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Arizona housing affordability hits a brand new low

Housing affordability dropped to a brand new low nationally and in Arizona in the course of the fourth quarter of 2022. The Nationwide Affiliation of House Builders/Wells Fargo Housing Alternative Index, launched February 9, indicated that solely 38.1% of recent and current houses bought within the fourth quarter of 2022 have been inexpensive to a household incomes the U.S. median revenue. This was the third straight quarter of reducing affordability for the nation, and declines have been attributed to larger mortgage charges together with larger development prices. The index displays the share of houses bought in an space that might have been inexpensive to a household incomes the native median revenue primarily based on normal mortgage underwriting standards. Arizona metropolitan areas skilled their lowest affordability since 2012 and solely two have been larger than the nation for the final quarter of 2022. They have been Sierra Vista-Douglas and Yuma at 41.3% and 38.3%, respectively. To place this in context, these two locations had shares of 86.1% and 65.2% within the fourth quarter of 2021 (Exhibit 1). These with decrease Arizona housing affordability than the nation have been: Lake Havasu Metropolis-Kingman at 37.7%, Tucson at 35.0%, Prescott Valley-Prescott at 18.6%, Phoenix at 18.3%, and Flagstaff at 15.6%. The areas with the bottom affordability within the nation for the fourth quarter have been all in California, with Los Angeles coming in final at simply 2.2%. Essentially the most inexpensive space within the nation was Bay Metropolis, Michigan at 88.5%.

Exhibit 1. Arizona Metropolitan Space Housing Affordability, NAHB/Wells Fargo Housing Alternative Index, %

Arizona housing affordability hits a brand new low

The U.S. Shopper Worth Index for All City Customers (CPI-U) rose 0.5% in January on a seasonally adjusted foundation after growing 0.1% in December. Shelter was the most important contributor, accounting for practically half of the month-to-month all gadgets improve. Meals costs elevated by 0.5% over the month whereas power elevated by 2.0%. The index for all gadgets much less meals and power rose 0.4% for the month in response to the February 14 U.S. Bureau of Labor Statistics launch. Annual inflation elevated by 6.4% in January, as proven in Exhibit 2. This was the smallest 12-month improve because the interval ending October 2021. The all gadgets much less meals and power index rose 5.6% over the past 12 months, its smallest 12-month improve since December 2021. The meals index elevated 10.1% and the power index rose 8.7% over the past yr for January.

Exhibit 2: U.S. Shopper Worth Index, 12-Month Share Change, January 2023

U.S. producer costs additionally posted a month-to-month improve and a 12-month lower. The producer value index elevated 0.7% over the month in January, seasonally adjusted. Last demand companies elevated 0.4% whereas last demand items have been up 1.2% for the month primarily based on the February 16 Producer Worth Index launch from the U.S. Bureau of Labor Statistics. A large portion of the January improve for items was attributed to gasoline costs. The 12-month change in producer costs for January was 6.0% on an unadjusted foundation. This was the seventh consecutive month of decrease year-over-year change in last demand (retaining in thoughts that every one indexes are topic to revisions as much as 4 months after authentic publication).

There have been 630 chapter filings in Arizona for January, fewer than final January’s determine of 641. This was the smallest January determine since 2007 (Exhibit 3). The variety of Chapter 11 (reorganization) filings was up over the identical interval final yr, all different types had fewer filings. The Phoenix workplace was 0.4% over January of final yr whereas the Yuma workplace had the identical quantity as final yr and Tucson filings decreased by 7.7%.  The lower for the Tucson workplace represented fewer bankruptcies in Pima, Pinal, Santa Cruz, and Greenlee counties over the identical interval final yr, whereas Cochise and Graham counties have been unchanged.

Exhibit 3. Month-to-month Arizona Bankruptcies by District

Unavailable – Whole Bankruptcies by District

Impacting Arizona housing affordability, November home costs for Phoenix had a one-year improve of 6.3%, a number of share factors decrease than the October one-year acquire of 9.6%, indicating continued easing of home costs. Nationally, the S&P CoreLogic Case-Shiller Index reported a 7.7% annual acquire in costs in its January 31 launch. This was down from 9.2% the earlier month. The 20-city composite was additionally decrease for November at 6.8% in comparison with 8.6% in October. Florida cities of Miami and Tampa have been as soon as once more the locations with the most important over the yr improve in home costs for November whereas San Francisco dipped into detrimental territory with a 1.6% decline in home costs over the yr.

The U.S. commerce deficit was $67.4 billion in December, up from a revised November determine of $61.0 billion. Exports have been $250.2 billion and imports have been $317.6 billion for the month primarily based on the joint U.S. Census Bureau and U.S. Bureau of Financial Evaluation February 7 launch. With the December numbers, we now have an preliminary have a look at annual commerce knowledge. The 2022 items and companies commerce deficit was $948.1 billion, the very best on file. The products and companies deficit was 3.7% of current-dollar GDP in 2022, up from 3.6% in 2021. Exports had the most important one-year greenback improve ever at $453.1 billion in 2022 shifting as much as $3,009.7 billion whole for the yr. Imports totaled $3,957.8 billion in 2022. Each export and import totals for 2022 have been the very best on file (Exhibit 4).

Exhibit 4. U.S. Annual Exports and Imports, 2018-2022

U.S. whole nonfarm payroll employment elevated by 517,000 in January, larger than the common month-to-month acquire of 401,000 in 2022. Employment was widespread throughout sectors, although leisure and hospitality lead job good points adopted by skilled and enterprise companies. The unemployment price was 3.4% for January. Each the labor pressure participation price and employment-population ratio have been unchanged after annual changes to inhabitants controls and have little web change since early 2022. The January Employment Scenario report, launched February 3 by the U.S. Bureau of Labor Statistics, contained revisions for institution survey knowledge primarily based on annual benchmarking. Additionally, family survey knowledge for January mirror up to date inhabitants estimates.

Job openings charges elevated in 10 states and decreased in 1 state in December and have been little modified in 39 states primarily based on the U.S. Bureau of Labor Statistics February 15 State Job Openings and Labor Turnover (JOLTS) launch. For Arizona, the job openings price ticked down to six.4% from 6.5% in November. Over the month, the nationwide job openings price elevated by 0.3 share factors to six.7%, surpassing the Arizona price. The December hires charges elevated in 4 states and have been little modified in 46 states. Arizona’s determine for hires charges was unchanged at 4.2%. In December, whole separations charges elevated in 7 states, decreased in 6 states (together with Arizona), and have been little modified in 37 states. In Arizona, this quantity decreased by 0.6 share factors for a December 2022 determine 4.1%. The nationwide hires price and whole separations price have been unchanged over the month.

There have been 172 metropolitan areas within the U.S. with unemployment charges decrease than 3.0% in December 2022, two of which have been in Arizona (Phoenix and Prescott). There have been additionally two metropolitan areas with unemployment charges larger than 10.0%, one in all which was in Arizona (Yuma). The bottom unemployment price within the nation was Madison, WI with 1.6% whereas El Centro, CA had the very best at 14.8% primarily based on the February 1 U.S. Bureau of Labor Statistics launch for metropolitan space employment and unemployment. The U.S. unemployment for December was 3.3%. Arizona unemployment charges have been 3.8% in Flagstaff, 3.9% in Lake Havasu Metropolis-Kingman, 2.7% in Phoenix, 2.7% in Prescott, 3.6% in Sierra Vista-Douglas, 3.1% in Tucson, and 13.7% in Yuma, as proven in Exhibit 5.

Exhibit 5. Metropolitan Space Unemployment Charges

Creator: Valorie H. Rice is the Senior Enterprise Data Specialist on the Financial and Enterprise Analysis Heart (EBRC) within the College of Arizona’s Eller Faculty of Administration. Scholar Researcher Shaw Zeider contributed to this report.


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