Housing Economics - 08/17/2011 (Plain Text Version)

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In this issue:
Housing Starts Down Slightly in July
Housing Market Statistics
Preview the Latest National Outlook
Property Tax Rates by County and City

Preview the Latest National Outlook

Highlights

The high drama on Capitol Hill will not seriously impair the smooth functioning of the economy. Tempers will flare, but in the end a deal will get done with the result being dominated by spending cuts, adding some fiscal drag to the economic recovery.
The European sovereign debt crisis continues to be well managed and recent policy initiatives continue to keep adverse “contagion” effects at bay.
The weak GDP report points to less momentum in the expansion than previously thought. We’ve trimmed our projections due to the disappointing data and the additional fiscal drag from the debt/deficit negotiations in Washington. We anticipate modestly above-trend growth in real output with systematic, if unspectacular, improvements in the labor market.
The temporary factors that constrained GDP and job formation during the first half of the year also put significant upward pressure on top-line and core inflation measures. However, we expect these pressures and inflation to subside during the second half of this year and to proceed at a moderate pace in 2012.
The Federal Reserve has kept the federal funds rate close to zero and our baseline forecast assumes no increases until the third quarter of 2012. Also, QE2 has been completed and we assume no QE3 program in our baseline.
The lackluster economic environment has held back significant improvements in the housing market in recent months. Home sales, single-family housing starts and single-family permits remain at levels close to their cyclical lows. Only the multifamily sector has been showing a convincing recovery pattern.

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