Economy Watch: Homebuilders a Bit More Perky; Consumer Price Index Jumps; Housing Inventory Low
By Dees Stribling, Contributing Editor
The National Association of Home Builders reported on Tuesday that its housing market index edged up by one point in October to 41, meaning that the industry is more optimistic than at any time since June 2006, when the index was headed the other way in the face of the gathering storm in homebuilding. Homebuilders aren’t wholly optimistic, however, since 50 still represents the threshold of more builders believing conditions are good than not.
Following spikes in September, the index’s components measuring current sales conditions and sales prospects for the next six months each remained unchanged in October at 42 and 51, respectively. On the other hand, the component gauging traffic of prospective buyers increased five points to 35, its highest level since April 2006.
“The slight gain in builder confidence this month is an indication that, while still moving forward, the speed at which the housing recovery is proceeding is being moderated by the various constraints,” NAHB chief economist David Crowe said in a statement. “These are the complicating factors that make it difficult for builder confidence to reach and surpass the 50-point mark, at which an equal number of builders view sales conditions as good versus poor.”
Consumer Price Index Sees Monthly Jump, Not So Much Annually
The Bureau of Labor Statistics said on Tuesday that the Consumer Price Index increased 0.6 percent in September, with energy accounting for most of the increase. Over the last 12 months, the CPI increased a relatively modest 2 percent.
For the second time in a row, the monthly increase in the CPI was mostly the result of an aggressive advance in the gasoline index, which rose 7 percent in September after increasing 9 percent in August. Though the price of gas has been falling in recent weeks, its gains during the late summer and September haven’t quite been rolled back yet.
Food, which has been a cause of off-and-on inflation worries in recent years, didn’t contribute much to the CPI’s overall gains in September, with the food index up only 0.1 percent. The so-called core index–taking food and energy out of the equation–was up 0.1 percent for the month as well. For the year ending in September 2012, the index for all items less food and energy rose 2 percent, same as that including food and energy, which only goes to demonstrate the volatile nature of food and energy pricing.
Housing Inventory Down
One reason that homebuilders are more cheerful: The National Association of Realtors reported on Tuesday (through its site Realtor.com) that the total U.S. for-sale inventory of single-family homes, condos, townhomes and co-ops remained low, with 1.8 million units for sale in September 2012, down 17.7 percent compared to a year ago.
The median list price in September was $191,500, marginally higher (up 0.78 percent) than a year ago, the NAR said. Lower inventories, combined with somewhat higher median list prices, suggest that the housing market is ending the 2012 home-buying season is in better shape than it was a year ago, but considering how awful 2011 was for housing, it’s a low bar to jump.
Wall Street ended Tuesday in better shape. The Dow Jones Industrial Average gained 127.55 points, or 0.95 percent, while the S&P 500 was up 1.03 percent and the Nasdaq advanced 1.21 percent.