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Reports on Manufacturing and Housing Point to a Weakening Economy

by Ingrid Miles, CBR, REALTOR®

WASHINGTON — Manufacturing output barely rose in September and signed contracts to buy existing homes recorded their largest drop in nearly three and a half years, in the latest signs that the economy’s momentum ebbed as the third quarter ended.

The New York Times

 

The reports on Monday showed that economic activity was on weak footing even before a 16-day partial shutdown of the federal government early in October that is expected to weigh on fourth-quarter growth.

“The economy seems to be losing steam as higher mortgage rates have hit the housing market and destructive government policy will likely bash the rest of the economy,” said Joel Naroff, chief economist at Naroff Economic Advisors.

Manufacturing production edged up 0.1 percent last month after advancing 0.5 percent in August, the Federal Reserve said.

Factory output was held back by a 0.5 percent drop in computer and electronic goods production. Output of electrical appliances also fell.

While automobile output increased 2.0 percent, that was a sharp slowdown from the 5.2 percent rise logged in August.

Despite the softness in factory output, a 4.4 percent increase in utility output lifted overall industrial production 0.6 percent, the largest increase since February.

Separately, the National Association of Realtors said its pending homes sales index, based on contracts signed last month, plunged 5.6 percent to the lowest level since December. The decline was the largest since May 2010.

The index, which leads home resales by a month or two, has now dropped for four consecutive months. Realtors say sales of existing homes, which dropped in September, peaked in July and August.

Data last week showed that a gauge of business spending tumbled in September. That data, combined with a disappointing reading on hiring released earlier this month, has offered a dull picture of economic activity.

Thomas Costerg, United States economist at Standard Chartered Bank, said a run-up in interest rates over the summer on expectations that the Fed would soon trim its bond-buying stimulus appeared to be holding back the economy. “This will make the Fed even more cautious when they next start to hint at tapering,” he said.

Rates on 30-year fixed-rate mortgages rose to an average of 4.49 percent in September, from an average of 3.54 percent in May, according to Freddie Mac. But a surprise decision by the central bank in mid-September not to cut its purchases and soft economic data have pulled rates lower since then.

The Fed’s policy makers are meeting on Tuesday and Wednesday and are expected to maintain their bond-buying pace, now at $85 billion a month.

While manufacturing accounts for only about 12 percent of economic activity, it was the main driver of the economy from the 2007-9 recession.

Factory output rose at a 1.2 percent rate in the third quarter, rebounding from a 0.1 percent fall in the previous three months. Economists expect that manufacturing slowed in October as the federal government shutdown hurt business confidence.

Last month, the amount of industrial capacity in use rose to 78.3 percent, the highest level since July 2008, from 77.9 percent in August.

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Active Summer Real Estate Market Pushed Close Sales and Prices up in September

by Ingrid Miles, CBR, REALTOR®

Active Summer Real Estate Market Pushed Close Sales and Prices up in September

Most closed September single-family and condominium sales since 2005

WALTHAM, Mass. October 22, 2013 The Massachusetts Association of REALTORS® (MAR) reported today that both sales and prices closed up with double digit increases in September compared to the same time last year. The condominium market also maintained its upward momentum.

“September closed sales and prices was another example of buyer demand outpacing housing supply and that resulted in the most closed sales in a September since 2005,” said 2013 MAR President Kimberly Allard- Moccia, broker-owner of Century 21 Professionals in Braintree. “Interest rates are still low and qualified buyers are still there, but what we need now to get to full recovery is those sellers who are holding off, to make the commitment to sell.”

There were 4,289 detached single-family homes sold this September, a 17.2 percent increase from the 3,660 homes sold the same time last year. This is the sixth straight month of year-over-year increases and the most closed sales of any September since 2005 when there were 4,744 closed sales. On a month-to- month basis, home sales were down 24 percent from 5,657 homes sold this past August. It is typical to see a decrease in closed sales from August to September.

The median selling price for single-family home in September was $325,000 which was up 11.9 percent from $290,000 in September 2012. This is the 12th straight monthly year-over-year increase. On a month- to-month basis, the September median selling price was down six percent from $345,000 in August 2013.

There were 1,746 condominiums sold this past September, an increase of 19.3 percent from the 1,464 condos sold the same time last year. This is the 21st straight month of year-over-year increases. Similar to single-family sales, this September had the most closed condominium sales since September 2005 when there were 2,275 units sold. On a month-to-month basis, condominium sales were down 23 percent from 2,269 homes sold this past August. Similar to single-family home sales, it is typical to see a decrease in closed condominium sales from August to September.

The median selling price for condominium in September was $305,000 which was up 7.8 percent from the $283,000 median price in September 2012. On a month-to-month basis, the September median selling price was down 4.7 percent from $320,000 in August 2013.

About the Massachusetts Association of REALTORS®:

Organized in 1924, the Massachusetts Association of REALTORS® is a professional trade organization with more than 19,000 members. The term REALTOR® is registered as the exclusive designation of members of the National Association of REALTORS® who subscribe to a strict code of ethics and enjoy continuing education programs.

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*Please Note: Because of the recent change on how the MLS Property Information Network, Inc., classifies under agreement status (“UAG”), year-over-year comparisons of inventory, months of supply and days on market data between September 2012 and September 2013 are not currently possible. The Massachusetts Association of REALTORS® is working with its analytics vendor and the MLS to determine and implement a solution to update historical data to provide for accurate year-over-year comparisons.

Editors and reporters: Please note that the term Realtor is properly spelled with an initial capital “R”, per the Associated Press Stylebook.

© 2013 Massachusetts Association of REALTORS®. All rights Reserved.

10/22/13

 

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Contact Information

Photo of Ingrid Miles, CBR, SRES, Lead REALTOR, Stephen Mil Real Estate
Ingrid Miles, CBR, SRES, Lead REALTOR, Stephen Mil
Keller Williams Realty
11 South Main St & 1 Merrimac St
Topsfield & Newburyport MA 01983 & 01950
Direct: 978-471-9750
978.861.4218
Fax: 978-861-4218

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