August Home Sales

By , September 29, 2011 11:59 AM

The Arkansas Realtors® Association reported this morning that home sales in August were up nearly 20% from the previous year, with total sales of 2,401 residential units.  The strength of the year-over-year growth in home sales is partly attributable to the expiration of home-buyer’s tax credits in April 2010.  A post-tax-credit  hangover last year suppressed sales over the summer months — usually the peak season for home sales.  As a result, the more normal seasonal pattern of home sales this year looks particularly strong compared to the summer of 2010.

Nevertheless, the August sales totals represent an improvement over previous months.  Last month, we reported that July sales “were well-below the level that one would expect during the busy summer months.”  The August figures are an improvement over July, indicating that the summer peak occured in August this year (as it often does).  The strength of the August data are important for projecting annual sales totals:  August sales typically account for nearly 10% of annual home sales in Arkansas, and the July-August total often accounts for as much as 20% of annual sales.  

The chart below shows the patterns of home sales from 2007-2011, both seasonally-adjusted and not-seasonally-adjusted.  The projections shown in the chart are based on an assumption that home sales in September through December will be as strong as indicated in the report for August.  Given typical seasonal patterns, this implies home sales of around 2000 per month in September and October, and nearly 1700 per month in November and December (not seasonally adjusted).  If this strength prevails, the sales total for the year will be about equal to last year’s total.   Under this scenario, therefore, there is about a 50/50 chance that 2011 sales will show an overall improvement over the previous year.   

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

How likely is this optimistic projected scenario?  Much depends on interpreting the sales peaks associated with the home-buyers tax credits in 2009 and 2010.  Total sales during these surges include three types of home-buyers:

  • Those who would have purchased a home anyway,
  • Those who purchased a home only because of the value of the tax credit, and
  • Those who purchased a home sooner, rather than later.

The key question pertains to the third group:  How much sooner were households induced to move their home purchases because of the tax credit?  Assuming that a substantial share of these home buyers advanced their purchase plans by months, rather than years,  the market should be returning to more normal patterns in the latter months of 2011.  The strength of the August sales report might therefore be taken as a sign that we are in this more-typical market already. 

On the other hand [and there’s always another hand when it comes to economic projections], recent signs of weakness in the general economy and a deterioration of consumer confidence might undermine the pace of home sales in coming months.

Metro Area Employment and Unemployment – August 2011

By , September 28, 2011 10:54 AM

As previously reported, the unemployment rate for the state ticked up one-tenth of a percent in August, so it might appear anomalous that data released this morning by the Bureau of Labor Statistics and Arkansas Workforce Services shows that unemployment rates in each of the state’s metro areas dropped for the month.  The discrepancy is due to the fact that state-level data are seasonally adjusted, whereas the metro area data are reported on a not-seasonally-adjusted basis.  After applying simple statistical procedures for seasonal adjustment, however, unemployment rates in the state’s metro areas generally rose in August — consistent with the statewide data.  (One important seasonal factor affecting unemployment rates in August is the return of teachers to work and students to school.  This tends to lower measured unemployment, but says little about the underlying state of labor markets.  Seasonal adjustment accounts for this recurring pattern.)

As shown in the table below, seasonally-adjusted unemployment rates in August were higher than July in all but two of the state’s Metropolitan Statistical Areas (MSAs).  Memphis was unchanged at 10.2% and Texarkana’s rate ticked down from 7.9% to 7.8%.  Unemployment rates in Fayetteville, Hot Springs, and Jonesboro rose by 0.3%, with smaller increases in Fort Smith, Little Rock and Pine Bluff.

Source:  Bureau of Labor Statistics, Institute for Economic Advancement

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Seasonally adjusted unemployment rates had been declining during the latter part of 2010, but have clearly been on a rising trajectory since the beginning of this year.  Over the past year and a half, Pine Bluff and Memphis have maintained the highest unemployment rates in the state, Fayetteville and Little Rock the lowest rates, with the state’s other MSA’s clustered near the statewide average. 

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Data from the separate payroll survey reinforces the weakness indicated by the unemployment figures.  From July to August, payroll employment declined in all of Arkansas’ MSAs except Hot Springs.  Compared to a year ago, employment has declined in Fayetteville, Jonesboro, Little Rock, Pine Bluff, and Texarkana.  Since the statewide employment trough in February 2010, however, most of the states metro areas still show positive net job growth.  Only Memphis and Pine Bluff had lower employment in August 2011 than in February 2010.  Compared to the start of the recession, employment in Hot Springs is up by 4.1%, but is lower in all of the other MSAs — ranging from -0.8% in Jonesboro to -8.4% in Memphis. 

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Personal Income – Second Quarter 2011

By , September 23, 2011 11:54 AM

Arkansas personal income growth in the second quarter was 1.3%, slightly above the national average rate of 1.1%.  According to the latest statistics from the Bureau of Economic Analysis, Arkansas’ growth rate ranked 15th among the 50 states.  Each of the three major categories of incomes — Net Earnings; Dividends, Interest, and Rent; and Transfer Payments — contributed to the increase. 

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The latest state personal income release incorporated recent revisions that were published for the national data in late August.  For Arkansas, total personal income was revised upward by 1.0% for 2008 and downward by 0.8% and 1.2% in 2009 and 2010.  As a result, the decline in income during the 2008-09 recession is now estimated to be considerably larger than previously reported.  From a peak in 2008:Q2 to a trough in 2009:Q3, Arkansas personal income declined by 3.5%.  Previously published data had shown a peak-to-trough decline of only 1.5%.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

In comparison to revised data for the U.S., however, the recessionary decline in income in Arkansas was still less severe.  The figure below compares indexes for the U.S. and Arkansas, normalized to the peak quarter of 2008:Q2.  The peak-to-trough decline in income for the U.S. was over 5.5%.  Arkansas income growth since the low point of 2009:Q3 has generally kept pace with national growth.  As of the second quarter of this year, total personal income in Arkansas was 4.3% above the 2008 peak.
 
Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

As reported in previous posts, personal income during recessions tended to be boosted by government transfer payments — through both “automatic stabilizers” that tend to increase when the economy weakens (e.g. unemployment insurance payments) and activist “stimulus” programs.  Consequently, measures of personal income net of government transfers provides a more accurate view of the strength of the underlying private-sector economy.  As shown in the chart below, personal income declined more precipitously during the recession and has been slower to recover when measured net of government transfer payments.  Without transfers, the peak-to-trough decline in  personal income was 6.8% in Arkansas and 8.8% for the U.S.  In both cases, the second quarter data show that personal income less transfer payments have only now recovered to their pre-recession levels.
Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The fact that Arkansas fared better than many other parts of the country has meant that our relative position in terms of per capita income has improved from pre-recession levels.  In 2008, Arkansas’ per capita income was 80% of the national average.  In 2009 and 2010, it had increased to 82%.  As a result, Arkansas’ relative ranking rose from 47th to 44th.
Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Arkansas Employment and Unemployment – August 2011

By , September 16, 2011 10:53 AM

The Arkansas unemployment rate rose for the fourth consecutive month in August, up one-tenth of a percent to 8.3%.  According to the Bureau of Labor Statistics (BLS), Arkansas was one of 26 states that saw a rise in the unemployment rate in August.  The statistics from the household survey showed that the number of employed was down 3,148 while the number of unemployed was up by 1,193.  

As shown in the figure below, the unemployment rate in Arkansas has been trending upward since the beginning of the year.  For most of the recession and recovery period, Arkansas unemployment rate was 2 percentage points below the unemployment rate for the U.S.  It has now crept up to within 0.8 percentage points of the the national average. 

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The payroll survey was also disappointing.  Seasonally adjusted data for August showed a decline of 1,900 jobs, on top of a downward revision to the July data.  After peaking in April, payroll employment has declined by 7,000 jobs in the past four months.  The table below shows that job losses in August were widespread.  The only sectors that showed positive monthly growth were Government (+3,000 jobs) and Manufacturing (+400).  Losses were particularly sharp in Professional and Business Services (-1,700) and Construction (-1,900).  Employment in construction had shown a sharp increase in July, but the August figures erased that gain.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

It is never advisable to put too much emphasis on one month’s data, or on any one particular statistic.  But today’s employment report is the fourth consecutive report indicating weakness in Arkansas’ job market.  Data from both the household survey and and payroll survey suggest that conditions have deteriorated markedly since April. 

#  #  #

*Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the monthly news release from the Arkansas Department of Workforce Services, are available hereTable – Seasonally Adjusted NFPE

Metro Area GDP – 2010

By , September 14, 2011 3:50 PM

The Bureau of Economic Analysis released its “advance” estimates on metro area GDP for 2010 on Tuesday.  For all U.S. metropolitan areas combined, the report showed that real (inflation-adjusted) GDP increased by 2.5% in 2010 after declining 2.5% in 2009.  Increases were reported in 304 of the nation’s 366 Metropolitan Statistical Areas (MSAs).  As shown in the table below, each of Arkansas’ MSAs showed positive growth, with Fayetteville, Fort Smith, Jonesboro and Pine Bluff all showing growth in excess of the national average.  Little Rock was the slowest-growing MSA, but it was also the only metro area in the state to have experienced positive growth in 2009.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The 2010 statistics are classified as “advance” statistics, meaning that they are preliminary and based on incomplete source data.  Only time will tell what subsequent revisions to the data will show.  Tuesday’s release included revisions to previous years’ data.  Each of Arkansas’ MSAs showed a downward revision compared to earlier-released estimates (see Metro Area GDP – 2009).

Income and Poverty in 2010

By , September 14, 2011 11:56 AM

U.S. incomes decline and poverty rises – but Arkansas fares better than most other states

Yesterday’s report from the Census Bureau showed that real household median income in the U.S. declined by 2.3% in 2010, and the share of the population below the poverty level rose to 15.1%–the highest level since 1993.  Clearly, the severity of the 2008-09 recession and the sluggish pace of the subsequent recovery are continuing to suppress standards of living.  Nevertheless, there are caveats to the coverage of the Census statistics that moderate some of the dismal interpretations of these statistics.  Moreover, the data for Arkansas contain some relatively positive news.

One important detail about the Census Bureau’s measurement of income is that it includes only “money income.”  It does not include government transfers such as housing subsidies, the value of publicly provided medical care, and food stamps.  The value of these transfers has grown rapidly in recent years, particularly since the onset of the recession.  If we consider overall standards of living — especially for the lower-income segment of households — comparisons to previous years’ money-income figures tell only part of the story.

Arkansas has long been among the lowest-income states in the nation.  Yesterday’s report did not change that generalization.  Median household income in Arkansas was $38,571, the second lowest in the nation.  Given the uncertainty associated with sampling and measurement error, Arkansas is one of nine states in which a three-year average of median household income is not significantly different from the lowest level (statistically speaking). 

However, in inflation adjusted terms, the 2010 income figure represents an increase of 3.8% compared to the previous year.  Arkansas was one of only 22 states to see an increase, and in fact, ranked as the 7th highest growth rate among the 50 states plus the District of Columbia.

The Poverty Rate in Arkansas was 15.5% in 2010 — nearly equal to the national average.  In comparison to 2009, the poverty rate in Arkansas was down from 18.9%.   Arkansas was one of only 16 states to see a decline, and the drop of 3.4 percentage points was the largest in the nation.  There is a range of statistical uncertainty in the poverty numbers as well, but using a 2-year moving average measure, the Arkansas’ poverty rate was basically unchanged from 2008-09 to 2009-10.

One important factor to consider when comparing income and poverty in Arkansas to the rest of the country is differences in cost-of-living.  The median income statistics and poverty levels are adjusted for inflation, but not for differences in prices across states and regions.  According to the most recent statistics on relative cost of living indexes, Arkansas has the fifth-lowest cost of living in the nation, with the general price level equal to about 91.4% of the national average.  If the income and poverty statistics were adjusted for differences in prices, the standard of living in Arkansas is higher than indicated by the uniform national statistics (see previous post:  The Poverty Rate and the Cost of Living).

Metro Area Employment and Unemployment – July 2011

By , August 31, 2011 12:17 PM

As previously reported, the statewide unemployment rate rose slightly in July, from 8.1% to 8.2% (seasonally adjusted).  New data released this morning shows that most of Arkansas’ Metropolitan Statistical Areas (MSAs) experienced stable or lower unemployment rates.  As shown in the table below, not-seasonally-adjusted unemployment rates declined in all of the state’s MSAs except for Texarkana.  Unemployment tends to be higher during the summer months, reflecting the impact of summer vacation for school employees and students.  There is typically a very slight drop in unemployment rates between June and July.   After accounting for these seasonal regularities, seasonally adjusted figures show unemployment rates declining in Hot Springs, Jonesboro, Little Rock, Memphis, and Pine Bluff.   Texarkana saw a small uptick in unemployment, while rates in Fayetteville and Fort Smith were unchanged.

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

The Bureau of Labor Statistics reported that unemployment rates in July were lower than a year earlier in 257 of the nation’s 372 MSAs, higher in 94, and unchanged in 21.  Here in Arkansas, only Hot Springs shows a lower unemployment rate than in July 2010.

The figures for nonfarm payroll employment in Arkansas’ MSAs show mixed results for July:  Compared to the previous month, employment declined in Fayetteville, Fort Smith and Texarkana.   Increases were recorded for Pine Bluff, Memphis, and Hot Springs.   The payroll data for Hot Springs have been particularly volatile in recent months, but as of the most recent observation, Hot Springs employment is 7.3% higher than a year ago, 7.8% higher than the employment trough of February 2010, and 2.6% higher than at the start of the 2008-09 recession.  Jonesboro also shows gains over all of those time-horizons, with employment up 1.0% since the start of the recession.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

July Home Sales

By , August 30, 2011 11:40 AM

The Arkansas Realtors® Association reported this morning that Arkansas home sales in July were 20% higher than a year earlier (see the full report here).  Taken in isolation, this statistic suggests considerable improvement in the Arkansas real estate market.  However, a broader look at home sales over the past several months shows that the July data confirm a trend of rather weak home sales during 2011.

As shown in the figure below, home sales tend to reach a seasonal peak during the summer months of June, July and August.  In 2010, however, sales spiked in April due to the expiration of the Federal home-buyers’ tax credit program.  Sales dropped sharply in the following months, with July 2010 showing a sales pace considerably lower than the summer months of previous years.  Sales in July 2011 were clearly higher than they were last summer, but were well-below the level that one would expect during the busy summer months.

Source:   Arkansas Realtors® Association

Source: Arkansas Realtors® Association

The weakness in home sales during 2011 is illustrated more clearly in the following figure, which shows seasonally adjusted sales data.  After adjusting for the typical pattern of low sales during the winter months and high sales during the summer, the non-seasonal cyclical pattern is more apparent.  So for in 2011, seasonally-adjusted home sales are above the post-tax-credit lull last year, but are not much higher than the during the recessionary period in 2008. 

Source:  Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement.

Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement.

Today’s report from the ARA included cumulative sales statistics that  reinforce the weakness of 2011 sales:  For the year-to-date (January-July), sales in 2011 are down 7.7% from the same period in 2010.  Thus far, the statistics suggest that sales for the year are likely to be lower than in any of the previous five years.  

Nevertheless, there is still the possibility of a recovery in coming months.  The home buyers’ tax credit programs sapped some of the strength from 2011 sales by shifting demand forward into 2010.  It is likely that at least some of that demand shift is continuing to depress the pace of current sales.  The more time passes, the more the lagged effects of tax credit programs will wane, revealing the true underlying condition of the Arkansas real estate market.

Arkansas Home Prices Continue to Decline … On Average

By , August 24, 2011 3:22 PM

New data from the Federal Housing Finance Agency (FHFA) show that house prices in Arkansas continued to decline in the second quarter of 2011.   The FHFA All-Transaction Index for Arkansas declined slightly (-0.2%) from the first quarter, leaving the index down 2.5% from the second quarter of 2010.  The rate of decline in Arkansas home prices remains below the national average:  the national statistics show prices down 1.9% in the second quarter and 4.5% lower than a year earlier.

Home price declines are far from uniform across the state.  As shown in the chart below, prices in the Fayetteville metro area have followed a pattern similar to the national average, while prices in Little Rock have only recently shown modest declines.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

In fact, house prices in some of the state’s smaller metro areas have fared even better than in the Little Rock area.  In the second quarter of 2011, prices rose in Hot Springs, Pine Bluff and Texarkana.  In each of these metro areas, prices are higher than they were a year earlier.  In Texarkana, house prices are higher than they were in the last quarter of the recession (2009Q2),  although prices in each of the other metro areas have fallen since then.  If we consider changes over the past five years, home prices in the Fayetteville and Memphis areas are down sharply, but homes in the state’s other metro areas have maintained their longer-run values.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

Arkansas Employment and Unemployment – July 2011

By , August 19, 2011 10:38 AM

The unemployment rate in Arkansas rose again in July, reaching a new cyclical high of 8.2% (up from 8.1% in June).  The latest data from the Bureau of Labor Statistics (BLS) and the Arkansas Department of Workforce Services (DWS) indicated that the number of Arkansans unemployed rose for the third straight month, up 1,400 in July following a cumulative increase of 3,600 in May and June.  The household survey also showed a decline in the number of those employed, down 7,400. 

The employment data from the household survey have been showing a downward trend since March, falling by a total of nearly 25,000.  However, the establishment survey (which is based on reports from employers) shows a slowdown, but with net positive growth since the beginning of the year.  As illustrated in the figure below, employment measured by the payroll survey has been growing–albeit irregularly–since February 2010.  But since March, net growth in payroll employment has been virtually zero (-0.02%).

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The payroll data for July shows a slight uptick in employment, rising by 600 jobs from the revised level in June (seasonally adjusted).  As shown in the table below, employment declines were registered in some key sectors for the Arkansas economy, including Manufacturing; Trade, Transportation, & Utilities; and Professional & Business Services.  Employment in Leisure & Hospitality Services and Education & Health Services expanded.  In a surprising break from its sluggish recent trend, construction employment rose sharply in July.   Looking at job growth since then end of 2010, only one sector (Manufacturing) has shown negative net growth.  Led by gains in the service providing sectors, total payroll employment has increased by 7,100 jobs during 2011. 

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The seasonally adjusted data from the BLS summarized in the table above is quite a bit different than the not seasonally adjusted data in the press release from DWS.  Before seasonally adjustment, the Arkansas payroll employment was down by 15,600 jobs.  Most of this decline was registered in the category of Local Government (-13,200), reflecting the seasonal decline in employment in the state’s public schools.  The not-seasonally-adjusted data also show a larger decline in Professional & Business Services.

#  #  #

*Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the monthly press release from the Arkansas Department of Workforce Services, are available hereTable – Seasonally Adjusted NFPE

Panorama Theme by Themocracy

AWSOM Powered