Last Week’s Economic News in Review
An increase in first-time buyers helped boost existing home sales, while housing starts and permits on new homes saw encouraging growth, and lay-offs continued to drop.
Existing Home Sales
A welcome influx of first-time homebuyers helped boost sales of existing single-family homes, townhomes, condominiums and co-ops by 1.1 percent in June, to hit an annual rate of 5.57 million, the National Association of Realtors reported last week. Compared annually, June’s existing home sales were 3 percent higher than June 2015’s rate, and were at their highest pace since February 2007.
While sales to investors fell to their lowest share since July 2009, first-time buyers represented 33 percent of June’s sales, up from May’s 30 percent, and was the highest percentage since July 2012’s 34 percent.
“Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances,” said NAR Chief Economist Lawrence Yun. “Sustained job growth as well as this year’s descent in mortgage rates is undoubtedly driving the appetite for home purchases.
“The modest bump in June sales to first-time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market,” Yun added. “The odds of closing on a home are definitely higher right now for first-time buyers living in metro areas with tamer price growth and greater entry-level supply — particularly areas in the Midwest and parts of the South.”
Looking at price, the median price for all types of existing homes hit $247,700, which was up 4.8 percent from June 2015, and marked the 52nd straight month of year-over-year sales increases. In terms of inventory, the number of existing homes for sale dropped 0.9 percent to 2.12 million units, which represented a 4.6-month supply of homes for sale.
New Home Construction
In new home construction, building permits issued for the construction of private housing of all types grew 1.5 percent in June to hit an annual rate of 1.15 million, according to last week’s report from the Census Bureau. That said, when compared annually, this was 13.6 percent below June 2015’s pace of 1.33 million. Permits issued for single-family homes grew 1 percent in June to hit an annual rate of 738,000.
Starts on construction of private homes of all types expanded a healthy 4.8 percent to hit an annual rate of 1.18 million for the month, but like permits, were still down from 2015, falling 2 percent below June 2015’s rate of 1.21 million. Starts on single-family homes grew 4.4 percent to hit an annual rate of 778,000.
“Homebuilding continues to gradually recover from the housing bust that accompanied the Great Recession,” PNC chief economist Stuart Hoffman told the Wall Street Journal. “Demand for new single-family homes is slowly but steadily improving.”
Initial Jobless Claims
First-time claims for unemployment benefits filed during the week ending July 16 continued to beat market expectations. Initial claims for the week dropped to 253,000, a decline of 1,000 claims from the preceding week’s unrevised total of 254,000, the Employment and Training Administration reported last week.
The 1,000-claim drop bucked the market, which had expected claims to hit 265,000. The week marked the 72nd consecutive week of first-time claims below 300,000, which economists consider a level that indicates a growing job market. This has been the longest such streak since 1973.
The four-week moving average — regarded as a more stable measure of lay-offs — fell to 257,750 claims, a decline of 1,250 claims from the prior week’s average of 259,000.
This week we can expect:
- Tuesday — Consumer confidence for July from The Conference Board; new home sales for June from the Census Bureau.
- Wednesday — Durable goods orders for June from the Census Bureau.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration.
- Friday — Advance second quarter gross domestic product from the Bureau of Economic Analysis; July consumer sentiment from the University of Michigan.