ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
August 27th, 2018
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
We join the many others in expressing our heartfelt sorrow for the recent passing of Senator John McCain. He was an optimist, a proud American, and represented the State of Arizona with authenticity and fearlessness for decades. We are grateful for his service and his civility. Our thoughts and prayers are with his family during this time of mourning and reflection.
U.S. Snapshot:
-
Manufacturers’ new orders for durable goods declined 1.7% in July compared to June. This was the third decline in the last four months. Yet, on a year over year basis orders are up a strong 9.2%. And excluding the volatile aircraft sector, orders were up 1.4% for the month and 8.5% from a year ago.
-
Sales of new single family houses in July were down 1.7% from June but were up 12.8% from a year ago. There were 627,000 sales at a seasonally adjusted annual rate.
-
Existing home sales subsided for the fourth straight month in July as issues of affordability and lack of supply affected potential buyers especially in major coastal cities. According to the National Association of Realtors, “Too many would-be home buyers are either being priced out or are deciding to postpone their search until more homes in their price range come onto the market.” Sales were down 0.7% from June and 1.5% from a year ago.
-
The current affordability issues in the U.S. are due to a combination of demand exceeding supply due to an inability of home builders to build enough houses in the “affordable” price range (thus resulting in existing home prices going up considerably faster than incomes) as well as interest rate increases. Yet, 30-year fixed rate mortgages, while up about 3/4 of 1% over the past year, have been essentially flat over the past month at about 4.5% (see chart below).
-
According to the FHFA home price index, prices rose 1.1% in the second quarter compared to the year’s first quarter. Over the past year, the index is up 6.5%. The index measures homes with mortgages that were sold to or guaranteed by Fannie Mae or Freddie Mac. The overall index is deceiving in that areas in Nevada, the District of Columbia, Idaho, Utah and Washington all had double digit price increases over the past year while North Dakota, Louisiana, West Virginia, Connecticut and Alaska all had appreciation of just over 2%. The increase from a year ago was 9.0% in Greater Phoenix and 5.1% in Greater Tucson.
Arizona Snapshot:
-
Statewide lodging performance was quite good in July according to Smith Travel Research. Occupancy was up 3.8% to 63.2% compared to a year ago. Overall demand increased by a strong 6.0% from a year ago while supply was up 2.1%. Year-to-date, demand is up 4.1% and supply is up 2.0%.
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
