MetroIntelligence Economic Update by P. DUFFY
July personal income rises for first time since April, consumer spending edges up
In July, personal income increased 0.4 percent (the first increase since April), disposable personal income (DPI) increased 0.2 percent (also the first increase since April) and personal consumption expenditures (PCE) increased 1.9 percent (versus increases of 6.2 percent in June and 8.6 percent in May).
Inflation tracker PCE price index up 0.3 percent in July and 1.0 percent year-on-year
The PCE price index increased 0.3 percent in July and 1.0 percent year-on-year. Excluding food and energy, the PCE price index increased 0.3 percent in July and 1.3 percent year-on-year.
August consumer sentiment up 2.2 points from July, but down 17.5 points year-on-year
Consumer sentiment has remained trendless in the same depressed range it has traveled during the past five months, rising 2.2 points from July to August but down 17.5 points year-on-year. Although strong gains in consumer spending from the 2nd quarter lows can be anticipated, those gains will significantly slow by year-end without some additional fiscal spending programs to diminish the hardships faced by unemployed workers, small businesses, as well as support for state and local governments.
Share of new condo construction shrank to 4% in 2Q20
The market share of rental multifamily construction starts increased to 96 percent during the second quarter of 2020. In contrast, the historical low share of 47 percent was set during the third quarter of 2005, during the condo building boom. An average share of 80 percent was registered during the 1980-2002 period. During the second quarter of 2020, there were only 3,000 condo multifamily units that started construction. There were 76,000 rental apartment starts. Condo construction has been weak since the end of the Great Recession.
Strong demand for homes leads to largest annual price growth in a year
Home seller confidence is growing and the number of new homes on the market is recovering closer to levels seen last year. Still, buyer demand is outpacing this new supply as newly pending sales are up big in year-over-year numbers, driven partly by mortgage rates that fell even further this week. Newly pending sales were up 16.5 percent from the same week last year as strong buyer demand is continuing into the late summer. That’s the biggest year-over-year jump since mid-February, before the coronavirus pandemic took hold. Home sellers that accepted an offer last week typically did so after 13 days, which is 13 days faster than a year ago.