Arkansas Home Sales – 2010

By , January 26, 2011 12:43 PM

This morning, the Arkansas Realtors® Association (ARA) released data on Arkansas home sales for December 2010.  As illustrated in the chart below, 2010 was an unusual year for home sales.  The typical seasonal pattern features a peak around mid-summer (usually in July), with a low point during the winter months (usually in January).  In 2010, the summer peak came early–in April.  Sales during the summer months were uncharacteristically low.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

The reason for this unusual pattern was the timing of Federal tax credit programs for home buyers.  The second round of credits–which were available for first-time and repeat home buyers–expired at the end of April 2010.  Typical delays in the closing process meant that some qualifying sales were not officially recorded until May or June, helping to support sales figures for those months.  The subsequent collapse in sales during the late summer and autumn of the year is a reflection of the demand that was shifted forward by the tax credit program:  Some households that would have purchased later in the year accelerated their plans to take advantage of the incentive program.  The sales pattern induced by the timing of the tax credit program is even more apparent when the sales data are seasonally-adjusted, as shown in the figure below:

Sources:  Arkansas Realtors® Association, Institute for Economic Advancement*

Sources: Arkansas Realtors® Association, Institute for Economic Advancement*

(The previous sales peak that is evident in the seasonally-adjusted data coincides with the conclusion of the original first-time home-buyers’ tax credit in November 2009.)

The December 2010 figures that were released this morning show that sales continue to recover from their low point in July.  The outlook for 2011 depends crucially on how quickly market conditions will return to “normal”–that is, how long it takes for the effects of policy-induced demand shifts to disippate.  The fact that seasonally-adjusted sales during the latter part of 2010 steadily improved suggests that the process of adjustment is taking place fairly rapidly.  Indeed, the sales figures for December 2010 are only slightly lower (-0.88%) than the previous year.

Overall, sales during 2010 were down 4.8% from the previous year.  The home-buyer tax credit appears to have shifted demand from the second half of the year to the first half, with little evidence of an impact on total annual sales.  As the tax credit program recedes further into the past, home sales during 2011 should increasingly reflect current market conditions rather than the delayed effects of special policy factors.

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*Seasonally adjusted data for Arkansas home sales were calculated by the Institute for Economic Advancement, using the Census X-12 ARIMA procedure.

Arkansas Employment and Unemployment – December 2010

By , January 25, 2011 11:38 AM

The final employment report for 2010 was released this morning by the U.S. Bureau of Labor Statistics and Arkansas Department of Workforce Services.   The data for the month of December were rather unremarkable.  However, with preliminary data now available for all of 2010, some interesting trends are apparent.

The unemployment rate in December was 7.9 percent — unchanged from the previous month.  The household survey showed that there were nearly 1,300 newly unemployed Arkansans, with unemployment reaching a new record-high of 107,755.  However, the number of employed rose by more than 6,000.   Hence, for the third consecutive month, Arkansas overall labor force expanded.  Since September, the labor force has increased by 18,000,  after declining by 37,000 over the first nine months of the year.  As job opportunities improve (particularly in comparison to other states), new workers are entering the state and unemployed Arkansans who had become discouraged in their job searches are re-entering the labor market.   The entrance of previously discouraged workers places upward pressure on the unemployment rate, even as employment expands.  But even at the elevated level of 7.9%, the state’s unemployment rate remains well below the U.S. average. 

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The payroll survey showed a seasonally-adjusted employment decline of 2,500 in December.   Sectors showing job losses included Manufacturing (-1,000), Trade, Transportation and Utilities (-1,900) and Other Services (-2,500).  Employment increased in some service sectors, including Professional and Business Services (+2,400), Education and Health (+400), and Financial (+200).

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

For the year, employment increased by 12,500.   Although this increase is not particularly large (representing less than 1 percent of the state’s labor force), it represents a turnaround from the previous two years.  Total employment declined by 18,400 in 2008 and by 35,000 in 2009.   Employment growth in 2010 therefore represents a replacement of about 23 percent of the jobs lost during the recession and its immediate aftermath.

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*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 here
Table – Seasonally Adjusted NFPE

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