KEEPING CURRENT

·         Sales of new homes dropped 1.5% in March to a seasonally adjusted annual rate of 511,000 units. The first-quarter sales pace of 517,000 units matches the sales pace set in last year’s first quarter. 1 ·         The median sales price of new homes sold in March was $288,000, a 1.8% decline from the $293,400 median price of March 2015.1 ·         Half of the new homes sold in March were on the market for at least 4.1 months after construction was completed. The median length of time on the market in March 2015 was 3.8 months. During the recent housing downturn, the median length of time on the market spiked to 13.3 months in 2010.1 ·         Over the last four quarters, the homeownership rate averaged 63.6%, the lowest four-quarter average since at least 1980. A year ago, the rate stood at 64.2%.2 ·         The economy expanded at a 0.5% seasonally adjusted annual rate during the first quarter of 2016. That’s the third consecutive quarter of deceleration since GDP expanded 3.9% in the second quarter of 2015. The economy has grown at a 2.1% average annual growth rate since the current recovery began in mid-2009, while the previous post-World War II recoveries averaged 3.7% annual growth.3 ·         Productivity fell for the second consecutive quarter in the first three months of 2016, generating a 0.6% gain over the past year. Productivity growth has been subpar for the last several years, compared to the 2.4% average annual growth rate set from 1991-2010. Productivity measures the output produced per hour of work and is a fundamental driver of changes in economic standards of living.4 ·         Slower productivity growth boosted growth in unit labor costs, which measures the cost of labor that’s required to produce a given amount of output. Unit labor costs are up 2.3% over the past year, almost double the 1.2% average annual gain from 1991-2010.4 ·         The average rate on 30-year fixed-rate mortgages in Freddie Mac’s survey was 3.61% during the week ending May 5, a decrease of 5 basis points from the previous week. That matches the April average and is below the first-quarter average of 3.74%. All rates quoted have fees and points averaging 0.5% to 0.6% of the loan amount.5