Economy Watch: Home Prices Increase; Construction Spending Ekes Out Gain in May; Manufacturing Sector Expands
- Jul 02, 2014
In yet another metric confirming that home prices nationwide are still increasing but not as fast, CoreLogic reported on Tuesday that home prices, including distressed sales, increased 8.8 percent in May 2014 compared to the same month a year ago. The change represents 27 months of consecutive year-over-year increases in residential prices nationally. On a month-over-month basis, home prices (including distressed sales) increased 1.4 percent in May compared to April.
Excluding distressed sales, home prices nationwide increased 8.1 percent in May 2014 year over year and 1.2 percent month over month. By CoreLogic’s reckoning, distressed sales include both short sales and REO transactions, and while those kinds of sales used to be a significant drag on residential real estate valuations, the effect isn’t so nearly pronounced now.
“The pace of home price appreciation is cooling off quickly as the weather warms up,” Mark Fleming, chief economist for CoreLogic, said in a statement. “May’s year-over-year growth rate is down almost three percentage points from just three months ago. The influences of modestly rising inventory and less-than-expected demand are causing price growth to moderate toward our forecasted expectations.”
Construction Spending Ekes Out Gain in May
The Census Bureau reported on Tuesday that U.S. construction spending during May was at an annualized rate of $956.1 billion, or a diminutive 0.1 percent above the April rate of $955.1 billion. The May 2014 figure is 6.6 percent above the same month a year ago, however.
Against previous trend, private construction spending declined in May, but public spending increased for the month. Spending on private projects dropped 0.3 percent compared with April, while the rate of public construction spending increased 1 percent month over month. Among other public construction categories that saw an increase in spending in May were water supply projects (up 7.9 percent), amusement and recreation (up 6 percent), and sewage and waste disposal (up 3.9 percent).
Residential construction, most of which is private, came in at an annualized rate of $354.8 billion in May, 1.5 percent below the April rate. Nonresidential construction partly made up for the slack, coming in at an annualized rate of $328 billion in May, 1.1 percent above the revised April rate.
Manufacturing Sector Still Expanding
Economic activity in the U.S. manufacturing sector expanded in June for the 13th consecutive month, and overall the economy grew for the 61st consecutive month, according to the latest Manufacturing ISM Report On Business released on Tuesday. The June PMI came in at 55.3 percent, a decrease of 0.1 percentage point from May’s reading, but still indicating expansion in the sector.
Wall Street was in a positive mood on Tuesday, with the Dow Jones Industrial Average up 129.47 points, or 0.77 percent, almost crossing the 17,000 threshold. The S&P 500 gained 0.67 percent and the Nasdaq advanced 1.14 percent.