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SURVEY REVEALS SMALL DIP IN CONSUMER CONFIDENCE
After a strong gain in December 2004, consumer confidence
recorded a slight downturn in January 2005, according to
the University of Michigan's Survey of Consumers. Two of
the three components measured by the survey declined last
month. The Index of Consumer Expectations and the Index
of Consumer Sentiment fell to 85.7 and 95.5, respectively,
reflecting a somewhat unfavorable assessment of future economic
conditions. The Current Conditions Index rose 4.2 points
to 110.9 in January, the highest level recorded in more
than four years. The survey also revealed that consumers
have a positive view of current homebuying conditions due
to low mortgage rates. "Rather than buying in advance of
rising mortgage rates, consumers are still focused on buying
in advance of rising home values," stated Richard Curtain,
director of the University of Michigan's Survey of Consumers.
NAR PREDICTS NEAR-RECORD HOME SALES IN 2005
With economic conditions expected to remain near 2004 levels,
NAR anticipates that home sales will see the second-best
year on record in 2005, according to a recent report. Existing-home
sales are estimated to decline 2.0 percent to a total of
6.54 million units, while new-home sales are projected to
fall 6.2 percent to 1.11 million units. After reaching the
highest level of housing construction since 1978 with 1.95
million units, housing starts also are expected to decrease
to 1.92 million units, a 1.8 percent decline. "Even with
a growing economy and improving job market, inflation should
stay tame, with only modest upward pressure on interest
rates," said NAR's Chief Economist David Lereah. "The relationship
between mortgage rates, family income and home prices will
remain favorable for homebuyers in most of the country."
REAL ESTATE CONSTRUCTION SPENDING RISES
Construction spending was at a seasonally adjusted annual
rate of $1,031.8 billion in December 2004, 1.1 percent above
the revised November estimate of $1,020.8 billion, according
to a report recently released by the U.S. Census Bureau.
December was the sixth consecutive month where the projected
rate of construction spending topped $1 trillion. The annual
value of construction spending in 2004 was $998.4 billion,
a 9 percent increase over the $915.7 billion spent in 2003.
Total spending on private construction rose slightly in
December, reaching a seasonally adjusted annual rate of
$789.0 billion, up 0.9 percent from November. Spending on
residential construction also increased, rising 0.7 percent
to $559.8 billion.
Information provided by - C.A.R. Newsline is published by
the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association
representing more than 155,000 REALTORS® statewide.
