Arkansas Economic Development Institute

Arkansas Home Sales in 2011

By , January 26, 2012 3:13 PM

The final sales report of the year from the Arkansas Realtors® Association (ARA) showed that home sales in December were down 6.2% from December 2010.  Total sales for the year were reported to be down slightly from the previous year (-0.6%), marking 2011 as the slowest sales year in recent history.  Nevertheless, there is reason to be optimistic about residential real estate markets in Arkansas.  Although 2011 sales were lower than the previous two years, they had been boosted in 2009 and 2010 by the Federal home-buyer’s tax-credit programs.  As shown in the figure below, home sales exhibited unusual spikes in the final months of the first-time home buyer’s program (November 2009) and at the conclusion of the second round of home-buyer tax credits (April 2010).  Sales in 2011 followed a more typical seasonal pattern, without any temporary boosts from government incentive programs.

Source: Arkansas Realtors® Association

After using standard statistical techniques to seasonally adjust the data, the extraordinary nature of the policy-induced sales spikes becomes even more apparent.  More important, the seasonally-adjusted data show a trend of increasing sales over the course of 2011.  Extrapolating this trend forward into 2012 suggests the emergence of a long-awaited, sustainable recovery in Arkansas residential real estate markets.

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

At the UALR Economic Forecast Conference in November, we anticipated that annual home sales for 2011 would be down slightly from the previous year (-0.8%), but that we would see a significant improvement in 2012 (+12.6%).  Although this would represent a significant improvement, the forecast is not based on expectations of a dramatic recovery in housing market conditions; rather, it reflects the expected outcome of slow steady growth starting from a very low base.  Given the typical seasonal pattern in home sales, however, it won’t be until the summer surge that we will have a clear indication of how the totals will end up in 2012.

 

December Unemployment Rate Drops to 7.7%

By , January 24, 2012 2:43 PM

The Arkansas unemployment rate declined to 7.7% in December, down from a revised 7.9% rate in November.   Over the last two months of the year, the number of unemployed declined by 6,469 and the number employed rose by 16,190.  Accordingly, the sharp drop in the unemployment rate has taken place in the context of an expanding labor force.  Since Spring of 2011, we had seen the labor force participation rate decline sharply as the unemployment rate rose.  In the final months of year we’ve seen that trend almost completely reversed and we’re now right about where we were before the summer doldrums hit the Arkansas employment market.

Source: Bureau of Labor Statistics

The improvement in unemployment indicated by the household survey suggests that the temporary weakness we saw during 2011 has abated.  But there is still reason to be cautious about the outlook for 2012.  In the independent payroll survey released as part of today’s report, total employment for the month declined slightly from the previous month (-500, seasonally adjusted).  Moreover, the employment total for November was revised down by 1,600.  For the two months together, payroll employment was up by 5,000.  However, total employment remains below a peak reached in April 2011.

Source: Bureau of Labor Statistics

The December decline in payroll employment was spread across service-providing sectors.  One notable exception was Trade, Transportation and Utilities, which showed an increase of 1,900 jobs for the month.  Nevertheless, TT&U employment remains 4,800 jobs below the April 2011 peak.  Other sectors that continue to lag well below their levels of last spring include Manufacturing and Professional & Business Services.

Source: Bureau of Labor Statistics

Compared to a year ago (December 2010), total payroll employment is up by 8,000.   However, the next monthly report (Scheduled for March 13), will include annual benchark revisions to the payroll data.  As discussed in a previous post, the data revisions are likely to result in a sharp downward revision to the payroll figures for early 2011.  As a result, we are likely to see the year-over-year employment gains revised away in light of updated, more accurate data.

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*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 Unemployment Rates Down in November

By , January 4, 2012 1:35 PM

Unemployment rates in Arkansas metro areas fell sharply in November, adding to declines registered in October.  The newest data, released this morning by the Bureau of Labor Statistics, show unemployment rates down in each of the Metropolitan Statistical Areas (MSAs) that include parts of Arkansas. The raw data (which are not seasonally adjusted) generally understate the magnitude of the declines. After seasonal adjustment, the declines in November ranged from -0.2% in Fort Smith to  -0.9% in Memphis.  For the two months of October and November, unemployment rates were down by at least one-half of a percentage point in all eight MSAs.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

After experiencing rising unemployment rates over the first half of 2011, the recent declines leave unemployment lower than the previous year in every MSA except Pine Bluff, where the unemployment rate was unchanged from November 2010.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

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