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Last Week’s Economic News In Review March 02, 2016

Market-Update-E Jansen

Existing home sales shot up, while new home sales quizzically declined. Meanwhile, lay-offs saw a spike, but remained in safe territory.

Existing Homes Sales

Sales of existing homes in January outpaced market expectations to hit a six-month high. Completed transactions of single-family homes, townhomes, condominiums and co-ops notched up 0.4 percent to an annual rate of 5.47 million in January, the National Association of Realtors reported last week. January’s sales beat expectations of a 5.3 million pace, and were 11 percent higher than January 2015, which marks the largest year-over-year gain since July 2013’s 16.3 percent gain.

Looking at price, January’s median price of existing homes of all types grew 8.2 percent from January 2015 to hit $213,800. In terms of inventory, the supply of homes at the end of January grew 3.4 percent to hit 1.82 million homes available for sale. This was 2.2 percent lower than January 2015’s 1.86 million units, and marks a four-month supply at January’s sales. That short supply prompted NAR Chief Economist Lawrence Yun to voice concerns.

“The spring buying season is right around the corner and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand,” Yun noted in a public statement. “Home prices ascending near or above double-digit appreciation aren’t healthy — especially considering the fact that household income and wages are barely rising.”

New Home Sales

While existing home sales were up, new real estate saw less than stellar performance. Sales of new single-family homes in January dropped 9.2 percent to an annual rate of 494,000, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development. Compared annually, this was 5.2 percent under January 2015’s rate of 521,000.

Looking at price, the median sales price of new homes sold in January 2016 was $278,800, and the average price was $365,700. In terms of supply, the estimate of new homes for sale at the end of January was 238,000, which represented a 5.8-month supply.

“Through some of the noise in the data, it appears that home sales are continuing to trend higher over time off of historically low levels,” JPMorgan Economist Daniel Silver told Reuters. “We maintain our view that the housing market will continue to recover.”

Initial Jobless Claims

Lay-offs increased a bit, but were in line with economists’ expectations. Initial claims for unemployment benefits filed by the recently laid off during the week ending February 20 hit 272,000, a gain of 10,000 claims from the prior week’s total of 262,000, the Employment and Training Administration reported last week.

Meanwhile the four-week moving average — considered a more stable measure of lay-offs — ticked down to 272,000, a decline of 1,250 claims from the preceding week’s average of 273,250.

Both totals were well below the 300,000-claim mark that indicates to economists that the job market is growing.

This week we can expect:

  • Tuesday — Construction spending for January from the Census Bureau; February car and truck sales from the auto manufacturers.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; fourth quarter productivity from the Bureau of Labor Statistics; January factory orders from the Census Bureau.
  • Friday — January trade balance from the Census Bureau; February unemployment rate, payrolls, average workweek and hourly earnings from the Bureau of Labor Statistics.