Housing starts and existing home sales rise. The Census Bureau reported that new single family housing starts increased by 501,000 units (at an annual rate) from August to September, a 3.9 percent increase. September’s housing starts increase marked the sixth time in the past seven months that single family housing starts have risen. However, this rate is still 9 percent below the rate a year ago, and substantially below the peak in January 2006, when the Census Bureau reported 1.8 million single family housing units starts.  Additionally, the National Association of Realtors reported that existing home sales rose by 5.6 million units (at an annual rate) from August to September, an increase of 9.4 percent.  Existing home sales in September were up 9.2 percent from a year ago and are at their highest level since July 2007. The report on existing home sales is consistent with this week’s release of the Federal Reserve’s Beige Book, which reported modest improvement in residential real estate and manufacturing. The increase in existing home sales and housing starts can be partly attributed to the first-time homebuyer tax credit, a part of the Recovery Act that has been cited for raising demand for housing. (See Chart) The tax credit is scheduled to expire on November 30, 2009, and as with cash for clunkers, the homeowner tax credit may have simply accelerated purchases that homeowners were planning on making anyway.  Some economists fear that the demand for housing will fall once the credit expires, as demand for automobiles fell after the expiration of cash for clunkers. While housing starts and existing home sales have little direct impact on GDP, they may signal a rise in consumer confidence and lead to an increase in consumption.

Home price index falls for the first time since the spring. The Federal Housing and Finance Agency (FHFA) reported that home prices fell 0.3 percent from July to August. This is the first decline in home prices reported by FHFA since March and represents a 3.6 percent decline in home prices since last August. However, declines in the home price index were mostly confined to the East Coast, as New England, the Middle Atlantic, and the South Atlantic were the only regions of the country to register a drop. Nevertheless, over the past twelve months, the FHFA home price index has fallen for every region of the country except the West South Central region (Oklahoma, Arkansas, Texas, and Louisiana). Since reaching a peak in April 2007, the FHFA home price index has fallen 10.7 percent.  The National Association of Realtors announced that sales of distressed homes declined as a percent of total sales, from 45 to 50 percent of the total for the past year to 29 percent of the total in September.

The White House reports that the stimulus is saving jobs. The Department of Education reported an initial estimate of the Recovery Act indicated that 250,000 education-related jobs have been created or saved around the country.  Data on the amount of stimulus money spent is available on Recovery.gov, which is administered by the Recovery, Accountability and Transparency Board.  On October 30, the Recovery, Accountability, and Transparency Board will disclose information on the total number of jobs created or saved by implementation of the stimulus.