Economy Watch: New Home Sales See Monthly Uptick
- Oct 27, 2011
October 27, 2011
By Dees Stribling, Contributing Editor
The Census Bureau reported on Wednesday that sales of new U.S. homes rose by 5.7 percent in September, the first increase in four months. The annualized rate of new single-family home sales was 313,000 for the month, compared with 296,000 in August. Compared with the same month a year ago, the September 2011 sales rate is 0.9 percent lower, however.
Lower prices and still-low mortgage rates seemed to be the driving factors in the uptick. The bureau also reported that the median sales price for a new house stood at $204,000 in September, down 3.1 percent for the month and a bit more than 10 percent year-over-year. Simultaneously, mortgage rates have been at record lows for much of this year.
Homebuilders have responded to the dearth of demand by cutting the number of properties they build. During September, only 76,000 new homes were under construction in the entire country, the lowest number since the government started keeping track of the industry during the Kennedy administration. At the current sales rate, the inventory of new homes would be exhausted in 6.2 months, down from 6.6 months in September.
Irreconcilable Differences Brewing in the Supercommittee
The deficit-reduction supercommittee in Congress has about a month to come up a package of savings to forestall automatic, and painful, $1.2 trillion cuts to the federal budget. Toward that end, the group has been meeting behind closed doors for weeks, and this week the supercommittee’s Democrats and Republicans offered up competing proposals that were little different from what the parties have come up with before.
The Democratic proposal would take the deficit down about $3.3 trillion over 10 years, financed partly with spending cuts, but also with tax increases to the tune of $1.3 trillion. The Republican proposal would amount to a little more $2 trillion, none of which would be from new taxes — unless one counts higher Medicare premiums and airport fees and the like as taxes. A few ideas, such as slowing down Social Security cost-of-living increases, seem to be common to both plans.
Various unconfirmed reports have it, however, that both sides are privately mocking each other and are showing little inclination to give ground. Thus the distance between them might be more like a no man’s land between entrenched armies than a preliminary to compromise.
CBO Reports on Income Disparity
The Congressional Budget Office reported on Wednesday that after-tax income for the highest-income U.S. households grew more than it did for any other group between 1979 and 2007. After-tax income, according to the CBO, is income after federal taxes have been deducted and government transfers — such as Social Security and unemployment Insurance — have been added.
Specifically, the CBO found that between those years, income grew by 275 percent for the top 1 percent of households; 65 percent for the next 19 percent; Just under 40 percent for the next 60 percent; and 18 percent for the bottom 20 percent. Also, in 2007, federal taxes and transfers reduced the dispersion of income by 20 percent, but that equalizing effect was larger in 1979. The share of transfer payments to the lowest-income households has declined since the end of the ’70s, and the overall average federal tax rate has fallen.
Wall Street, now back in yo-yo mode, bounced upward on Wednesday, with the Dow Jones Industrial Average gaining 162.42 points, or 1.39 percent. The S&P 500 was up 1.05 percent, while the Nasdaq advanced 0.46 percent.