ECONOMY WATCH

Gas Prices Drop

The Energy Department announced that for week ending May 23, 2011, the average price of US gasoline fell to $3.849 a gallon, down from $3.960 per gallon week earlier.

Diesel prices fell to an average $4.06 per gallon, down from $4.10 last week.

Mortgage Rates Drop Again

Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.77%, down from last week's 4.82%, according to its weekly national survey ending May 18, 2011. It also reported that the average 15-year fixed mortgage rate was 3.95%, down from 4.00% last week.

Housing Hiccup

The US Commerce Department reported that privately-owned housing units authorized by building permits in April 2011 were at a seasonally adjusted annual rate of 551,000. This is 4.0% below the revised March rate of 574,000 and 12.8% below the revised April 2010 estimate of 632,000. Single-family authorizations in April were at a rate of 385,000, 1.8% below the revised March figure of 392,000. Privately-owned housing starts in April were at a seasonally adjusted annual rate of 523,000, a drop of 10.6% from the revised March estimate of 585,000 and is 23.9% below the revised April 2010 rate of 687,000. Single-family housing starts in April were at a rate of 394,000, a 5.1% decline from the revised March figure of 415,000. Privately-owned housing completions in April were at a seasonally adjusted annual rate of 554,000, up 4.1% from the revised March estimate of 532,000, but 25.5% below the revised April 2010 rate of 744,000. Single-family housing completions in April were at a rate of 420,000. This is up 14.4% from the revised March figure of 367,000.

A housing forecast by the National Association of Home Builders echoes this dismal news. It expects 597,000 total housing starts for all of 2011, a slight increase from 2010, but far below the 1.8 million housing starts in the glory days of 2006. For 2012, it expects a modest bump up to 800,000 housing starts. According to NAHB, there's about a nine month supply of homes (including condos and townhouses) available on the market in April 2011, up about a month from March 2011 and up about a month from April 2010.

Employment Hiccup?

As the US unemployment rate inched upwards to 9% in April, the Conference Board Employment Trends Index declined 0.6% in April 2011 to 100.5, down from the revised figure of 101.1 in March. The Federal Reserve lowered its forecast for the unemployment rate to between 8.4% and 8.7% at end of 2011, but did not change its estimate for 6.8% to 7.2% unemployment rate by late 2013. Most analysts predict slow and steady employment growth through the year.