As we prepared the April 2015 Market Trend Analysis Report, we noted certain developments, as they relate to the US economy and housing.
The GDP rate started out the year on solid ground, but slowed as the quarter progressed. It is currently estimated to come in between a 1% and 1.5% annual rate for the first quarter of 2015. This is below the 2.2% and 5.0% growth recorded during the 4th and 3rd quarters of 2014, but represents an improvement from the 2.1% decline recorded a year earlier. Some of the slowing was blamed on the harsh winter. However, the cutbacks in the energy industry and strong US dollar also played into the total. For the entire year, GDP is still forecast to grow between 2.5% and 3.0%.
Employment growth in the first quarter of 2015 averaged 197,000 per month. This was well below the 324,000 monthly averages during the last quarter of 2014, while still surpassing the 190,000 per month a year earlier. Job growth remained strongest in the Western and Southern regions of the US. More than half the jobs created in 2014 were in the various service industries, and many of these were thought to be lower-paying positions. Even though the unemployment rate remained in the mid-5% range, wages were fairly flat. This has left personal income growth to remain modest. Job availability is improving. It appears that employers are having a difficult time finding qualified workers, which may force wages to improve.
Low oil prices remain one of the major concerns during the last half of 2014 and into 2015. Oil prices are nearly half of where they were a year ago. This resulted in the loss of jobs (with more on the horizon), a decline in state revenues and reduced investment in oil exploration. Those states facing the greatest impact include Alaska, Louisiana, North Dakota, New Mexico, Oklahoma, Texas and Wyoming, due the concentration of employment in this industry. For Texas, analysts are quick to point out that total employment is more diversified today than back in the 1980s.
We are still waiting for housing to make a meaningful return. Home sales were off in 2014 and generally flat to start the year. The number of first-time homebuyers was near 30% of the market, while the supply of units held at under 5 months. Property values increased about 5% in 2014, with little change as 2015 started. There are still more than 5 million homeowners underwater on their mortgages. It is hoped that rising consumer confidence and an increasing number of better paying jobs will start to translate into better gains in the housing market in 2015.Tags: Economy, Employment, GDP, Housing Market, Mortgage Industry