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Posted by: Joe Weber on July 24
Despite the recent surge in the stock market, mixed signals continue to dominate the economic outlook. Housing, that big engine for all-important consumer spending, is looking a bit brighter, according to the latest home sales report. But joblessness continues to rise, frustrating hopes for a quick or robust turnaround.
Sales of existing homes rose 3.6% in June, to an annual rate of 4.89 million, the National Association of Realtors reports. This is the third consecutive monthly gain. Moreover, sales of single-family existing homes rose 2.4% in the month, to an annual rate of 4.32 million, which is also a third monthly rise. “The small and sustained increase in sales of existing homes is noteworthy,” says Northern Trust economist Asha G. Bangalore in her in Daily Global Commentary for July 23.
The most brisk movement in housing in June took place in the South and West, areas both hit hard by the housing downturn. The rise in the South amounted to 3.1%, while the West clocked at 4.95% gain. Sales held steady in the Northeast and Midwest. Says the economist, “additional gains of this sort will be necessary to declare the sales of existing homes are on a firm footing.”
Of course, home-sellers have been taking it on the chin. The median price of an existing single-family home at $181,800 in June is now down 14.98% from a year ago. The good news for sellers, though, is that the slide is smaller than the 16.8% drop recorded for April.
On the job front, the news is less encouraging. Initial jobless claims rose 30,000 to 554,000 in the week ended July 18, following three consecutive weekly gains. Auto industry layoffs, occurring sooner than expected, played a role. Bangalore maintains, however, that “the underlying trend of initial jobless claims is pointing south.”
BusinessWeek’s Joe Weber, Patricia O'Connell, Michelle Conlin, Frederik Balfour, Peter Coy, Greg Spielberg and Roger Crockett examine The Case for Optimism by looking past the financial turmoil and economic unrest gripping the globe to focus on the promising future that lies on the other side of this storm. We’ll chronicle the forward thinkers investing in R&D, launching promising new products, entering new markets, or implementing management and leadership.
See why BusinessWeek Editor-In-Chief Stephen J. Adler is optimistic about the economy amid the sharpest downturn since the Great Depression.