Philadelphia Fed Sees Housing Slowing
The Philadelphia Federal Reserve Bank released the 2006 Q1 Highlights report today:
Regional Highlights (PDF)
Economic activity in the tri-state region (Pennsylvania, New Jersey, and Delaware) continued to expand in the first quarter. Manufacturing increased, building on the gains of the fourth quarter of last year. Retail sales of general merchandise rose slowly during the quarter. Healthy sales growth in January was followed by sluggish growth in February and March. However, sales growth is expected to pick up with warmer spring weather. Auto sales were up a bit from the fourth quarter of last year. Residential building activity eased, and demand for existing homes moderated. Commercial real estate markets continued to firm as the amount of space leased increased and rents rose. Employment in the three states of the region increased, although growth rates varied among the three states. The Philadelphia Fed is forecasting continued job growth in each of the three states, and a slight improvement in the region’s overall unemployment rate.
...
Residential building in the region slowed further in the early months of 2006, as the decline in home building that began in mid-2005 continued. On a seasonally adjusted basis, the number
of housing permits issued in the three states as a whole declined in February (latest available data), as it did in the nation. The three-month moving average in total permits—to smooth monthly volatility—reflects drops in Pennsylvania and Delaware and virtually steady permit issuance in New Jersey (Chart 5).
Sales of existing homes in the region have also been slowing. The downward trend in sales noticed in the fourth quarter of 2005 continued into the first quarter of this year. Although there was an increase in sales nationally in February attributable to warm weather, sales in the region did not strengthen appreciably. So far this year the inventory of existing homes for sale has been rising both nationally and locally, and the average amount of time homes are on the market has been increasing, suggesting that the downward trend in sales will continue.
...
Homebuilders and real estate agents in the region expect price appreciation to slow significantly this year. Recent signs that a growing proportion of existing houses are selling for less than the asking price and that new home price increases are fading indicate that slower price appreciation is probably setting in.
From Reuters:
Philadelphia Fed sees housing slowing, jobs solid
The Philadelphia Federal Reserve Bank said on Thursday the regional job market is set to show continued solid growth this year, while the housing market is likely to slow significantly.
The regional Fed bank report covered economic activity in Pennsylvania, New Jersey and Delaware.
The report said slower growth in house prices has probably set in, citing recent signs that a growing proportion of existing houses are selling for less than the asking price and that new home price increases are fading.
"Homebuilders and real estate agents in the region expect price appreciation to slow significantly this year," the report said.
Caveat Emptor!
Grim
Regional Highlights (PDF)
Economic activity in the tri-state region (Pennsylvania, New Jersey, and Delaware) continued to expand in the first quarter. Manufacturing increased, building on the gains of the fourth quarter of last year. Retail sales of general merchandise rose slowly during the quarter. Healthy sales growth in January was followed by sluggish growth in February and March. However, sales growth is expected to pick up with warmer spring weather. Auto sales were up a bit from the fourth quarter of last year. Residential building activity eased, and demand for existing homes moderated. Commercial real estate markets continued to firm as the amount of space leased increased and rents rose. Employment in the three states of the region increased, although growth rates varied among the three states. The Philadelphia Fed is forecasting continued job growth in each of the three states, and a slight improvement in the region’s overall unemployment rate.
...
Residential building in the region slowed further in the early months of 2006, as the decline in home building that began in mid-2005 continued. On a seasonally adjusted basis, the number
of housing permits issued in the three states as a whole declined in February (latest available data), as it did in the nation. The three-month moving average in total permits—to smooth monthly volatility—reflects drops in Pennsylvania and Delaware and virtually steady permit issuance in New Jersey (Chart 5).
Sales of existing homes in the region have also been slowing. The downward trend in sales noticed in the fourth quarter of 2005 continued into the first quarter of this year. Although there was an increase in sales nationally in February attributable to warm weather, sales in the region did not strengthen appreciably. So far this year the inventory of existing homes for sale has been rising both nationally and locally, and the average amount of time homes are on the market has been increasing, suggesting that the downward trend in sales will continue.
...
Homebuilders and real estate agents in the region expect price appreciation to slow significantly this year. Recent signs that a growing proportion of existing houses are selling for less than the asking price and that new home price increases are fading indicate that slower price appreciation is probably setting in.
From Reuters:
Philadelphia Fed sees housing slowing, jobs solid
The Philadelphia Federal Reserve Bank said on Thursday the regional job market is set to show continued solid growth this year, while the housing market is likely to slow significantly.
The regional Fed bank report covered economic activity in Pennsylvania, New Jersey and Delaware.
The report said slower growth in house prices has probably set in, citing recent signs that a growing proportion of existing houses are selling for less than the asking price and that new home price increases are fading.
"Homebuilders and real estate agents in the region expect price appreciation to slow significantly this year," the report said.
Caveat Emptor!
Grim
13 Comments:
"Philadelphia: Major northeastern cities may be the least expected on a list like this, so we were somewhat surprised to see Philadelphia show up in a favorable position on several reports. The NAR quarterly report showed a 12% increase in appreciation between 2004 and 2005, high enough to encourage people to buy homes, but not at such a dizzying rate as to spark panic purchases. The housing-cost-to-income ratio, at 31%, is quite favorable compared to other large northeastern cities (53% in Washington, D.C., and Newark, N.J., and 72% in New York City) and while job growth is small, it's moving in the right direction. "
That's from a report on MSN today. Show's Philadelphia as favorable for Home Price increases.
I wonder where to get good information?
KL
Just keep in mind the Philly Fed report covers NJ, PA, and DE region, not Philly specifically..
Wow...who cares.
Isn't greenspan talking about asset bubbles and abnormal situations he created. I wouldn't trust 1 thing these phoney money printers say.
Now that Greenspan is out of the Fed, there is less pressure to use Fedspeak. I'm looking forward to his comments when the weight of the housing market collapses on itself.
Check this out, a website for one FSBO:
http://www.houseforsalesummit.com
They actually did a good job promoting their house.
The owners of that place purchased a home in Summit late September of last year, on Washington, sales price was $905,000.
The home on Briant was purchased in 2002.
grim
Staying on the subject of FSBO..
I'm seeing so many FSBO and Foxtons listings every day that I'm beginning to wonder if the MLS-based inventory stats I've been postings don't really show the full picture here.
The same goes for price reductions and lowballs.
I have a feeling as prices moderate and fall, more owners will attempt to sell FSBO in an attempt to preserve that precious equity. A 5-6% commission will put a large number of buyers underwater.
grim
"The owners of that place purchased a home in Summit late September of last year, on Washington, sales price was $905,000."
So they've been carrying two mortgages since September? Ouch.
They paid $240K in 2002 for the home, so their current carrying costs are:
4,433 (new house)
1,182 (old house)
-----------------
5,615 TOTAL per month
(Assumes 20% down and 30-year fixed @ 6.25%)
Add in property taxes, utilities, etc...
Also, they went from buying a house for $240K four years ago, to buying a $905K house at bubble peak?
Sounds like a recipe for graduation from the FB school of personal finance.
Bagholders will suffer
Booooyaaaaaah!
Bob
Just my opinion... but there is no standoff between buyers and sellers... this is just buyer exhaustion... there aren't millions of buyers waiting on the sidelines to step in, when prices fall... as pointed out in other threads, the final sales number for existing home sales was 7.08 million and out of that 3.34 million were for "investment purposes"... that's 47% of all buyers last year... that's truly amazing... now, those 3.34 million buyers are either done or are on the sell side of the equation... not the buy side.
Excellent point anon 4:04 - also bear in mind the non-investors who have leveraged themselves wiht risky loans and HELOCs will probably not be in the market for a long, long time, either perhaps for the rest of their lives.
And am I alone in wanting to know what is up with Boooooyaaaah Bob? First I was annoyed, then amused, now I look forward to his one-note cheers. I am a fan!
He's like silent bob, but better.
Yes, I too like to be reminded that those nasty Bagholders will suffer.
Who did they think they were anyway? Now they'll get theirs!
hehehehe!
Booooyaaaaaah!
(Is there a little dance that goes along with that?)
wl
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RickJ
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