family homes increased by 6 points in September.  This represents a 10.2% jump from last month and 6.6% above levels seen last year. Builders point to rising incomes leading to more serious buyers.
  • Existing home sales in the U.S. slowed for the second straight month. Single Family home sales decreased 2.3% in August, still a 0.6% increase from the prior year.
Arizona Snapshot:
  • Arizona’s weekly unemployment claims declined 1.5% compared to the week prior and stands 5.5% below last year.
  • Real GDP in Greater Phoenix grew 1.8% in 2015 over 2014.  Collectively, real GDP for the U.S. metro areas increased 2.5% over the same period.  Of the nation’s 381 metro areas, Greater Phoenix ranked 17th in GDP growth.
  • Arizona’s Joint Legislative Budget Committee reported August General Fund revenue growth of 12.7% over the prior year.  This was above expectations.  Both individual income tax collections (14.8%) and insurance premium taxes (74.9%) were strong, but aided by technical timing issues (more processing days and processing delays from the prior month). Fiscal Year-to-date, revenues are $22 million above the forecast.
  • According to R.L. Brown, single family housing permits in Greater Phoenix continued to show good results in August.  R.L.’s data indicates that 1,575 permits were issuedin August, up 5.8% from a year ago.  Year-to-date, permits stand at 12,341.  That is a 13.2% increase from the same 2015 period. Median resale prices in Greater Phoenix were up 9.5% from a year ago while median new home prices were up 4.4%.
  • Greater Tucson’s permit activity was up 26.2% from a year ago to 207 permits in August.  Year to date, 1,815 permits have been issued compared to 1,448 a year ago (a 25.3% gain).  Median resale prices in Tucson were up 3.3% from a year ago while median new home prices were up 8.9%.
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September 2016