Senior HomeBuilders More Optimistic; Fed Expands Oversight; Gas Prices Moderate for Summer
- May 13, 2013
Late last week, the National Association of Homebuilders said that its 55+ Single-Family Housing Market Index increased 19 points year-over-year to 46 in the first quarter of 2013. That’s the highest first-quarter reading since the inception of the index in 2008 (meaning the index started while the industry was on its way down), and sixth consecutive quarter of year-over-year improvements.
In other words, homebuilders are now almost optimistic about seniors housing, but not quite, since 50 is the threshold between a generally optimistic and generally pessimistic outlook. All of the components of the 55+ single-family index showed significant growth from a year ago: present sales climbed 19 points to 46, expected sales for the next six months increased 21 points to 53, and traffic of prospective buyers rose 15 points to 41.
“The strong year-over-year increase in confidence reported by builders for the 55+ market is consistent with year-over-year increases in other segments of the home building industry,” NAHB chief economist David Crowe said in a statement. “While demand for new 55+ housing has improved due to a reduced inventory of homes on the market and low interest rates, builders’ ability to respond to the demand is being limited by a shortage of labor with basic construction skills and rising prices for some building materials.”
Fed Expands Oversight
In a speech at a conference sponsored by the Federal Reserve Bank of Chicago, Fed chairman Ben Bernanke said on Friday that the central bank is expanding its oversight beyond banks and into other kinds of financial institutions. Though the chairman didn’t quite put it so plainly, one of the main reasons is that many financial businesses—including those that securitize loans—have a history of risky undertakings, especially when the economy is relatively healthy.
This is how he put it: “[One] motivation for more intensive monitoring is the apparent tendency for financial market participants to take greater risks when macro conditions are relatively stable.” Another reason for stepped-up monitoring, Bernanke asserted–and maybe a more fundamental one–is that “the financial system is dynamic and evolving, not only because of innovation and the changing needs of the economy, but also because financial activities tend to migrate from more-regulated to less-regulated sectors.”
What’s the Federal Reserve monitoring these days besides regular banks? “Four components of the financial system that are among those we follow most closely,” Bernanke said: “Systemically important financial institutions, shadow banking, asset markets, and the nonfinancial sector.”
Gas Prices Moderate for Summer
The Energy Information Agency reported late last week it expects that the price of regular gasoline nationwide to average $3.53 per gallon over the summer driving season, which it counts as April through September. That represents a decline from earlier this year; according to the agency, the year-to-date high was on Feb. 25, when the U.S. average was $3.78 per gallon.
Last summer, gasoline prices averaged $3.76 per gallon during the same period, so the EIA’s predictions are good news both for drivers and for businesses that depend on summertime business. The agency further predicts that annual average will decline from $3.63 per gallon in 2012 to $3.50 per gallon this year, and to $3.39 per gallon in 2014, though it readily admits predicting gas prices even a year in advance is tricky business.
Wall Street ended the week on an upbeat Friday, with the Dow Jones Industrial Average gaining 35.87 points, or 0.24 percent. The S&P 500 was up 0.43 percent and the Nasdaq advanced 0.8 percent.