Home Values Continue to Rise; Manufacturing Sector Expands
- Oct 02, 2013
Day One of the federal government shutdown, 2013 version, passed without too much incident on Tuesday. As expected, certain functions of the U.S. government came to a halt. Also as expected, Congress didn’t act to resolve the situation.
“The most significant immediate term impact of the government shutdown is whether it rattles households and businesses by impacting uncertainty and confidence,” Auction.com Research Chief Economist Peter Muoio told CPE. “With the shutdown only several hours old, it’s too early to tell. So far the financial markets haven’t reacted wildly, which would get everyone’s attention.”
“All that said, the primary potential transmission mechanism is through uncertainty.” Muoio added. “So far this year, the decreased levels of uncertainty have supported stronger economic growth and, therefore, demand for both residential and commercial real estate. We must gauge the shutdown’s impact on uncertainty and stress that a quick solution would clearly have less impact than a prolonged fight.”
CoreLogic: Home Values Continue to Rise
Alhough government-generated statistics came to a temporary halt – in particular, construction spending data — numbers from private sources continued as usual on Tuesday. CoreLogic reported that home prices nationwide, including distressed sales, increased 12.4 percent in August 2013 compared to August 2012. That’s the 18th consecutive monthly year-over-year increase in home prices nationally, according to the company. Excluding distressed sales, home prices increased on a year-over-year basis by 11.2 percent compared to August 2012.
On a month-over-month basis, including distressed sales, home prices increased by 0.9 percent in August compared to July. Take distressed sale out of the equation and home prices increased 1 percent month over month. Distressed sales, which include short sales and REO, clearly aren’t the stumbling block in most housing markets that they used to be.
CoreLogic further predicts, based on pending home sales that it tracks, that in September prices will rise 12.7 percent compared with the same month last year, but only 0.2 percent month over month (both of those estimates include distressed sales). Strip distressed sale out and the increases will be 12.2 percent annually and 0.7 percent month over month.
Manufacturing Sector Expands in September
The latest Manufacturing ISM Report On Business, which was released on Tuesday, found that economic activity in the U.S. manufacturing sector expanded in September for the fourth consecutive month, and the overall economy grew for the 52nd consecutive month. The Purchasing Managers Index came in at 56.2 percent, an increase of 0.5 percentage points from August. September’s index reading is the highest of the year, leading to an average reading of 55.8 percent for the third quarter.
Wall Street didn’t seem overly concerned about the federal government shut down on Tuesday, with the exchanges all turning positive for the first day of the fourth quarter, gaining back much of the previous day’s losses. The Dow Jones Industrial Average was up 62.03 points, or 0.41 percent, while the S&P 500 and the Nasdaq gained 0.8 percent and 1.23 percent, respectively.