Last Week’s Economic News in Review
Existing home sales picked up the pace, while growth in construction permits stoked optimism for increased home inventory, and lay-offs continued to remain at very low levels.
Existing Home Sales
Sales of existing homes regained some momentum as transactions of single-family homes, townhomes, condominiums and co-ops, grew 1.5 percent in October to hit an annual rate of 5.26 million, the National Association of Realtors reported last week. October’s performance marked the second consecutive monthly sales gain, and with sales for the month being 2.5 percent higher than October 2013, it was the first time this year where sales were up from a year ago.
“Sales activity in October reached its highest annual pace of the year as buyers continue to be encouraged by interest rates at lows not seen since last summer, improving levels of inventory and stabilizing price growth,” explained NAR chief economist Lawrence Yun. “Furthermore, the job market has shown continued strength in the past six months. This bodes well for solid demand to close out the year and the likelihood of additional months of year-over-year sales increases.”
Looking at price, the median price in October for existing homes of all types grew to $208,300, which was 5.5 percent over October 2013’s median price, and marked the 32nd straight month of annual price increases. Where inventory was concerned, supplies of existing homes fell 2.6 percent in October to 2.22 million units for sale, representing a 5.1-month supply at October’s sales rate. Inventory has been a key concern among real estate watchers, because an adequate supply keeps prices down, which helps ensure decent sales volume.
“The growth in housing supply this year will likely prevent the drastic sales slowdown and coinciding spike in home prices we saw last winter due to low inventory,” Yun noted. “However, more housing starts are needed to increase supply, meet current demand and keep price growth in check.”
Housing Starts and Permits
In other real estate news, permits issued for construction of new homes hit a six-and-a-half-year high, but starts on construction of new homes saw a drop, according to data released by the Census Bureau last week.
Permits issued for private housing hit an annual rate of 1,080,000 in October, which was 4.8 percent higher than September’s rate and 1.2 percent higher than October 2013’s rate. Permits for single-family homes hit a rate of 640,000, which was 1.4 percent higher than September’s rate.
Construction starts on private housing in October dipped to an annual rate of 1,009,000, which was 2.8 percent under September’s rate, but was 7.8 percent higher than October 2013’s rate. Starts on single-family homes hit an annual rate of 696,000, which was 4.2 percent higher than September’s rate.
While October figures might come across like a mixed bag, the report generally pointed to continued improvement, according to HSBC Securities USA economist Ryan Wang.
“Conditions in the housing market are at least stable, and on the margin they appear to be improving a bit,” Wang told Bloomberg. “We should expect continued gradual growth heading into next year.”
Initial Jobless Claims
Looking at near-term employment activity, first-time claims for unemployment benefits filed by the newly unemployed continued to fall, and overall insured unemployment was at a 14-year low. Initial unemployment claims filed during the week ending Nov. 15 dropped to 291,000, a fall-off of 2,000 claims from the prior week’s revised level of 293,000, the Employment and Training Administration reported last week.
The four-week moving average for initial jobless claims — considered a more stable measure of near-term layoffs — notched up to 287,500, a gain of 1,750 from the preceding week’s revised average of 285,750, but still at the lowest levels in years.
Notably, the total population of unemployed workers covered by benefits for the week ending Nov 8 fell to 2,330,000, a drop of 73,000 from the previous week. This was the lowest level since Dec. 16, 2000, when the population was 2,322,000.
This week, we can expect a busy, but condensed slate of economic releases due to the Thanksgiving holiday:
• Tuesday — The second estimate of third quarter GDP from the Bureau of Economic Analysis.
• Wednesday — Initial jobless claims for last week from the Employment and Training Administration; November consumer confidence from The Conference Board; October Durable goods orders from the Census Bureau; October personal incomes and spending from the Bureau of Economic Analysis; November consumer sentiment from the University of Michigan and Thomson-Reuters Survey of Consumers; and October new home sales from the Census Bureau and the Department of Housing and Urban Development.
AL ADAME
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