Daily Economic Update: Jobless Claims, FHFA Home Price Index

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights jobless claims and the FHFA home price index.

• High gas prices and little good economic news continue to take their toll. Jobless claims rose by 10,000 claims in the week ending July 16th. The figure reached 418,000, erasing part of last week’s sharp drop. Despite this week’s increase, the 4-week moving average inched lower to 421,250.
• The state government shutdown in Minnesota accounted for 9,681 layoffs, which may be transitory, but there were widespread layoffs in New York state where 20,599 layoffs were reported in the transportation, service, and education related service industries.
• The 400,000 mark depicted in red in the chart below is important because that is the level at which more jobs are being created than cut. When the claims report is above that level, it suggests that there is upward pressure on the unemployment rate.
• The Federal Housing Finance Agency (FHFA), the entity that oversees Freddie Mac and Fannie Mae, released its monthly look at home prices. The FHFA’s price index is a same-sale index much like the Case-Shiller index, but it focuses on homes under the conforming limit of $729,250 and is not weighted to capture the more volatile changes as is the Case-Shiller index, and is thus more representative of the national market.
• The FHFA’s index edged slightly higher in May relative to April, but remains 6.3% lower than May of 2010. The year-over-year price gap peaked in April, though, and receded this month. Outside of the coastal regions of the U.S., prices are up relative to last year.
• Employment growth remains lethargic, but improved from June. Home sales will remain muted as long as employment growth and confidence are sluggish. Prices, though, are showing signs of bottoming. Home prices slid in the later part of 2010, which suggests that if prices this year remain steady, the year-over-year gap will decline. Price stability is important for consumer confidence, both for those looking to buy as well as those who own homes. Stable prices will help to mitigate foreclosure, aid refinancing, and boost the consumer spending needed to drive the economic expansion.