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Last Week’s Economic News In Review – March 30, 2016

Market-Update-E Jansen

Real estate saw mixed results, with existing home sales down and sales of new homes increasing, while layoffs experienced slight growth but remained in encouraging territory.

Existing Home Sales

After hitting a six-month high in January, February’s existing home sales suffered a drop. Sales of single-family homes, townhomes, condominiums and co-ops, fell 7.1 percent in February to an annual rate of 5.08 million, the National Association of Realtors reported last week. That said, when compared annually, February’s sales are still 2.2 percent higher than February 2015’s performance.

“The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings,” noted NAR Chief Economist Lawrence Yun. “However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

And where affordability was concerned, prices were still on the rise. February’s median existing-home price for all types of existing homes grew to $210,800, which was 4.4 percent higher than February 2015’s $201,900. This marked the 48th consecutive monthly year-over-year price increase.

Looking at the supply of homes, the inventory of existing homes for sale at the end of February grew 3.3 percent to hit 1.88 million units, representing a 4.4-month supply at February’s sales pace. This was up from January’s 4-month supply but was still 1.1 percent lower than February 2015’s 1.9 million-unit supply.

New Home Sales

Sales of new, single-family homes grew 2 percent in February to hit an annual rate of 512,000, according to last week’s report from the Census Bureau. This beat market expectations for a rate of 511,000, but when compared annually, was down 6.1 percent from February 2015’s pace of 545,000. Still, the upward movement was generally considered a positive sign after January’s 9.2 percent drop.

“This reflects a slow but steady increase in demand from homebuyers as well as increasing confidence of homebuilders,” Ralph McLaughlin, chief economist for real estate website Trulia, told the Wall Street Journal. “It is also a positive sign for the U.S. economy headed into 2016, as new-home sales lead to new construction and consumer demand for housing-related goods and services.”

Looking at price and supply of new homes, the median price for new homes sold in February hit $301,400 and the average price was $348,900. Reassuringly, the inventory of new homes was on the rise, with the number of new homes for sale hitting 240,000 units at the end of February, which represented a 5.6-month supply. This is just shy of a 6-month supply, which economists consider a balanced market.

Initial Jobless Claims

Layoffs were up, but well below market expectations. First-time claims for unemployment benefits filed by the newly unemployed during the week ending March 19 grew to 265,000, a gain of 6,000 claims from the preceding week’s total of 259,000, the Employment and Training Administration reported last week. This was under market expectations of 268,000 claims, and still well below the 300,000-claim mark that economists consider representative of a growing job market.

“There’s a cautious optimism,” David Sloan, senior economist at 4Cast Inc., told the Bloomberg news service in regard to sentiment among hiring managers. “Things may slow a little as the year goes, but we’ve got a pretty healthy picture in the labor market.”

The four-week moving average — considered a more stable measure of lay-off activity — was slightly notched up to 259,750, an increase of just 250 claims from the prior week’s average of 259,500.

This week we can expect:

  • Monday — Personal incomes and spending for February from the Bureau of Economic Analysis.
  • Tuesday — Consumer confidence for March from The Conference Board.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration.
  • Friday — March unemployment, payrolls, average workweek and hourly earnings from the Bureau of Labor Statistics; car and truck sales for March from the auto manufacturers; consumer sentiment for March from the University of Michigan and Thomson-Reuters Survey of Consumers; construction spending for February from the Census Bureau.