Explaining Southern California's economy

July new home sales in the West: Flat since June, but booming since 2011

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A construction worker in Petaluma, California. New homes sales in the West have surged since July of 2011, according the Commerce Dept.

The Commerce Department has released data on new home sales for July. For the West region, sales were flat from June, declining a blippy 0.9 percent. But compared with July 2011, sales have boomed, surging 69 percent. That's by far the best of any U.S. region and well above the July 2011-July 2012 increase for the nation as a whole.

In July, the West and South accounted for a majority new houses sold and for sale — 286,000, our of a U.S. total of 372,000. For those keeping track, the South is in the lead and has been for a while. 

The data indicates that the U.S. housing market is moving in the right direction. As we learned yesterday when the National Association of Realtors released July existing home sales data, we have a supply-and-demand problem with housing in the U.S and in the West in particular. Prices are being pushed up because there isn't enough housing inventory to meet demand. 

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More modest home price increases for Los Angeles

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A Foreclosure sign is seen in front of a bank-owned home for sale in Las Vegas. We may start to see fewer of these if the U.S. housing market truly hits bottom.

Real estate and business information service CoreLogic has released June housing data, and for Los Angeles, the story is much the same as what we learned from the most recent Case-Shiller index. Year-over-year, national home prices were up 2.5; they increased 1.3 percent from May.

In what CoreLogic calls "Core Based Statistical Areas," the Los Angeles-Long Beach-Glendale region, prices were up very slightly year-over-year in June: 0.8 percent. Factoring in distressed sales, of which there's no shortage in the area, prices are up rather more, 3.5 percent.

The most recent Case-Shiller data is for May (Case-Shiller lags most other indices), but it also shows modest price upticks for Los Angeles, one of the 20 cities the index tracks. 

Overall this a is good news, although it's also important to note the CoreLogic reports that California had one of the nation's steepest price declines during the housing collapse: almost 40 percent.

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Case-Shiller: Los Angeles home prices continue to rise in May

May Case-Shiller

S&P

Home prices continue to rise in Los Angeles and the U.S., but overall, they're still down from a year ago.

May Case-Shiller numbers are out, and for Los Angeles, the news is good. Prices moved up 2.2 percent from April to May, according to the index, which tracks data for both a 10- and 20-city group. This reinforces a trend that we saw starting earlier this year.

As I wrote last month:

In L.A., February-March saw a tiny 0.1-percent increase after a January-February month-on-month decline. But the March-April uptick was better: 1.5 percent. This could mean that prices are gaining a footing and could start to build on their gains.

And now April-May was better still. In fact, with a 2.2-percent increase, L.A. matched the composite, which was up 2.2 percent in the aggregate. However, year-over-year, L.A. home prices for the period were down more than for the overall index: a decline of 2 percent.

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June home sales are down in the U.S., but up in the West

Justin Sullivan/Getty Images

A construction worker installs a window in a new home in San Mateo, California. Home sales declined in June nationally, but rose slightly in the West.

The Commerce Department just released data on new home sales, and the data overall is not good. Sales fell by a worrying 8.4 percent in June. This erases last month's impressive gain of 7.9 percent (which was revised up slightly). The silver lining in this dark cloud is that compared to last June, sales are up nationally by about 15 percent.

Regionally, the Northeast was completely crushed, with a 60 percent decline in June from May. But the West held up with a 2.1 percent gain.

The news contrasts with recent speculation that the housing market in the U.S. is forming a bottom for falling prices (you have to be careful, though, about assuming that sales data and prices data are somehow connected.) 

There's another factor to take into account, however. As Reuters points out, housing inventories are "near record lows," at least where new homes are concerned. What's holding back a more robust recovery is the sluggish economy — it only grew at 1.9 percent in the first quarter and added on average less than 80,000 jobs in the second quarter. Plus, the markets are worried about the neverending eurozone crisis and its latest phase, the apparent collapse of Spain's financial system. 

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Southern California still struggling with foreclosures

Foreclosures Spike As Banks Accelerate Loan Default Notices

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A for sale sign is posted in front of house in Glendale, California. Foreclosure remains a big problem in Souther California, but it seems to be getting gradually better.

DataQuick, which tracks the U.S. housing market, has released new data on foreclosures in California. The good news is that foreclosures decelerated in the second quarter of 2012 statewide. The bad news is that in Southern California, the foreclosure situation has barely changed over last year. Making that bad news worse is that SoCal's had the highest number of foreclosures in the state in the second quarter, and more than twice and many as the next-worst region, the Central Valley. 

The second quarter of 2011 saw around 30,000 notices of default (NOD), the first step in the foreclosure process, issued in SoCal. The same period in 2011 saw roughly the same, diminished by only about 2 percent.

The Bay Area, meanwhile, saw NODs drop by more than 13 percent, with an overall number of foreclosures that was already a third of what we're witnessing in SoCal.

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