My Mortgage Blog

Despite a light slate of financial headlines due to the New Year’s holiday, the real estate market enjoyed some welcome news where housing supply was concerned; short term employment might soon see some stability; and car sales scored a six-year high.

Real Estate

After two months of real estate experts calling for more inventory to counteract increasing prices and declining sales volume, construction spending hit its highest point in longer than four years.

Construction spending during November hit estimated annual rate of $934.4 billion, marking a 1 percent gain over October’s revised estimate of $925.1 billion, the Census Bureau reported. This was 5.9 percent over the November 2012 estimated rate of $882.7 billion the highest rate since May 2009.

November’s numbers pending on private construction (as opposed to public sector buildings) ticked up to an annual rate of $659.4 billion, which was 2.2 percent higher than October’s revised estimate of $644.9 billion. Similarly, residential construction grew to an annual rate of $345.5 billion, representing a 1.9 percent gain over October’s revised estimate of $339.2 billion.

Besides increasing the supply of homes, which should hopefully stabilize prices and improve sales volume, construction brings additional benefit: each new home generates roughly $90,000 in tax revenue and creates three new jobs for the year, according to the National Association of Home Builders.

Employment

And where jobs are concerned, first-time claims for unemployment insurance saw a slight dip, according to last week’s report from the Employment and Training Administration. Initial jobless claims filed during the week ending Dec. 28, inched down to 339,000, a decline of 2,000 claims from the previous week's revised figure of 341,000, the Administration reported. This was the lowest level in a month.

That week’s claims were in line with economists’ expectations, but the Thanksgiving-through-New Year’s time period is considered highly volatile for first-time jobless claims. The four-week moving average, which is considered a more reliable gauge of recent employment activity, notched up to 357,250, an 8,500-claim increase from the preceding week's revised average of 348,750.

The Administration also reported that the total number of unemployed Americans on jobless benefits during the week ending Dec. 21 dropped to 2,833,000, a decline of 98,000 people from the previous week's revised level of 2,931,000.

Auto Sales

U.S. sales of cars and trucks hit a six-year high in December, but the month’s receipts weren’t as high as the auto manufacturers had hoped for, given that sales activity during the late Thanksgiving holiday grabbed some of December’s sales volume. All told, car makers sold roughly 1.4 million cars and trucks in December, which was still the fourth-best sale month of 2013.

With the close of the year, U.S. auto sales grew 8 percent to hit 15.6 units for 2013, which would be the highest since 2007’s 16.1 million. An average 4 percent increase in rebates and incentives helped push December’s performance, with Ford notably increasing rebates 22 percent. Those efforts to nab buyers are indicative of car makers’ desires to woo buyers.

"We think there's going to definitely be more competition," said Larry Dominique, president of Automotive Lease Guide, which reports on car sales and lease prices. "We're seeing the OEMs fighting each other a little bit more now."

Some key performances for the year were Ford, which enjoyed an 11 percent U.S. sales increase; Chrysler and Nissan, which both saw 9 percent sales growth; and General Motors, Toyota and Honda, which notched a 7 percent sales increase. Also notable was the fact that Detroit’s Big Three, General Motors, Ford Motor and Chrysler, comprised 45.2 percent of all new U.S. vehicle sales in 2013, which was up from 44.5 percent in 2012.