ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
January 2nd, 2018
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
We hope that you had a great holiday season and that 2018 will be a prosperous and memorable year for all of you. It appears that the economy is entering 2018 on a roll. The level of activity is strong and given the amount of stimulus that is going to take place in terms of tax cuts and expected infrastructure spending this year, 2018 should show generally stronger activity than 2017.
In addition, despite the relatively low levels of unemployment, wage and other inflationary pressures are not an issue at the moment. As long as this is the case, the FED will likely continue to raise rates, only slowly. While we would not expect to get through the year without some disturbances caused by the more rapid growth in an aging cycle, the overall outlook can only be described as positive.
Last week was a short work week, which was reflected in the amount of significant data reported. While consumer confidence modestly declined, the overall level remains high. Mortgage rates over the last month have remained level. Pending home sales remain strong. And home prices continue to rise. In Greater Phoenix, activity at Sky Harbor continues to increase at a modest pace and home prices locally continue to follow the national pattern of increases. This will reduce the already low number of homeowners who have negative equity.
U.S. Snapshot:
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Consumer confidence as measure by the Conference Board declined in December as consumers apparently felt less merry. Yet, the index remains at one of the highest levels since the early 2000’s. The index stood at 122.1 in December compared to 128.6 in November and 113.3 in December 2016.
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Interest rates for 30-year fixed rate mortgages remained in the same range they have been in for a while (see chart below). Last week’s rates averaged 3.99% compared to 3.90% a month ago. Rates remain low.
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Pending home sales did squeak out a minor gain both on a monthly and annualized basis in November according to the National Association of Realtors. The home sales index stood at 109.5 compared to 109.3 in October and 108.6 a year ago. According to the NAR, one of the biggest questions heading in to 2018 is if the depressed levels of available supply of homes can improve enough to slow price growth and make buying a home more affordable. Existing home sales prices were up 5.8%-more than double the rate of wage growth-and the 3.4 month supply of homes on the market was the lowest since NAR began tracking the data in 1999.
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According to the U.S. S&P/Case-Shiller home price index, prices of homes in the U.S. increased 6.4% for the year ending October and were up 0.2% over September (composite 20 city index). Home prices continue to climb supported by low inventories and increased sales.
Arizona Snapshot:
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Activity at Sky Harbor International Airport continued to grow modestly in November. Enplanements grew 1.3% compared to a year ago and deplanements increased by 1.0% over the same period. Total activity increased 1.1% at the airport.
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Home prices in Greater Phoenix grew by 6.0% over the past year according to the S&P/Case-Shiller home price index. The index now stands at 173.6. This compares to 100 in 2011 and 227.4 at the peak in 2006 (see chart below).
About EDPCo
Elliott D. Pollack & Company (EDPCo) offers a broad range of economic and real estate consulting services backed by one of the most comprehensive databases found in the nation. This information makes it possible for the firm to conduct economic forecasting, develop economic impact studies and prepare demographic analyses and forecasts. Econometric modeling and economic development analysis and planning are also part of our capabilities. EDPCo staff includes professionals with backgrounds in economics, urban planning, financial analysis, real estate development and government. These professionals serve a broad client base of both public and private sector entities that range from school districts and utility companies to law firms and real estate developers.
For more information, contact –
Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251
480-423-9200
