e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]Total housing starts decreased by -5.9% in February to 575,000 units (seasonally adjusted annual rate or SAAR). This decline just about offset January’s increase of +6.6%, and returned housing starts to their pace in November-December. At 499,000 units SAAR, construction of single-family homes in February was barely below (-0.6%) the January rate but well above (+40%) the lows of January-February, 2008 (at 357,000 units). In the volatile multi-family sector, starts dropped by -30.3% in February to just 76,000 units, the lowest monthly pace since October (when only 53,000 units were started).
Activity in the U.S. homebuilding industry plunged for three years and appeared to reach bottom in the second half of 2009. Total housing starts in February were still -71% below the cycle peak of 2.12 million units registered in first quarter 2006. Single-family and multi-family starts both also were down by -71% over this period.
The dynamics of the housing industry have changed, though slowly. (1) Inventories of unsold newly built single-family homes have declined markedly—by -56.5% from the market peak through January 2010—and the oversupply of unsold new homes is coming down though slowly--months supply available for sale stood at 9.1 in January. (2a) Supported by massive secondary market mortgage purchases by the Federal Reserve, rates on qualifying (fixed-rate) mortgages continue to be relatively low, which helps would-be homebuyers with good credit records. (2b) A federal tax credit is available through April 2010 for first-time homebuyers. (3) Conditions in the single-family detached homebuilding sector have stabilized, but the future is uncertain. The Fed's purchase program is supposed to end March 31, 2010, and federal tax credits expire a month later. What happens to rates then is not yet clear. (4) Meanwhile, the multifamily sector's troubles have multiplied. Constrained by a lack of finance and rising vacancies (as tenants lose their jobs), the number of new projects is extremely low, and the multi-family sector is still at risk. Homebuilding is not completely out of the woods just yet. (Nancy D. Sidhu)
PR: http://www.census.gov/const/newresconst.pdf
Home sales in Southern California rose above prior year levels in February for the 20th consecutive month. Meanwhile, the average median price in the six-county region increased by +10.0% from a year earlier to $275,000. Last month marked the third month in a row in which the median price increased on a year-over basis. The median price had peaked at $505,000 in mid-2007 and appears to have bottomed out at $247,000 in April 2009. San Diego and Orange Counties posted the strongest gains in median price during February, rising by +13.0% and +11.2% respectively. Prices also rose in Los Angeles County (+5.4%) and Ventura County (+7.0%). After remaining flat in January, the median price in Riverside County ticked up a bit (+3.7%) but the median price in San Bernardino fell by -2.0% as the high number of distressed properties available for sale in the county continued to exert downward pressure on prices.
A total of 15,359 new and resale home were sold in the SoCal region last month, edging up by +0.8% from a year ago. Compared with January, sales volume basically remained unchanged.
The regional housing market remains unsettled as indicators of distress continue to point in opposite directions. On the one hand, sales and median price were up, but the sales distribution remained slanted toward lower-cost, distressed properties (although less so than most of last year). Foreclosure sales accounted for 42.3% of transactions last month, up from 42.1% in January but still well below the last year’s peak of 56.7%. Jumbo loans (mortgages above $417,000) accounted for just 14.8% of lending for home loans in February compared with 14.2% in January and 10.7% in February 2009. FHA loans accounted for 38.5% of home purchase loans, while adjustable-rate mortgages came in at 4.0%, up from 2.1% one year ago.
Investors and second-home buyers purchased 18.9% of homes sold in February and cash buyers accounted for 29.3% (the average over the last 20 years for Southern California was 13.8%). Mortgage interest rates remain low, so provided a buyer qualifies for a loan or has cash, the cost of home ownership is the lowest it has been in decades. (Kimberly Ritter)
|
Sales Volume |
Median Price |
||||
County |
Feb 2009 |
Feb 2010 |
%Change |
Feb 2009 |
Feb 2010 |
%Change |
Los Angeles |
4,590 |
5,034 |
9.7% |
$299,000 |
$315,000 |
5.4% |
Orange |
1,879 |
1,986 |
5.7% |
$375,000 |
$417,000 |
11.2% |
Riverside |
3,420 |
3,199 |
-6.5% |
$190,000 |
$197,000 |
3.7% |
San Bernardino |
2,324 |
2,095 |
-9.9% |
$153,000 |
$150,000 |
-2.0% |
San Diego |
2,473 |
2,465 |
-0.3% |
$285,000 |
$322,000 |
13.0% |
Ventura |
545 |
580 |
6.4% |
$327,000 |
$350,000 |
7.0% |
Southern California |
15,231 |
15,359 |
0.8% |
$250,000 |
$275,000 |
10.0% |
Source: Data Quick News
The overall Consumer Price Index for All Urban Consumers (CPI-U) remained unchanged in February after inching up by +0.2% in January. Over the twelve months ending February 2010, headline inflation increased by +2.1%
The Core U.S. Consumer Price Index (all items less food and energy) barely stirred in February, edging up by +0.1% after falling by the same amount in January. Over the past year, core CPI rose by +1.3%, the smallest increase since February 2004. No substantial price movements were recorded in any of the major expenditure categories.
The cost of medical care continued to rise – increasing by +0.5% last month and by +3.5% over the year. The education index also rose by +0.5% in February, pushed up by higher prices for books and supplies (+0.7%) and tuition (+0.5%). Over the year, the education index rose by +4.7%. Prices for used vehicles ticked up by +0.7% while prices for new cars gained by +0.1%. The indexes for apparel (-0.7%), recreation (-0.1%) and communication (-0.1%) all posted declines. The shelter index remained unchanged in February.
Outside the core CPI components, the energy index fell by -0.5% in February ending nine consecutive monthly increases. Over the year, the energy index was up by +14.4%. The gasoline index slipped by -1.4% but soared by +36.8% over the past 12 months. The index for household energy increased by +0.4% due primarily to higher prices for gas (piped) and electricity (+0.5%), which were largely offset by a decline in fuel oil (-1.3%).
The food and beverage index was flat last month after rising by +0.2% in January. Within the food index, prices for food at home (groceries) ticked up by +0.1% but were down by -1.5% over the year. The index for food away from home nudged up by +0.1% (the same amount as in January) and increased by +1.4% compared with a year ago.
The Los Angeles MSA (LA-Riverside-OC) Consumer Price Index also remained unchanged in February after increasing by +0.4% in January. Opposing price movements in all eight major expenditure categories worked against each other last month. Over the year ending February 2010, however, the regional all-items index advanced by +1.4%, mainly due to higher energy prices. The energy index has risen by +24.1% since February 2009. [Note: local consumer price index data are not seasonally adjusted]
During the month of February, the local transportation index slipped by -0.7% after rising by +1.5% in January. Gasoline prices decreased by -2.7% but were up by +33.1% over the year. Since February 2009, transportation prices advanced by +11.6%. The transportation index comprises just over 16% of the Los Angeles CPI all-items index.
Food and beverage prices in the Los Angeles area declined by -0.5% last month after edging up by +1.0% in January. Over the past 12 months, prices for food and beverages declined by -1.0%. The food at home index, which measures grocery prices, dipped by -1.0% in February, and was down by -2.9% over the year.
The housing index (47% of the Los Angeles Area’s all-items index) ticked up by +0.1% last month, and was down by -0.7% compared with 12 months ago. Apparel prices rose by +0.5% over the month, but decreased by -0.5% over the year. Medical care prices were up by +0.4% in February and by +2.4% on a year-over basis. (Kimberly Ritter)
PR: http://www.bls.gov/news.release/pdf/cpi.pdf
http://www.bls.gov/ro9/cpilosa.pdf
Movements in the U.S. Producer Price Index (PPI) were mixed in February. Prices in the index for finished goods dipped by -0.6% in last month after rising by +1.4% in January. Prices for core finished goods (less food and energy) edged up by +0.1% after rising by +0.3% over the previous month. From February 2009 to February 2010, finished goods prices increased by +4.4%. In the early stages of production, prices of intermediate goods edged up by +0.1% after rising by +1.7% during the previous month. Prices quoted by manufacturers of intermediate goods have increased by +5.6% since February 2009. Prices in the crude goods index fell sharply in February (-3.5%) after shooting up by +9.6% in January. Over the year, the crude index climbed by +28.6%.
In the finished goods category, the index for energy goods fell by -2.9% last month after jumping by +5.1% in January. A fall in the price of gasoline prices (-7.4%) accounted for about 90% of the overall decline in energy goods. Prices for home heating oil and liquefied petroleum gas were also down last month. The index for finished foods rose by +0.4% in February (the same as January’s increase), the fifth monthly increase in a row. While prices for fresh fruits and melons plummeted by -12.9%, the loss was made up by advances in other food categories, particularly vegetables, eggs and meat products. The core index for finished goods rose by +0.1%. Price movements outside the volatile energy and food indexes were muted and not especially noteworthy.
Prices for intermediate materials edged up by +0.1% in February following an increase of +1.7% in January. The energy goods index fell by -2.7% last month after rising by +0.5% during the previous month. Meanwhile, prices for intermediate foodstuffs were pushed down (-0.4%) primarily by lower prices for prepared animal feeds (-4.0%). Over the year, intermediate food prices rose by +2.3%. Led by higher prices for steel mill products and plastic resins, the core intermediate index moved up by +0.9% in February, its ninth consecutive monthly rise.
Price indexes for crude materials fell across the board last month, but the primary driver was a -6.4% decline in prices for crude energy materials, which accounted for 70% of the overall crude materials index decrease. (In January, crude energy prices surged by +16.8%). Over half of February’s decrease in energy prices was attributable to lower crude petroleum prices (-8.7%), but declines in the natural gas and coal indices also made significant contributions. Prices for crude foods and feeds fell by -1.4% in February after rising by +3.2% in January. Most of last month’s decline resulted from sharply lower prices for slaughter hogs and turkeys. The core index was down by -0.6% for the month due to downward pressure exerted by lower prices for nonferrous metal ores and metal scrap.
What is the PPI? We have been reporting on the Producer Price Index (PPI) for quite some time now, so a refresher on exactly what the PPI measures may be useful to some of our readers. The PPI is a family of indexes that measure the average change over time in the prices received by domestic producers of goods and services sold before they reach the retail stage (those are covered in the CPI). That is, these indexes measure price changes from the perspective of the seller. The Bureau of Labor Statistics releases PPIs for more than 9,000 individual products and product groups each month which cover virtually every industry in the mining and manufacturing sectors of the U.S. economy. The indexes are gradually being expanded to cover a larger portion of the economy and will eventually include products in the construction, trade, finance, and service industries.
PR: http://www.bls.gov/news.release/pdf/ppi.pdf
The total number of containers handled in February at the ports of Los Angeles and Long Beach rose by +28.2 percent on a year-to-year basis (the third consecutive month of year-to-year increases), to 938,593 TEUs (twenty-foot equivalent units). Three straight months of improvement are encouraging, as the total number of containers handled at Los Angeles and Long Beach (including empties) had deteriorated by -17.6 percent in 2009 when compared to 2008. This was the first month of TEU totals below one million units after seven consecutive months above one million. However, the Chinese New Year on February 14 likely explains some of the decline.
The Port of Long Beach experienced the largest gain in trade volumes over the year, as total containers grew by +29.9 percent in February. The Port of Los Angeles also witnessed a significant gain in volumes as total containers were up by +26.9 percent on a year-to-year basis.
Loaded inbound traffic at the Port of Long Beach surged by +39.3 percent from February 2009 to February 2010, rising from 149,299 TEUs to 207,920 TEUs (excluding empties). The Port of Los Angeles reported a jump in the total number of inbound loaded containers, to 267,361 TEUs in February 2010 compared with 206,035 TEUs in February 2009, an expansion of +29.8 percent.
The Port of Long Beach reported a total of 123,208 loaded outbound TEUs (excluding empties) in the month of February, an increase from 92,781 TEUs in February 2009 (+32.8%). The Port of Los Angeles saw a total of 147,926 loaded outbound TEUs for the month of February, a similar rise of +32.6 percent from February 2009.
The Port of Oakland reported that its total inbound and outbound container traffic both strengthened from a year earlier. The total number of inbound TEUs was 67,689 in February (from 55,453 in February 2009, up by +22.1%), while the total number of outbound TEUs came in at 87,884 (from 77,305 in February 2009, up by +13.7%). Over the year, Oakland’s total TEU count was up by +7.5 percent. (Ferdinando Guerra)
PR:http://www.portoflosangeles.org/maritime/stats.asp,http://www.polb.com/
http://www.portofoakland.com/
Tuesday, March 23, 2010: Town Hall Los Angeles: Have Any Questions About the Economy? - Janet L. Yellen, PhD, President and Chief Executive Officer, Federal Reserve Bank of San Francisco
12:00 PM Luncheon Address with Q&A. Millennium Biltmore Hotel (506 South Grand Avenue), Los Angeles. Parking: $20 Valet and $9.35 Self-Parking at Pershing Square; both require validation.
Yellen took office on June 14, 2004, as president and chief executive officer of the Twelfth District Federal Reserve Bank, at San Francisco. Yellen is a member of both the Council on Foreign Relations and the American Academy of Arts and Sciences and a research associate of the National Bureau of Economic Research. She also serves on the board of directors of the Pacific Council on International Policy, and in the recent past, she served as president of the Western Economic Association, vice president of the American Economic Association and was a Fellow of the Yale Corporation.
April 19-20, 2010: USC Marshall School of Business: Asia/Pacific Business Outlook 2010
USC - Davidson Conference Center (on Campus), 3415 S. Figueroa St., Los Angeles, CA
As the world economies slowly rebound from the financial crisis in 2010, Asian economic growth leads the globe. Learn how your firm can benefit from Asia’s surge. Now in its 23rd year, APBO is North America’s premier event for business leaders who want to expand their trade and investment in Asia/Pacific. APBO features 60 concurrent sessions on 15 Asia/Pacific economies. Build your international business network through APBO’s unprecedented access to 60 business experts with on-the-ground knowledge and experience.
Wednesday, May 12, 2010: International Trade Outlook: L.A. County Ties with China
Breakfast & Networking: 8:00 a.m. - 9:00 a.m. Program: 9:00 a.m. - 10:30 a.m. At Hilton Long Beach & Executive Meeting Center, Catalina Ballroom (701 West Ocean Boulevard).
As the largest trading partner with L.A. County, China’s investment into the region has created thousands of jobs for Angelenos. In the first of a series of key country reports, the Kyser Center for Economic Research will release a special report on China. This dynamic country of more than 1 billion people ranks as the ninth largest source of foreign-owned and -affiliated companies in Los Angeles County. The LAEDC will also present its annual International Trade Trends & Impacts report for the Southern California region.
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