Article in July 26, 2007 Detroit Free Press

U.S. home sales slip; prices edge up

June turnover rate declines 3.8% from year-ago levels

July 26, 2007

BY GRETA GUEST

FREE PRESS BUSINESS WRITER

The real estate market remains sluggish as existing home sales dropped 3.8% in June while prices rose slightly, the National Association of Realtors said Wednesday.

Total existing home sales were at a seasonally adjusted rate of 5.75 million units in June, compared with 5.98 million in May. Sales were 11.4% below the 6.49-million pace of June 2006.

The national median existing home price was $230,100 in June, up 0.3% from June 2006 when the median was $229,300.

Existing home sales in the Midwest slowed by 2.8% to 1.37 million units from May to June, 8.1% below June 2006 levels. The median price in the Midwest was $171,700, about 1.5% below a year ago.

In Michigan, sales of existing homes in May were down 5.2% from May 2006. The average home price dropped 7.8% to $136,566, from $148,102 in May 2006, according to the Michigan Association of Realtors.

"Homebuyers have been getting mixed signals about the housing market, which is causing some of them to hesitate," said Lawrence Yun, senior economist for the association.

Buying in a hurry

Roanne Swaneck, 37, who moved into a home in Grosse Pointe Woods on July 7, said she had to look at 70 houses before finding the right one.

She was forced into finding a home in a hurry after selling her five-bedroom colonial in Clinton Township in less than two months. Her price range was $250,000 to $300,000, far above the median value in the Midwest.

While everyone talks about the buyer's market, Swaneck said she found many sellers unwilling to budge on their prices or offering homes in bad shape at inflated prices.

"It's either garbage or it's so nice you can't afford it," Swaneck said about the housing choices.

She and her husband, Kenneth, and their two children ended up settling on the smaller three-bedroom home that needs some work. They got a good deal, paying $210,000; the home is a block from an elementary school, and the neighbors are friendly, Swaneck said.

"Now that we live here, we love it so much we are never going to move," Swaneck said. They are updating the bathrooms and kitchen, waterproofing and remodeling the basement, and replacing the front porch and windows.

"There are deals to be had because people are desperate to sell, but be aware that there is a reason behind the deal," she said. "If there's a deal, there's work to be had."

Total housing inventory nationwide fell 4.2% to 4.2 million existing homes for sale at the end of June. That represents an 8.8-month supply, the same as in May.

"Two bright spots in the June report are a decline in housing inventory and a modest gain in home prices," Yun said.

Article in July 6, 2007 Wall Street Journal

Employment Posts Solid Increase

By BRIAN BLACKSTONE
July 6, 2007

WASHINGTON -- U.S. employment posted a solid rise last month on strong hiring in health care and government and previous months' gains were revised sharply higher, suggesting labor market conditions remain very supportive of economic activity at midyear.

The figures suggest a continuation of the Federal Reserve's lengthy interest-rate pause is likely for the next several months at least amid signs of well contained wage pressures. They could even put the prospect of rate increases on the table for next year if confirmed by future data.

Nonfarm payrolls increased 132,000 in June, after swelling 190,000 in May and 122,000 in April, the Labor Department said Friday. Previous reports showed job growth of just 157,000 in May and 80,000 in April. Monthly job growth has averaged a robust 145,000 so far this year. The unemployment rate was unchanged last month at 4.5%.

Average hourly earnings increased $0.06, or 0.3%, to $17.38. That was up 3.9% from a year earlier, suggesting tight labor markets still aren't putting much pressure on labor costs.

The June payroll gain was in line with Wall Street expectations of a 128,000 rise. Many economists had braced for a higher payroll number following a report Thursday from Automatic Data Processing and Macroeconomic Advisers suggesting that more rapid hiring occurred last month. Forecasters had expected a 4.5% unemployment rate and 0.3% rise in wages.

The data provide further evidence that the economy has picked up considerable steam after several subpar quarters. Gross domestic product advanced just 0.7% in the first quarter. However, economists expect that to mark a low point of the current cycle with growth likely exceeding 3% in the second quarter.

Economists generally think the economy can expand around 3% without generating much inflation. Yet even amid reaccelerating growth, underlying inflation has fallen at a surprisingly quick pace in lagged response to last year's economic slowdown.

A key question heading into the second half of 2007 is which quarter, the first or second, better reflects the economy's underlying state. The latest employment report -- coupled with other data like the Institute for Supply Management's June purchasing managers indexes suggest it's the second.

With the jobless rate near six-year lows, consumers should remain supported in coming months, suggesting that second quarter economic momentum carried into the current quarter despite ongoing weakness in housing and sluggish automobile sales. Consumer spending makes up about two-thirds of GDP, so even modest growth there can offset sizable drags in other sectors.

The jobs data also suggest the Fed's steady interest-rate stance -- which hit the one-year mark last week -- will extent at least until the end of 2007, if not longer. And the payroll figures appear to confirm the Fed's view that economic conditions have brightened while inflation remains the primary risk.

Officials warned in a policy statement last week that they're not yet satisfied with the moderation in core inflation, which is below 2% by their preferred gauge, the price index for personal consumption expenditures excluding food and energy. The jobs report will likely keep them on edge about future inflation prospects.

The Labor Department said hiring last month in goods producing industries fell by 3,000. Within this group, manufacturing firms cut 18,000 jobs -- the 12th-straight decline -- while construction employment was up by 12,000, led by gains in the nonresidential sector.

Service-sector employment rose 135,000. Retail fell by 24,200. Business and professional services companies' payrolls fell 9,000. Education and health services employment, in contrast, jumped by 59,000. Leisure and hospitality rose 39,000, while the government added 40,000 jobs. The average work week was up 0.1 hour at 33.9 hours.