Economy Watch: Home Prices Jump; Office Vacancies Dip; Slow Increase in Holiday Sales
By Dees Stribling, Contributing Editor
Home prices nationwide, including distressed sales, increased year-over-year by 4.6 percent in August compared to August 2011, according to CoreLogic on Tuesday. The CoreLogic report is the first look at home prices for August, since the Case-Shiller numbers released last week covered July. In any case, the increase was the largest one reported by CoreLogic since July 2006.
On a month-over-month basis, including distressed sales, home prices nationwide grew by 0.3 percent in August. The August 2012 figures mark the sixth month increase in a row for home prices both year-over-year and month-over-month, by CoreLogic’s reckoning. According to the company, all but six states are experiencing price gains. Take distressed properties out of the equation and home prices nationwide increased annually by 4.9 percent in August 2012, and 1 percent month-over-month.
CoreLogic also publishes a pending housing price index, and predicts from it that September 2012 home prices will have risen by 5 percent since the same month in 2011, including distressed sales. The company is expecting prices to drop somewhat between August and September 2012 (0.3 percent), however.
Office Vacancies Edge Down
Reis Inc. reported on Tuesday that the U.S. office vacancy rate dropped during the third quarter, but slowly — as the rate has been doing for some time now. As of the end of the third quarter, 17.1 percent of the nation’s office space was vacant, down from 17.2 percent during the second quarter of this year, and 17.4 percent during the same quarter in 2011.
The slow absorption of office space is being driven by the fact that companies are demanding more of it in some cities, such as Houston and Austin, where energy firms are snapping up workers, and San Jose and Boston, where tech firms are hiring. Also, very little office development is going on; only 2.84 million square feet of new space was added to the entire national inventory during the second quarter.
Rental growth for U.S. office space also grew glacially, as it has been lately. According to Reis, asking rents were an average of $28.23 per square foot during third quarter, up from $28.17 in the second quarter and $27.84 a year ago. Effective rents were up, too, from $22.40 a year ago and $22.72 in second quarter to $22.78 a square foot during the most recent quarter. It’s what the old office broker pros call “better than nothing.”
NRF Posits Slower Increase in Holiday Sales This Year
On Tuesday, the National Retail Federation released its predictions for the upcoming holiday sales season — that is, the Christmastime and end-of-the-year holiday — and Santa will be ho-ho-hoing a little less vigorously this year. The organization says that average sales will be up 4.1 percent compared with 2011, to $586.1 billion. But the prediction is on the side of caution this year, since retail sales were up 5.8 percent year-over-year in 2011.
“While moderate compared to what we experienced the last two holiday seasons, the forecast is a very pragmatic look at what to expect this year given the current rate of economic growth,” NRF chief economist Jack Kleinhenz said in a statement. “There’s still some general anxiety amongst consumers when it comes to how the state of the economy is impacting their spending plans, but retailers can expect to see excitement around their promotions and plenty of bargain hunters both online and in stores in the coming months.”
Wall Street had a bumpy day, gyrating in positive and negative territories, but ended close to its starting point. The Dow Jones Industrial Average lost 32.75 points, or 0.24 percent, but the S&P 500 gained 0.09 percent and the Nasdaq was up 0.21 percent.