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Pollack: Permitting activity slows




& Company


November 26th, 2018

The Monday Morning Quarterback

A quick analysis of important economic data released over the last week

Hope you all had a happy and healthy Thanksgiving weekend. While last week was short for most of us, there was still lots of economic news to go over. Most of it showed that the general pattern remained positive. This remained true even given the continued weakness in the stock market. For example, Leading indicators were up. Consumer sentiment remained strong.   And manufacturing, at least on a year over year basis, was impressive. On the other hand, the housing market showed some continued signs of weakness as home prices and mortgage rates effected affordability.

Locally, lodging performance remained bullish and total taxable sales and retail sales both statewide and in Maricopa County were good. Also, Greater Phoenix housing permits remained positive in October but slowed into November. Weakness was also seen in Tucson.

While it is too early to get any meaningful data on the important holiday shopping season, all income, employment and confidence data suggests that the holiday season should be a good one in terms of retail sales. That would be a fitting end to what has been a very strong year economically. We will keep you informed.

U.S. Snapshot:

  • The Index of leading indicators increased 0.1% in October to 112.1 following a 0.6% increase in September and a 0.5% increase in August.  So, while the rate of increase has slowed, the direction is still positive.

  • The University of Michigan Consumer Sentiment Index for November remained largely unchanged at a very favorable level (97.5 in November vs. 98.6 in October).  The range for the last eleven months has been from 95.7 to 101.4.  Interestingly, the Sentiment Index remained unchanged among Democrats and Republicans prior to and following the election.

  • New orders for manufactured durable goods in October declined 4.4% from September but were still up 6.7% from year earlier levels.

  • Privately owned housing units permitted in October were at a seasonally adjusted annual rate of 1,263,000.  This compares to revised September number of 1,270,000.  The October permits number is 6.0% below year earlier levels.  Single family permits were down 0.6% for the month and 0.6% from year earlier levels.  Thus, the decline was really negligible.

  • On the other hand, growing affordability concerns resulted in builder confidence in the market for newly built single family homes falling from 68 in October to 60 in November.  A year ago, the index stood at 69.  According to the National Association of Home Builders, builders reported that they continue to see signs of consumer demand for new homes but that customers are taking a pause due to concerns over rising interest rates and home prices.

  • According to the National Association of Realtors, existing home sales increased in October after six straight months of decreases.  Sales rose to 5.22 million (SAAR) in October after a sales rate of 5.15 million in September.  A year ago, the seasonally adjusted sales rate was 5.50 million.

Arizona Snapshot:

  • Statewide lodging performance improved in October as occupancy rose to 71.0% from 69.1% a year ago.  This was due to a 4.7% year over year increase in demand and a 1.9% increase in supply.

  • Total taxable sales in the state rose 0.8% for the month in September and now stand 5.0% above year earlier levels.  Retail sales were down for the month but still stand 4.9% above year earlier levels.

  • Total sales in Maricopa County rose 1.6% for the month in September and stand 5.7% above a year ago.  Retail sales in Maricopa County are up 5.5% from a year ago.

  • According to R. L. Brown, single family building permits in the Greater Phoenix area were up 30.1% in October from year earlier levels.  That’s 1,900 permits this year vs. 1,460 a year ago.  Year-to-date thru October, permits are up 16.0% to 19,107.  New home prices over that period are up 4.7% to $332,186 while resale home prices are up 6.4% for the same period to $250,000.

  • On the other hand, Jim Belfiore reports that activity though mid-November has weakened due to the lack of existing home supply and the same affordability concerns mentioned above.

  • Permits in the Greater Tucson area were 245 in October.  This is a decline of 6.5% from a year ago.

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

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