Augusta’s housing market improving, Medcalfe says

Contributing writer: Simon Medcalfe, Associate Professor of Finance in the James M. Hull College of Business at Georgia Regents University

In July, the Hull College of Business Augusta Leading Economic Index (LEI) increased 0.5 percent from May. The index has increased 4.2 percent from July 2013. This represents five consecutive months of growth. The increase was driven by housing permits (increased 5.5 percent from June) and initial claims for unemployment insurance (decreased 9.3 percent from June). Job openings increased by 0.6 percent, and a small decrease in the price level improved consumers’ purchasing power.

The housing market continues to improve. According to data from Blanchard and Calhoun Real Estate Company, house prices for properties that sold in August were 4.1 percent higher than in August 2013. Buyers can benefit from a large inventory of homes for sale, although this inventory is lower than last year at this time.

Economic Commentary GFX
About the Index
The Augusta Leading Economic Index (Augusta LEI) is a monthly composite index that combines several national, regional, and local indicators into a single variable. Leading indexes combine variables that change before business cycle variables such as employment changes. Leading indexes may, therefore, indicate changes that could occur in the economy. Leading indexes are not forecasts or predictions about the future, but may signify future economic activity.

The Augusta LEI may provide local decision makers with timely information about future business cycle patterns in the Augusta area. The Augusta LEI uses economic indicators for the Augusta Metropolitan Statistical Area (MSA), which includes seven counties (i.e., Burke, Columbia, Lincoln, McDuffie, and Richmond counties in Georgia, and Aiken and Edgefield counties in South Carolina).

The index also includes regional and national indicators to reflect that national trends affect the local economy. The index is constructed in the same way that the Conference Board constructs the Leading Economic Index for the United States.

About Simon Medcalfe
Simon Medcalfe is an Associate Professor of Finance in GRU’s Hull College of Business. He earned his doctoral degree from Lehigh University, and he received his master’s degree from the University of Leicester.

Medcalfe has authored numerous academic articles and is a former columnist for the The Augusta Chronicle’s “Your Business” section.