Some positive news in recent weeks suggests the economy and housing demand may be gaining some traction after a year of just limping along.

In the advance estimate for the third quarter, gross domestic product accelerated to 2.5% — up from 0.4% and 1.3% in the first and second quarters, respectively.

The Federal Open Market Committee attributed the acceleration to “the reversal of temporary factors” restraining growth earlier in the year. However, there are many other factors that could still derail the recovery.

The labor market remains weak, with the addition of 80,000 jobs in October. While revisions added more than 100,000 jobs to August-September estimates, this year’s monthly job creation averaged a sluggish 125,000 through October. This falls below the pace needed to keep pace with growth in the size of the labor force, leaving unemployment stubbornly high at 9.0%.

On the housing front, the NAHB/First American Improving Market Index showed continued expansion in November, with 30 metro areas on the list; the third-quarter homeownership rate ticked up to 66.1%, the first increase since 2008; and private residential construction spending rose in September.

However, pending home sales continued to drift down, suggesting little improvement for existing home sales over the next few months; and NAHB’s remodeling market index faltered again in the third quarter, after reaching a four-year high in the first quarter.

Also raising concern, several gypsum producers announced plans to increase prices in early 2012, some by as much as 35%. NAHB estimates this would add up to $600 to the cost of building a median-priced house.

The ongoing housing crisis is likely to have a long-term impact on demographics. Household formations have been delayed, and new NAHB research shows that marriages and having children are also being delayed, leading to a marked decline in fertility rates among women in their 20s and 30s.

Latest Posts

• Improving Markets Index Expands to 30 Metros in November
  The NAHB/First American Improving Markets Index continued to expand for a third consecutive month, rising to 30 in November. Posted: Nov. 7
  
  
• Wealth Gap for Young Households Growing
  A recent Pew Research Center study finds that the wealth gap between older and younger households has grown substantially, mainly because of housing. Posted: Nov. 7
  
  
• Federal Open Market Committee Nov. 1-2 Meeting Statement: Stay the Course
  In a statement following its Nov. 1-2 meeting, the Federal Reserve Board’s FOMC confirmed that it will continue current monetary policies for the time being. Posted: Nov. 4
  
  
• Employment Situation for October Not Good News
  A net 80,000 jobs were added to employment rolls in October, resulting in a slight decline in unemployment, to 9.0%. Posted: Nov. 4
  
  
• The Demographic Impact of the Housing Crisis
  Analysis by NAHB finds that younger Americans are delaying forming households, getting married and having children, pointing to long-term demographic changes. Posted: Nov. 4
  
  
• Sharp Rise in Gypsum Prices Likely in New Year
  Out of proportion to the weak housing market, planned gypsum price increases as high as 35% in 2012 would likely increase the cost of building a new home by around $600. Posted: Nov. 3
  
  
• Improving Markets Index: Casper, Wyo.
  A diversified economy and a boom in energy and agriculture put Casper, Wyo., on the NAHB/First American Improving Markets Index. Posted: Nov. 3
  
  
• Homeownership Rate Rises During Third Quarter
  The homeownership rate rose slightly during the third quarter to 66.1%., which was its lowest level since the second quarter of 1998. Posted: Nov. 2
  
  
• Property Tax Receipts Decline as Housing Weakness Continues
  Despite recent declines in total property tax collections and significant erosion in house prices since 2006, the owners of housing and other real estate are still contributing more than average to state and local tax receipts. Posted: Nov. 2
  
  
• Construction Spending Ticks Higher in September
  Private residential construction spending increased 0.2% during September, but has failed to expand consistently over the past year. Posted: Nov. 1
  
  
• Third Quarter GDP Growth: Gaining Strength, But Where’s Housing?
  The gross domestic product grew at an estimated seasonally adjusted annual rate of 2.5% in the third quarter, up from 1.3% in the second quarter and 0.4% in the first quarter. Posted: Oct. 28
  
  
• Mixed Readings on Consumer Confidence in October
  Consumer confidence in October remained at levels close to the darkest days of the Great Recession, but the two most frequently used indexes showed some disagreement over whether confidence was rising or falling. Posted: Oct. 28
  
  
• Remodeling Slows in the Third Quarter
  The NAHB Remodeling Market Index dropped 2.2 points to 41.7 in the third quarter. Remodelers report that home owners are interested in pursuing remodeling, but are extremely slow to commit because of the weak economy. Posted: Oct. 28
  
  
• Pending Home Sales Continue to Drift Down in September
  Pending homes sales continued to drift down in September, with the National Association of Realtors Pending Home Sales Index falling 4.6% to 84.5. Posted: Oct. 27
  
  
• Improving Markets Index: Anchorage, Alaska
  Benefiting from a joint Air Force and Army base, growth in the healthcare sector and a healthy real estate market, Anchorage appears on the NAHB/First American Improving Markets Index. Posted: Oct. 27

Eye on the Economy is a bi-weekly digest of the latest economic and housing policy news, analysis and studies as posted on NAHB’s free Eye on Housing blog. The preceding is a reissue of his Nov. 10 edition. To subscribe to Eye on the Economy, click here.

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