Good News Friday
First In, First Out?
The housing sector, which led us into the woods in the first place, is slowly leading us out. New and existing home sales increased in July by 9.6 and 7.2 percent, respectively, buoyed by the $8,000 tax credit for first-time buyers and competition for entry-level homes between first-time buyers and investors. The months’ supply of new homes on the market is headed down at a brisk pace, ending July at 7.5 months versus a balanced market of five to six months. The supply of existing homes, at 9.4 months, also is trending lower but at a more leisurely pace. According to the closely monitored Standard & Poor’s/Case-Shiller 20-city home price index, the seasonally adjusted average price of a single-family home rose 0.7 percent from May to June, the first increase since May 2006. (The index is based on a three-month moving average, i.e. the three months ending in June compared with the three months ending in May.)
Like housing, the long-suffering manufacturing sector is poised to break out of its multi-year slide. Durable goods orders surged 4.9 percent in July, its biggest gain in two years. Orders for civilian aircraft led the way.
One particularly hard-hit corner of the manufacturing sector, the recreational vehicle industry, is on the mend. Northern Indiana has been among the hardest-hit regions in the country, prompting President Obama to visit the city of Elkhart on three occasions. But several RV manufacturers in the region are adding jobs, and one new company is being launched. (Click here for article.) Can cash-for-campers be far behind?
Robert Bach
SVP, Chief Economist
Grubb & Ellis