We’re focusing on Philly new homes this week as we’ll be in Philadelphia on November 9th at the Penn’s Landing Hyatt Regency Hotel for our final fall Housing Seminar.  If you’ve been wondering what juicy data tidbits we share with the audience, this is your last chance until spring!  New homes data released last week showed that new home sales nationally were still down compared to last year and unfortunately Philadelphia was no exception to this.  But upon taking a deeper look into the data, it’s clear that all new homes are not created equal.  According to data from Housing IntelligencePro, new home closings in projects that opened after 2010 are selling much better than those that were open prior to 2010.  During the first nine months of 2011, new home communities experienced on average 3.44 closings per project in those communities that opened in January 2010 and beyond while new home communities that opened in December 2009 and before only experienced an average 2.16 closings per project.  The average closing price for the newer communities was also more competitively priced at $308,000 compared to $348,000 and slightly bigger at an average 2,296 sq. ft. compared to 2,126 sq. ft.  Interesting, isn’t it?  Want to know more?  Come join us on November 9th at the Hyatt Regency on Penn’s Landing for more in-depth local analysis for the Philadelphia region.

In broader economic news, there’s been a mixed bag of economic news over the past couple of weeks domestically as international headlines dominated volatile financial markets.  US GDP grew at a moderate pace despite weaker consumer confidence at the end of the third quarter.   Job creation slowed in October and was weaker than most economists had expected.  Although the economy continues to add jobs, the general feeling remains that the U.S. labor market is very fragile.  The economy has now increased payrolls in each of the past 13 months but the pace of increase has not been sufficient to make a notable dent in the unemployment rate.

The Economy
On a seasonally-adjusted basis, non-farm employment increased by 80,000 payrolls which was weaker than most economists expected.  This is the weakest job creation in any month since June.  However, seasonally-adjusted non-farm employment for September was revised higher to a gain of 158,000 jobs compared to a gain of 103,000 jobs which was originally reported.  Job growth in August was also revised higher to a gain of 104,000 payrolls from an increase of 57,000 payrolls.

The nation's unemployment rate declined slightly from the previous month to 9.0% in October.  This matches the lowest the unemployment rate has been since April.  The unemployment rate has not recorded a monthly increase since June.  This figure equates to approximately 13,897,000 unemployed people.

First-time unemployment claims decreased by 9,000 to a seasonally-adjusted figure of 397,000 in the week ended October 29th from an upwardly revised figure of 406,000 in the previous week.  This is the third straight week that initial jobless claims have declined and the lowest they have been in five weeks.  First-time jobless claims have hovered around this 400K level for the past several weeks.

Advance estimates for third quarter GDP growth showed the economy growing at its fastest rate since the third quarter of last year.  The U.S. economy expanded at a 2.5% pace in the third quarter which was driven higher by increases in consumer and business spending and stabilization in government spending.  This marks the ninth straight quarter that the U.S. economy has expanded.

Personal incomes in September increased to $13,029.1 billion compared to a downwardly revised figure of $13,011.8 billion in August.  Before recovering in September, personal incomes recorded their first monthly decline last month in August since October 2009.  Personal incomes are up 4.4% from $12,477.7 billion in September of last year.  Although personal incomes have recorded 21 straight months of year-over-year increases, the annual gains have been weaker in recent months.

Consumer spending increased for the third straight month in September.  Personal consumption expenditures, PCE, increased 0.6% from last month to $10,857.3 billion.  The PCE price index, which is a leading gauge for inflation, increased 0.2% from the previous month.  The PCE price index excluding food and energy was flat compared to last month.

Consumer confidence in October plunged for the second time in the past three months due to concerns of slower economic growth and the Eurozone debt crisis.  The consumer confidence index dropped to a reading of 39.8 from an upwardly revised September figure of 46.4.  The consumer confidence index is now at its lowest reading since March 2009 when it was near all-time record lows at the height of the economic crisis in the U.S.

Housing Market
In the third quarter 2011, the national homeownership rate increased from the previous quarter to 66.3 percent.  The homeownership rate rebounded slightly during the third quarter after hitting its lowest levels in the second quarter since the first quarter of 1998.  This is the first quarterly increase in the homeownership rate since the third quarter of 2009.  The homeownership rate is lower compared to this time last year when it stood at 66.9%.

The National Association of Realtors’ Pending Home Sales Index declined 4.6% from the previous month to a reading of 84.5 in September.  However, it still remains 6.4% higher than it was this time last year when it stood at a reading of 79.4.

New home sales in September increased 5.7% from the previous month to a seasonally-adjusted annual rate of 313,000 units.  This is the fastest pace of new home sales since April.  New home sales had declined for four straight months before September’s rebound.  However, new home sales for the previous three months were revised lower by 4,000 units.  New home sales are still 0.9% lower than they were this time last year.

In September, median new home prices declined to $204,400 from an August figure of $210,900.  This is the third straight month that median new home prices have declined and the lowest they have been since October 2010.  Median new home prices are down 10.4% from this time last year and are 5.6% lower than they were this time two years ago.  This is the steepest year-over-year drop in new home prices for any month since April 2009.

Falling mortgage rates and lower home prices in September pushed new home affordability to a new all-time record high.  The new home affordability ratio increased to a reading of 64.1% in September compared to 62.3% in August.  This is the third consecutive month that new home affordability has increased.

New home inventory in September remained unchanged from the previous month at all-time record lows.  Seasonally-adjusted new home inventory remained at 163,000 units while new home inventory on a non-seasonally adjusted basis remained steady at 165,000 units.  Due to stronger sales activity, months of new home inventory declined in September.  Seasonally adjusted months of new home inventory decreased to 6.2 months in September from 6.6 months in August.  Months of new home inventory in September matched their lowest levels since May 2006.

National average mortgage declined from the previous week to 4.00% with an average 0.8 points in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on November 3rd.  This is the third straight week that rates have declined and the lowest they have been since the beginning of the month.  Mortgage rates remain historically low.  Rates have now averaged under 5.0% for 37 straight weeks.

In the week ending October 28th, the MBA’s seasonally-adjusted purchase index increased 1.8% from the previous week.  This is the second straight week that the purchase index has increased.  Overall mortgage application activity this past week increased 0.2% driven by gains in purchase activity which helped offset a slight decline in refinance activity.
 

For additional market-level data and analysis please visit our website at http://www.housingintelligence.com.  For more detailed information on  these and other indicators, please visit the following links: