Economic Highlights for the Week Ending August 25, 2006

Monday, August 21st
Stocks suffered under Lowe's lower guidance Monday. It seems that consumer spending is taking a hit from higher gas prices and the housing slowdown. Consumer spending accounts for nearly two-thirds of all economic activity so as goes spending so goes the economy. Investors are expecting some consolidation this week after last week's run-up. The Dow fell 36.42 to 11345.05. The NASDAQ tumbled 16.20 to 2147.75.
Tuesday, August 22nd
The National Association of Homebuilders housing opportunity index fell to 40.6% in Q2 from a level of 41.3% in Q1. Essentially, the level of the index represents the percentage of new and existing homes that were sold during the quarter that were affordable to families earning the national median income of $59,600. Higher mortgage rates decreased affordability in the second quarter. Nationally, the weighted mortgage interest rate was 6.65% in Q2 compared to 6.39% in Q1. The nation's most affordable major metro area was Indianapolis where 87.4% of homes sold were affordable to families with the area's median income of $65,100. The least affordable major metro area was Los Angeles where just 2.0% of homes sold during the quarter were affordable to those earning the area's median income of $56,200. The median sales price of homes sold in Indianapolis and Los Angeles during the period was $120,000 and $521,000 respectively.
Wednesday, August 23rd
Existing home sales fell 4.1% in July to a seasonally adjusted annual rate of 6.33 million units. Sales were much weaker than expected last month missing estimates for a rate of 6.55 million. Existing home sales have been trending lower since peaking last summer with declines driven by higher mortgage interest rates. Slower sales have resulted in much higher inventories which in turn are placing downward pressure on prices. Due to softening fundamentals, further slowing in the housing is expected.
The MBA mortgage applications index rose 0.1% to 561.5% for the week that ended August 18. Applications activity increased for the third straight week in response to mortgage rate declines during the same timeframe. Despite the gain, application volume continues to trend lower and remains down 25.7% on the year.
Thursday, August 24th
Durable goods orders fell 2.4% in July led by a large decrease in orders for transportation equipment, mainly motor vehicles and civilian aircraft. Excluding the volatile transportation sector, durable goods orders rose 0.5% on the month. Despite the steep decline, durable goods manufacturing remains healthy outside of the auto sector.
Jobless claims fell 1k to 313k for the week that ended August 19. The level of the index suggests a low level of layoffs and modest payroll expansion. Expectations are for jobless claims to drift higher in coming months as the slowdown in the housing sector reduces construction and other types of jobs supported by the sector.
Mortgage rates slipped for the fifth straight week on lower rate hike expectations. Weaker than expected housing market data confirms a broader economic slowdown and lessens the chance the Fed will raise again this year. 30-year fixed rate mortgage averaged 6.48% this week compared to 6.52% last week according to Freddie Mac's mortgage market survey.

Friday, August 25th
Stock Market Close for the Week
Index Latest A Week Ago Change
DJIA 11284.05 11381.47 -97.42 or -0.85%
NASDAQ 2140.29 2163.95 -23.66 or -1.09%

WEEK IN ADVANCE
Slower housing data raised hopes that the Fed's work may be done. A slew of data this week should help determine if the possibility of another rate hike has been taken off the table prematurely. Of keen interest will be consumer confidence, payrolls, the ISM index and motor vehicle sales, all covering the August period. Also, the preliminary revision to Q2 GDP should show stronger economic growth than first estimated.

CERTIFIED RESIDENTIAL SPECIALIST DESIGNATION AWARDED

FOR IMMEDIATE RELEASE IN ARIZONA

CHARLENE SPILLUM HAS BEEN AWARDED THE CERTIFIED RESIDENTIAL SPECIALIST DESIGNATION BY THE COUNCIL OF RESIDENTIAL SPECIALISTS.


Gilbert, August 24, 2006 – Charlene Spillum, a Gilbert Realtor has been awarded the Prestigious Certified Residential Specialist (CRS) Designation by the Council of Residential Specialists, the largest not-for-profit affiliate of the National Association of Realtors.

Realtors who receive the CRS Designation have completed advanced courses and have demonstrated professional expertise in the field of residential real estate. Fewer than 38,000 Realtors nationwide have earned the credential.

Home buyers and sellers can be assured that CRS Designees subscribe to the strict Realtor code of ethics, have access to the latest technology and are specialists in helping clients maximize profits and minimize costs when buying or selling a home.

Charlene Spillum is a sales associate with ReMax 2000 in Gilbert. She is a member of the Southeast Valley Real Estate Board of Realtors.

Economic Highlights for the Week Ending August 18, 2006

Economic Highlights for the Week Ending August 18, 2006

Monday, August 14th
Financial markets believe that the Fed may not be done with rate hikes just yet. Fed funds futures traders are pricing in a 27% chance the FOMC will raise rates at their September 20 meeting but nearly a 70% chance of another tightening in December. Inflation data remains key to the interest rate outlook.
Tuesday, August 15th
The producer price index increased 0.1% in July after a 0.5% gain in June. Over the past year producer prices have climbed 4.1% with 2.9% of that attributable to higher energy prices. Excluding food and energy from the index core producer prices fell 0.3% in July and were up just 1.3% over the last year. The unexpected drop in core wholesale inflation provided some relief but price pressures at the crude and intermediate levels of processing remain.
The NAHB housing market index plunged 7 points to a level of 32 in August. Homebuilders rated current sales and sales prospects in six months much lower while foot traffic through model homes slowed substantially. The contraction in builders' attitudes stems from a high level of sales cancellations and rising inventories homes for sale.
The NAR reported that house price growth slowed appreciably in the second quarter. Median existing home prices showed the largest gain in the Northeast where they rose 6.3%. Median prices were up 4.1% in the South and 3.6% in the West. Second quarter median existing single-family home prices were down 2.0% in the Midwest. Of the 151 metro areas included in the report 37 showed double digit growth while 26 showed minor price declines. NAR chief economist, David Lereah said appreciation rates slowed to single digits in most metro areas and that the cooling is indicative of a soft landing in the housing sector. Weakening house prices also may signal an end to Fed rate hikes.
Wednesday, August 16th
The consumer price index increased 0.4% in July, in line with expectations. Rising energy costs pushed the index higher once again last month. The CPI has now gained 4.2% in the last twelve months. Excluding food and energy, the core CPI rose 0.2% last month and is up 2.7% over the last year. Although core inflation is slowing, it is still running at a faster pace than the Fed would like to see.
Industrial production rose 0.4% in July less than an expected gain of 0.6%. Weakness was concentrated in manufacturing output which gained just 0.1% because of weak auto production. Excluding motor vehicles gains were quite strong. Mining production gained 0.8% while utilities usage surged 2.0% because of a nationwide heat wave the last two weeks of July. The capacity utilization rate inched higher to 82.4% from 82.3% in the previous month.
Housing starts fell 2.5% in July to a seasonally adjusted annual rate of 1.80 million. Housing starts have tumbled 20.8% since peaking in January of this year and are now at their lowest level since 2003.
Thursday, August 17th
Jobless claims fell 10k to 312k for the week that ended August 12. Claims were lower than expected last week with the level consistent with moderate growth in payrolls.
The index of leading economic indicators fell 0.1% in July, below estimates for a 0.1% gain. The decline was led by a 6.5% drop in building permits during the month. The pace of decline in the housing market is worth noting due to its impact on the broader economy. The LEI index suggests economic growth will continue to slow over the next six to nine months.
Friday, August 18th
Consumer sentiment fell 6.0 points to 78.7% in the preliminary reading for August. The drop was led by much lower ratings in the expectations component though current conditions ratings dropped as well. Turmoil in the Middle East and its impact on oil prices probably weighed on consumer attitudes this month. With a cease fire now in place and oil prices retreating the final August sentiment reading in two weeks will likely improve.

Ten Things Buyers Like Best About Working with Real Estate Agents

Ten Things Buyers Like Best About Working with Real Estate Agents

1. Good Negotiating skills
2. Personality of Agent
3. Persistence
4. Made it easier. Saved us time.
5. Listened
6. Followed up, but did not sound like a telemarketer
7. Went the extra mile. Put together a buyer packet for us
8. Treated us with respect
9. Told us the truth. Showed us what we really needed to do.
10. Worked with a smile, even on weekends

(The National Association of REALTORS® Profile for Home Buyers and Sellers, 2004.)

Economic Highlights for the Week Ending August 11, 2006

Economic Highlights for the Week Ending August 11, 2006

Monday, August 7th
Consumer credit increased by $10.3 billion or at a 5.7% annual rate in June. This is the third straight month of oversized gains in credit outstanding. Credit gains were led by the revolving credit category which consists mostly of credit card debt. Non-revolving credit balances, like car loans, also increased strongly during the month.
Tuesday, August 8th
Productivity grew at a 1.1% annual rate in the second quarter, in line with expectations, but slower than a 3.7% rate in Q1. Unit labor costs increased 4.2% last quarter after upward revisions to costs in the previous three quarters. These data show that productivity growth has slowed while labor costs are running at their fastest pace in over 5 years.
The Federal Open Market Committee opted to hold key short term rates steady at their policy setting session today as widely expected by economists and financial markets. The fed funds rate stands at 5.25%, its highest level since March 2001. The pause in tightening today follows 17 consecutive 25 bp rate hikes. In the policy statement the Fed indicated that economic growth has moderated because of a cooling housing market and higher energy costs and interest rates.
Wednesday, August 9th
The MBA mortgage applications index rose 4.9% to 553.3% for the week that ended August 4. The purchase index gained 3.4% on the week while refinancings increased 7.1%.
Homebuilder Toll Bros reported weaker than expected quarterly results today and lowered estimates for the number of homes it will deliver in the current quarter. Chairman Robert Toll said in a statement that the current housing slowdown "is the first downturn in the forty years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors." Toll believes it "to be the result of an oversupply of inventory and a decline in confidence." While the Chairman expects the market to return to previous high levels once supply is absorbed and buyers become confident that home prices have stabilized, he expects the slowdown to last at least through this year and possibly for another year or two.
Thursday, August 10th
The international trade deficit on goods and services narrowed to $64.8 billion June from a gap of $65.0 billion in May. The smaller trade gap was due to a solid decline in oil imports and considerable export gains. The June trade picture was better than expected and will result is a small upward revision to Q2 GDP.
Jobless claims increased 7k to 319k for the week that ended August 5. The level of claims is above their year-to-date average indicating still solid but somewhat softer labor market conditions.
Lenders eased mortgage rates this week in response to the Fed's pause in tightening. 30-year fixed rate mortgages averaged 6.55% this week compared to 6.63% last week according to Freddie Mac's mortgage market survey. Lower mortgage rates should help sustain healthy housing market activity. Freddie Mac economists predict that 2006 will be the third highest level for total home sales on record.
Friday, August 11th
Retail sales jumped 1.4% in July after a downwardly revised drop of 0.4% in June. Retail sales were stronger than expected last month and driven primarily by a 3.1% gain in motor vehicle sales. Gasoline sales were strong too, up 2.5% on the month due to higher prices. The strong rebound in spending last month gets Q3 off to a fast start but may come under some restraints as consumers try to manage rising debt, higher energy prices, weaker home price appreciation and slower job growth.
Import prices jumped 0.9% in July led by a 4.7% increase in petroleum prices. Excluding petroleum, import prices actually fell 0.1% last month. Higher imported energy costs will likely boost headline producer and consumer prices for the month of July as well. Lower overall import prices suggest more contained core rate gains.

Economic Highlights for the Week Ending August 4, 2006

Monday, July 31st
Fed funds futures traders were pegging the chances of another rate increase at the next FOMC meeting at about 31% today.
Tuesday, August 1st
The ISM manufacturing index increased to 54.7% in July from 53.8% in June. The price index contained in this data series also increased, showing elevated price pressures. Manufacturing activity continued to expand solidly last month. That, combined with higher prices raised some doubt as to an anticipated Fed pause next week.
Personal income rose 0.6% in June in line with expectations. Gains in both wages and transfer payments boosted income growth in June. Consumer spending increased 0.4% in June after a 0.6% gain in May. A closely watched inflation gauge contained in these data, the core PCE price deflator rose 0.2% for the month and was up 2.4% on the year, its highest level since September 2002.
The NAR's pending home sales index rose 0.4% in June after an upwardly revised gain of 1.4% in May. The pending home sales index is a leading indicator of existing home sales. Recent index gains suggest more stable market conditions early in the third quarter.
Construction spending rose 0.3% in June, as spending in the previous two months was upwardly revised to show modest gains instead of declines. June's gain was led by a 2.7% surge in non-residential construction. Investment in the non-residential segment continues to lead spending growth and is expected to remain a source of strength for the economy the second half of this year.
Wednesday, August 2nd
Motor vehicle sales jumped 5.8% in July to an annual rate of 17.2 million units. Generous auto dealer incentives gave sales a lift last month. However, sales are well off their year ago annual rate of over 20 million units when employee discounting was first introduced. Retail sales and consumer spending will get a boost from higher auto sales which will jumpstart third quarter growth.
The MBA mortgage applications index fell 1.2% to 527.6% for the week that ended July 28. Purchase applications fell 3.3% on the week while refinancings rose 2.2%. Mortgage application volume, down 29.8% from year ago levels, has been trending lower since last year under higher interest rates.
Thursday, August 3rd
The ISM non-manufacturing index fell to 54.8% in July from 57.0% in June. July's reading of service sector expansion was the lowest it's been since Hurricane Katrina. The level of the index shows growth in the sector albeit at a slower pace.
Factory orders increased 1.2% in June less than an expected gain of 1.8%. Durable goods orders led the gain. Demand for nondurable goods declined. Factory activity remains volatile but is trending higher.
Jobless claims rose 14k to 315k in the week that ended July 29. The level of claims, while volatile and a bit higher than expected this week, are still consistent with solid labor market conditions.
Mortgage rates tumbled again this week on GDP data that showed slower than expected economic growth in the second quarter with fairly tame inflation. 30-year fixed rate mortgages averaged 6.63% this week compared to 6.72% last week according to Freddie Mac's mortgage market survey. Economists expect long term mortgage rates to drift higher and lower but remain below 7.0% this year.
Friday, August 4th
Payroll employment increased just 113k in July much less than an expected gain of 145k. Despite the weakness in job growth, average hourly earnings gained a strong 0.4% on the month. The average workweek remained unchanged at 33.9 hours while the unemployment rate increased to 4.8% of the workforce. Employment data today support a Fed rate hike pause Tuesday but a small chance remains it could go the other way.

Back to School

Back-to-School With No Stress? It Could Happen!

When the warm summer months begin to wind down and the days become a little shorter, you can almost smell it in the air - back-to-school time is here! And, just as fall and cooler weather approach, so does back-to-school anxiety. Between kids fearing they'll miss the bus and won't make new friends, and parents feeling stressed about hectic mornings and carpooling chaos, how can anyone get excited about the first day back to school? Parents, however, can set the tone for a smooth transition from summer to the new classroom by proactively addressing their children's concerns. Here are a few tips to help ease your family's back-to-school anxiety.

Be enthusiastic. If you are excited and confident, your child will be, too.

Prepare yourself. Note your child's reaction to separation. If possible, visit the new setting together and introduce your child to the new teacher in advance.

Start daily routines. Let your child become involved with packing her lunch and laying out her clothes the night before. Also, begin an earlier bedtime at least one week before.

Pack the night before. Make sure your child packs her book bag every night before bed. This eliminates the morning rush and trying to locate stray items.

Always say good-bye to your child. Be firm, but friendly about separating. Never ridicule a child for crying. Instead, make supportive statements like, "I know it's hard to say good-bye."

Send a photo of your family or write a reassuring note and put it in his backpack or lunch box.

At the end of the workday, put aside your work concerns and focus on being a parent.