Economy Watch: Home Starts Eke Out Gain in September
- Oct 20, 2010
October 20, 2010
By Dees Stribling, Contributing Editor
It isn’t a spike or a jump or a surge, but U.S. starts did increase in September by 0.3 percent compared with August, according to the United States Census Bureau. That overall rate was driven by a more sizable 4.4 percent increase in single-family properties, with the more volatile multi-family sector dropping 9.7 percent from August.
The overall annualized rate of new residential construction was 610,000 units, more than the 587,000 that economists had predicted, and better than the pit the industry experienced in early 2009, when the number was 500,000. Of the September 2010 total, 452,000 were single-family properties.
The September uptick took the new housing market to its highest annualized rate since April, before the expiration of the federal homebuyer tax credit. But the number of permits issued in September, a leading indicator, was down 5.6 percent month-over-month, strongly hinting that there might not be many more housing-start upticks for a while.
The Foreclosure Saga Gathers No Moss
On the heels of Bank of America Corp. resuming residential foreclosures in 23 of the states, GMAC Mortgage has done the same. But it isn’t not clear whether this “really, everything’s OK now” will persuade very many people of the soundness of foreclosure proceedings, or more importantly very many states’ attorneys general as their investigation gets under way.
On Capitol Hill, Congress is busy with the elections at the moment, but after that the House Subcommittee on Housing and Community Opportunity plans to hold hearings on the foreclosure situation, not long after the Senate Banking Committee will do the same. Expect to hear some outre stories about banks foreclosing–oops–properties whose mortgages they don’t actually own.
In a related development, various heavy-hitters–the Federal Bank of New York, BlackRock Inc. and Pacific Investment Management Co.–are reportedly putting the screws on Bank of America to buy back the bum mortgages that Countrywide Financial packaged into $47 billion worth of bonds. Bank of America took on Countrywide’s problems when it acquired the mortgage-maker at the height of the financial panic.
Meanwhile, a federal task force–formally called the Financial Fraud Enforcement Task Force–is now up and running. One of its main tasks will be to investigate whether banks and other lenders played too fast and too loose not only with foreclosure paperwork, but also regarding what they told the various federal housing agencies. On Wednesday, members of the task force, which includes investigators from HUD, the Justice Department and other agencies, will meet at HUD to discuss the matter.
Since so many loans are insured by the various GSEs, which are part of the federal government now in all but name, the feds have a clear interest in finding out just how much robo-signing has been going on, and whether it meets legal standards for fraud. Despite the banks’ best efforts to get the wheels of foreclosure spinning again, the mess might only be beginning.
Holiday Spending Predicted to Rise Modestly
The National Retail Federation is expecting a bit more holiday cheer for retailers in 2010 than 2009. According to the NRF’s 2010 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch and released on Tuesday, U.S. consumers plan to spend an average of $688.87 on holiday-related shopping this year, a slight rise from last year’s $681.83.
Following the patterns of previous years, most holiday gift-givers will spend the largest portion of their budget buying gifts for family ($393.55) and friends ($71.45), though co-workers and others will receive something ($18.26 and ($34.82, respectively). Total spending on gifts ($518.08) is expected to rise 2.1 percent from last year. Americans will also spend an average of $41.51 on decorations, $26.10 on greeting cards and postage, $86.32 on candy and food, and $16.86 on flowers.
Wall Street apparently got a case of the currency jitters on Tuesday, with the Dow Jones Industrial Average taking a dive to the tune of 165.07 points, or 1.48 percent. The S&P 500 and the Nasdaq likewise following a downward path, ending 1.59 percent and 1.76 percent lower, respectively.