The New York Times reports that the slow number of home sales and new home builds in May hit record lows highlighting the importance of new job growth and government stimulus programs.
These low numbers coupled with an increase in job loss makes the economic recovery look further away than before (unemployment in May was 9.7% and 9.8% in June). New statistics show that both new home construction and pending sales declined. Some manufacturers did report gains last month, but they were still down from May and below estimates.
“The idea of a growth slowdown in the second half of 2010, a long-held belief of ours, is catching on as the data increasingly reinforces this idea,” said Dan Greenhaus, the chief economic strategist for Miller Tabak & Company.
The National Association of Realtors‘ chief executive, Lawrence Yun, said that now the determining factor in the housing market recovery sans a federal stimulus is potential job growth. The association noted that their housing indexes of pending home sales shows that after the tax credit expired, home sales are now down 16% from where it stood in May 2009. That is the lowest reported figure since the association started tracking these indexes in 2001, and it reversed three months of reported increases when homebuyers were pushing to utilize the tax credit.
“How much growth depends on what starts to happen in the next few months,” he said. “We need to see some further support from things like construction, consumer spending, and we are a little nervous about the export picture over all because Europe is weak an there are some early signs that China is slowing down.”
New home construction is also dependent on the labor market, and construction spending also fell in May.
Manufacturing is the only area to report any gains. In a survey of 18 different anufacturing companies, employment was still expanding though it slowed by 2% in June when compared to May figures.
