California Home Sales and Median Prices in September

The California Association of Realtors recently released their report on California existing home sales and median prices in September. The statewide median price last month was $482,150, down slightly (by 2.3%) compared with August but up by 4.3% from the year ago figure. Although home prices continue to rise on a year-over-year basis, they may have reached their peak for this year. While it is typical for the median price to reach its peak for the year somewhere between June and August, the geographic distribution of sales is also affecting the statewide median. The CAR report noted that more homes are now being sold in the Central Valley where the median price is lower than in coastal metro areas. The share of homes sold in the Central Valley increased from 25.5% last year to 26.4% this year, while in the Bay Area the share decreased from 18.8% to 17.2%. As the share of homes sold in lower-cost areas rises relative to more expensive regions, increases in the state-wide median price will moderate.

The number of single-family homes in California that closed escrow in September rose by 6.9% over the year to 425,030 units (seasonally adjusted annualized rate). Compared with August, sales were down by 1.5%. Home sales in September were up over the year for the eighth straight month.

Inventories continue to be very tight. State-wide the inventory of homes for sale in September was 3.7 months, unchanged over the month but down from 4.2 months from a year ago. In the Los Angeles metro area, there was a 3.9-month supply in September. The Inland Empire reported 4.4 months, while in the San Francisco Bay area there was only a 2.5-month supply.

Interest rates are still quite low, dipping over the month from 3.91% in August for a 30-year fixed rate mortgage to 3.89% in September. A year ago the average interest rate was 4.61%.

Below is a year-over-year summary of sales and price activity in Southern California by county. Although the statewide sales figures are seasonally adjusted, regional and county figures are not.

§  Los Angeles County:  unit sales increased by 9.6% over the year in September, while the median price rose by 6.5% to $517,750.

§  Orange County: sales jumped by 13.8% and the median price was up by 1.7% to $707,700

§  Riverside County:  sales of existing homes climbed by 10.4% and the median price increased by 4.0% to $329,200.

§  San Bernardino County:  sales rose by 9.2% in September with the median price rising by 8.0% to $229,890.

§  San Diego County:  unit sales were up by 4.8% and the median price rose by 3.8% to $539,340.

§  Ventura County:  sales shot up by 34.7% over the year while the median price edged up by 1.8% to $599,710.

Source:  http://www.car.org/newsstand/newsreleases/2015releases/septemberhomesales

California Financial Report for September

The State Controller’s office has released the September cash report for the State’s General Fund. Three months into the fiscal year (2015-2016), total receipts were up by 7.7% to $23.8 billion compared with the same period last year. Total disbursements ($32.2 billion) were down by 14.1% over the same period, but still exceeded cash receipts by $8.3 billion. As of September 30, the state’s cash balance stood at -$5.8 billion.

Total revenues (receipts from taxes, licenses, fees or investment earnings) were up by 6.5% to $22.2 billion compared with the first three months of the previous fiscal year. So far this year, total revenues are running slightly ahead of expectations, but two of the state’s top three revenue sources failed to match projections.

• Personal income taxes increased by 8.9% to $15.3 billion, beating expectations by $606.2 million or 4.1%
• Corporate income taxes plunged by 17.6% to $1.3 million, missing the budget forecast by 7.3%
• Revenues from sales and use taxes were up by 7.4% to $5.6 billion, but fell short of expectations by 6.3%

The schedule of cash disbursements in the Controller’s report showed that expenditures on Local K-12 Education were $9.5 billion during the first three months of the fiscal year, a decline of 29.9% compared with the same period last year. Expenditures for Community Colleges dropped by 4.9% to $1.6 billion. The UC and CSU Systems have fared better this year – disbursements were up by 13.2% from the year ago level. Contributions to CalSTRS (the state teacher’s pension fund) increased by 47.0% to $332.1 million.

Spending for the Department of Corrections was little changed from last year, edging up by 1.3% to $2.5 billion Meanwhile, the amount California spent on health and human services plummeted by 40.5% to $715.5 million compared with $1.2 billion during the same three month period last year. The amount the state has paid to service its debt obligation so far this year was up marginally, rising by 1.4% to $862.2 million.

As of September 30, the General Fund had $32.7 billion in unused borrowable resources against $5.8 billion in outstanding loans, which are composed entirely of internal borrowing and is current to this year – no outstanding loans were carried over from the previous fiscal year.  

Sources:  http://www.sco.ca.gov/eo_pressrel.html

September State and Local Employment Report

The Employment Development Department (EDD) released the state and local employment reports for the month of September. Total California nonfarm employment increased by 8,200 jobs over the month in seasonally adjusted (SA) terms following a gain of 42,000 jobs in August.

The year-over-year change showed an increase of 444,300 jobs (SA). This equated to a growth rate of 2.8%, which exceeded the national increase of 2.1%, but was the slowest rate of increase since September 2012 when it was 2.5%. California’s private sector added 405,600 jobs (an increase of 3.0% over the year), while employment in the public sector rose by 1.6% (38,700 jobs).

While industry employment trends have been consistent for several months, job growth in California mirrored the slowdown seen in the September national numbers. Nine of the 11 super-sectors added jobs over the year to September: construction; trade, transportation and utilities; information; financial activities; professional and business services; educational and health services; leisure and hospitality; other services; and government for a combined gain of 451,000 jobs. Professional and business services posted the largest gain on a numerical basis, adding 130,200 jobs (up by 5.3%), while construction claimed the largest gain in percentage terms, increasing by 6.4% or 43,900 jobs.

Two sectors recorded a decline over the year in September. Mining and logging plunged by 10.1% for a loss of 3,200 jobs; manufacturing employment fell by 3,500 jobs (-0.3%).

California’s unemployment rate declined from 6.1% in August to 5.9% in September and was down from the year ago rate of 7.3%. This was the first time California’s unemployment rate dropped below 6.0% since November 2007. The civilian labor force was down over the month (-0.2%), but increased over the year by 0.8%. That’s equivalent to 143,700 new entrants to the labor force.

County highlights:

(Note: With the exception of the Los Angeles unemployment rate, county level numbers are not seasonally adjusted, which means there can be large month-to-month fluctuations in job counts. A truer picture of how local labor markets are faring is revealed by focusing on the year-over-year numbers. Annual trends “correct” for the seasonal factors that influence certain industry sectors over the course of the year.)

In Los Angeles County, the seasonally adjusted unemployment rate was 6.5%, down from 6.9% in August and below the year ago rate of 8.1%. Total nonfarm employment increased by 39,900 jobs. With the summer ending and a new school year beginning, 44% of last month’s job gain was in local education. Over the year, employment in Los Angeles County was up by 85,000 jobs, an increase of 2.0%.

Education and health services posed the largest year-over-year gain in employment in September with a net increase of 25,200 jobs. The health care industry added 24,100 jobs, while private education employment increased by 1,100 jobs.

Also recording significant jobs gains were leisure and hospitality, up by 19,400 jobs, and professional, scientific and technical services, up by 8,100 jobs.

Four major industry sectors reported year-over-year declines in September. Mining and logging lost 200 jobs, manufacturing was down by 1,200 jobs, finance and insurance posted a decline of 2,200 jobs, and information was down by 2,500 jobs.

In September, the unemployment rate in Orange County was 4.0%, down from 4.5% in August and below the year-ago figure of 5.3%. Nonfarm payroll jobs increased by by 3,400 over the month and were up by 44,900 over the year (an increase of 3.0%).

In the Riverside-San Bernardino area, the unemployment rate in September was 6.1% compared with 6.8% in August and below the year ago rate of 7.8%. The Inland Empire gained 3,500 nonfarm payroll jobs over the month and 36,300 over the year. This represented an increase of 2.8%.

In Ventura County, the unemployment rate was 5.3%, down from the year ago estimate of 6.6%. Total nonfarm employment was up over the month by 2,400 jobs and up over the year by 4,400 jobs (1.5%).

 Summary: Employment growth in California slowed in September, mirroring the slower pace of job growth that occurred at the national level. However, California continues to add jobs at a faster rate than the nation. It is generally best not to read too much into one month – we could see an upward revision next month. It is difficult to determine if the labor markets have simply hit a soft patch or if this is the start of a longer trend. In any case, the LAEDC expects to see job growth slow as we move into 2016, which reflects an economy in a mid- to late-cycle expansion. (Kimberly Ritter-Martinez)

Sources:  http://www.labormarketinfo.edd.ca.gov/

U.S. Light Vehicle Sales Rise above 18 Million Unit Pace

In September, U.S. light vehicle sales were up by 10.0% over the year to 18.1 million units (seasonally adjusted annualized rate). This was the fastest pace of sales since July 2005. On a per unit volume basis, 1.44 million light vehicles were sold last month making it the second highest September volume on record. Boosted by the inclusion of Labor Day promotions in September, unit sales were up by 15.8% over the month.

Sales momentum is still solidly on the side of light trucks. Sales increased by 17.5% over the year to September to 10.4 million units and accounted for 57.6% of the light vehicle sales mix. This was the highest share of truck sales recorded since July 2005.

• Sales of domestic trucks increased by 16.2% over the year to 8.6 million units
• Foreign light truck sales, which currently account for slightly less than 20% of the light truck market, surged by 24.5% to 1.8 million units
• Compared with August, sales of pick-ups, SUVs and crossovers were up by 2.2%

Total passenger car sales, including foreign and domestic models, edged up by 1.2% over the year to 7.7 million units.

• Sales of domestic autos were up by 3.1% over the year to 5.7 million units,
• Sales of foreign passenger cars declined by 4.0% to 1.9 million units
• Compared with August, total passenger car sales moved higher by 1.5%

Sales of medium-heavy truck rose by 3.7% over the year in September to 450,000 vehicles. These are heavier trucks are used by firms to haul freight and make deliveries so an increase in demand for these vehicles is an indication of stronger business activity.

Demand for new vehicles is expected to carry forward through the rest of the year, bolstered by moderating gasoline prices and positive news regarding economic growth and job creation. It’s looking likely that auto sales will exceed expectations this year, pushing past calendar-year projections of 17.2 million units to 17.3. 

Source:  www.bea.gov

Disappointing U.S. Jobs Report for September

The U.S. Labor Market Report covering the national employment situation in September showed a gain of 142,000 nonfarm jobs. The unemployment rate remained unchanged over the month at 5.1%. The average workweek edged down by 0.1 hour to 34.5 hours, while the average hourly wage was little changed over the month at $25.09. Over the year, average hourly earnings were up by 2.2%.

The employer payroll survey reported that total nonfarm employment in the United States increased by 142,000 jobs in September. The private sector contributed 118,000 jobs to the September increase, while the public sector added 24,000 jobs. Nearly every major industry added jobs in monthly terms except mining and logging, and manufacturing. Compounding the blow of last month’s weak job growth, were downward revisions to the July and August figures that showed 59,000 fewer jobs added in those months than previously reported. Over the past three months, job gains have averaged 167,000 per month. The 2015 year-to-date average monthly gain is 198,000 compared with 260,000 in 2014.

On a year-to-year (YTY) basis, U.S. employment expanded by 2.75 million jobs, an increase of 2.0%. In year-to-year terms, mining and logging was the only industry to record a decline. The largest YTY gain occurred in professional and business services with 616,000 jobs added over the year, an increase of 3.2%. Within this super-sector, professional and technical industries grew by 311,400 jobs (up by 3.7%), while administrative, waste and support services added 251,300 jobs (2.9%). Forty-one percent of the increase in administrative, waste and support services occurred in temporary employment (103,900 jobs).

Education and health added 568,000 jobs (2.6%) with most of the gains occurring in health care and social assistance (599,300 jobs). Employment in the trade, transportation and utilities sector expanded by 536,000 jobs YTY (2.0%) with most of the gains occurring in retail trade (314,100 jobs or 2.0%). Leisure and hospitality grew by 426,000 jobs (2.9%), construction added 205,000 jobs (3.3%) and financial activities added 147,000 jobs (1.8%).

Turning to the household survey, in August the unemployment rate held steady at 5.1%, the lowest since April 2008. The year ago rate was 5.9%. The labor force participation rate fell again, dropping to 62.4%, a 38-year low. The more comprehensive U-6 unemployment rate was 10.0% last month, down from the year ago rate of 11.7% and is now below its 20-year average of 10.7%. The U-6 unemployment rate counts part-time workers who would prefer full-time work and individuals who would like a job but have given up the search.

Continuing improvements in the labor market have also helped to bring down the share of workers how have been jobless for 27 weeks or more. In September, that share was 26.6%, which was down from August (27.7%) and down from the year ago share of 31.9%. The long-run average is 25%. Over the past 12 months, the number of long-term unemployed persons has fallen by 847,000. In addition, the median duration of unemployment dropped from 13.3 weeks in September of last year to 11.4 weeks last month.

Summary: For the second month in a row, the pace of job growth slowed compared with earlier in the year. Some reasons for the recent slowdown in job growth include weakness overseas, which hurts U.S. exports of services as well as manufacturing; volatility in the stock market, which makes companies more cautious; and weak productivity growth, which may lead companies to shed workers to boost productivity. Even so, wages continue to make modest gains against annual inflation and, although not as robust as seen in previous month, most industries posted job gains.

As much as the Federal Reserve would like to start normalizing short-term interest rates, this report may lead to some hesitation. At this point, however, the FOMC is probably more concerned about the global economy and less concerned about the U.S., which has generally maintained a steady course for quite some time.

Source:  http://www.bls.gov/news.release/pdf/empsit.pdf