Last Week’s Economic News In Review
Existing home sales slowed, while new home sales enjoyed solid enough growth to hit a record high, and lay-offs saw a small, unanticipated decline.
Existing Home Sales
After two months of gains caused by increased purchases by first-time buyers, tight inventory finally caught up with existing home sales. Transactions of existing single-family homes, townhomes, condominiums and co-ops fell 3.2 percent to an annual rate of 5.39 million in July, the National Association of Realtors reported last week.
“Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” NAR Chief Economist Lawrence Yun said. “Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.”
Total housing inventory at the end of July rose just 0.9 percent to 2.13 million existing homes of all types available for sale, representing a 4.7-month supply at July’s sales pace. Compared to last year, July’s inventory was 5.8 percent down from July 2015.
That narrowing supply pushed prices higher, with July’s median existing-home price for all home types hitting $244,100, which is 5.3 percent higher than July 2015’s $231,800 median price.
New Home Sales
Meanwhile, new home sales fared much better, with transactions of new single-family homes in July shooting up to an annual rate of 654,000, a whopping 12.4 percent higher than June’s rate of 582,000, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development. This marked a nine-year high, and when compared annually, July’s sales were 31.3 percent higher than July 2015’s pace of 498,000.
Looking at price and supply, the median sales price of new homes sold in July came in at $294,600, and the average sales price was $355,800. The estimated number of new homes for sale at the end of the month was 233,000, representing a 4.3-month supply at July’s sales rate.
“This is a continued sign that demand for new homes remains solid in a low interest rate, low unemployment environment,” said Ralph McLaughlin, economist at real estate site Trulia.com.
Initial Jobless Claims
Turning to employment news, new claims for unemployment benefits filed by the recently laid off during the week ending August 20 notched down to 261,000, a small decline of 1,000 claims from the prior week’s total of 262,000, according to last week’s report from the Employment and Training Administration.
That total was well below the 265,000 claims that the market had expected, and kept lay-offs well below the 300,000-claim mark that economists consider indicative of a growing job market. So far, this is the 77th straight week of claims below 300,000, which is the longest such streak since 1970.
The four-week moving average — considered a more reliable measure of jobless claims — fell to 264,000, a 1,240-claim drop from the previous week’s average of 265,250.
This week we can expect:
- Monday — Personal incomes and spending for July from the Bureau of Economic Analysis.
- Tuesday — Consumer confidence for August from The Conference Board.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration; workforce productivity and costs for the second quarter from the Bureau of Labor Statistics; July construction spending from the Census Bureau.
- Friday — August car and truck sales from the auto manufacturers; July balance of trade from the Census Bureau and the Bureau of Economic Analysis; July factory orders from the Census Bureau; August payrolls, unemployment, hourly earnings and average workweek from the Bureau of Labor Statistics.