First time claims fell a surprising 27,000 to 365,000 for the week ended April 28, the Labor Department reported Thursday after revisions drove the prior week’s report up by 4,000 to 392,000, the highest level in five months. Economists had expected initial claims would decrease to 378,000.
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The US economy grew at a disappointing 2.2 percent in the first quarter, the Bureau of Economic Analysis reported Friday, down from the 3.0 percent growth rate in the fourth quarter and below expectations. Economists had expected GDP to grow at 2.5 percent in the first quarter.
In dollar terms, GDP increased $73.4 billion, most of which was an increase in personal consumption - $68.1 billion. A slowdown in government spending subtracted $19.0 billion, most of which was a $15.0 billion drop in federal spending in the first quarter from the fourth.
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The analysts at Barclays Capital say a "triple-dip" in home prices will likely materialize by early next year. The term "triple-dip" emerged in a Clear Capital report a couple of weeks ago, and Barclays says its analysis corroborates the idea. The research firm warns that home prices will likely slip another 6 to 7 percent over the coming winter months. That would put median prices at a new low for this cycle, in fact 3 percent below the double-dip measurement of last spring.
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Clear Capital has released its forecast for home prices heading into the first part of next year. The company says the market is flirting with a "triple-dip" by next spring. Last spring prices did a double-dip, dropping below this cycle's previous low point. While prices have ticked up in recent months, Clear Capital is projecting a drop of 1.6 percent over the last three months of this year, and another 3.2 percent by next April, moving prices dangerously close to the levels seen at the end of the first quarter of 2011.
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Data released by Clear Capital Friday show home prices at the national level posted their first quarterly gain in June after nine months of declines. The company says the 0.9 percent increase is an encouraging sign that the markets are capable of positive price growth despite continued economic and foreclosure pressures. But even with the second-quarter uptick, U.S. home prices lost 3.2 percent during the first half of 2011, and Clear Capital is forecasting another 2.4 percent drop for the second half of the year.
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Markets across the country are in full-fledged correction mode. That combined with the prevalence of foreclosures has analysts at the research firm Capital Economics convinced that the double dip in home prices will continue throughout this year. In fact, they say the structural factors that are constraining demand, such as higher down payment requirements, probably mean that prices won't rise consistently until 2014. Capital Economics expects up to three million foreclosed homes to make their way to the market over the next few years.
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Clear Capital sees signs of market stability as we move into the summer months. New data released Thursday by the company shows that U.S. home prices continue to fall, but the 2.3 percent drop recorded for the three months ending in May was half the decline seen in the previous month's report. Clear Capital says the median price paid for distressed properties has started to rise, indicating the REO market is seeing increased activity toward the upper end of the price range and helping to rein in the depreciating trend of the past several months.
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While a number of closely-watched home price indices show national readings have slipped into a double-dip, Altos Research says it's come and gone. The firm notes that the latest Case-Shiller findings declaring a new post-recession low are based on data through the end of March. Since that time, Altos has recorded a steady uptick in prices for both major metros and mid-city markets across the country. The firm expects to see a rising and falling pattern for several years and believes the double-dip is really just the start of the next housing cycle.
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The S&P/Case-Shiller home price index confirmed a double-dip in home prices across much of the country as Standard & Poor's national reading fell another 4.2 percent during the first quarter. One economist notes that prices have now fallen by more than they did during the Great Depression. On that occasion, the peak in home prices was not regained for 19 years. The widespread view is that with over a quarter of all mortgages underwater and 6.3 million homeowners either delinquent or in foreclosure, home prices have not yet hit bottom.
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Data released Tuesday morning by Standard & Poor's show that the S&P/Case-Shiller national home price index declined by 4.2 percent in the first quarter of 2011, after having fallen 3.6 percent in the fourth quarter of 2010. The national reading hit a new recession low with the first quarter's data and posted an annual decline of 5.1 percent versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels. Officials from S&P note that this month's report is marked by the confirmation of a double-dip in home prices across much of the nation.
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