Existing home sales continued growing, while housing starts bounced back, and lay-offs reversed an earlier sharp increase with a sizable fall.
Existing Home Sales
Sales of existing homes kept their momentum in April with completed transactions of single-family homes, townhomes, condominiums and co-ops, rising 1.7 percent to an annual rate of 5.45 million for the month, the National Association of Realtors reported last week. Compared annually, April’s performance was 6 percent higher than April 2015.
That said, both prices and inventory were not ideally suited to driving increased sales volume. The median existing-home price for all existing homes in April grew a solid 6.3 percent from April 2015 to hit $232,500. Moreover, while housing inventory increased by 9.2 percent from March to hit 2.14 million existing homes available for sale at the end of April, this was still 3.6 percent lower than April 2015’s 2.22 million-unit supply. So what’s pushing volume up despite the price and supply barriers?
“Primarily driven by a convincing jump in the Midwest, where home prices are most affordable, sales activity overall was at a healthy pace last month as very low mortgage rates and modest seasonal inventory gains encouraged more households to search for and close on a home,” said NAR Chief Economist Lawrence Yun. “Except for in the West — where supply shortages and stark price growth are hampering buyers the most — sales are meaningfully higher than a year ago in much of the country.”
In new real estate, home construction bounced back with building permits issued in April for construction of private housing or all types growing a solid 3.6 percent to hit an annual rate of 1.11 million, according to last week’s report from the Census Bureau. That said, when compared annually, permits were 5.3 percent lower than April 2015’s rate. Permits issued in April for single-family homes grew 1.5 percent to hit a rate of 736,000.
Construction starts on private homes of all types in April grew 6.6 percent to an annual rate of 1.17 million. Compared to last year, this was 1.7 percent below April 2015’s pace. Starts on single-family homes in April grew 3.3 percent to a rate of 778,000.
While the news is encouraging, Steven Blitz, chief economist for ITG Investment Research LLC, warned that growth in new housing sector will likely be modest.
“We embrace the steady growth story, with single-family starts getting above the 800,000 level at some point this year, but not the myth of starts returning to the promised land of pre-recession levels of construction,” he told the Wall Street Journal.
Initial Jobless Claims
First-time claims for unemployment benefits filed by the newly unemployed during the week ending May 14 dropped to 278,000, a decline of 16,000 claims from the preceding week’s total of 294,000, the Employment and Training Administration reported last week. The market had expected claims to drop further to 275,000 claims, after a momentary trend of striking Verizon workers was to resolve itself.
“The bulk of the swings in the last two weeks reflected a one-off bump in claims in the state of New York,” Amherst Pierpont Securities Chief Economist Stephen Stanley told MarketWatch.
The four-week moving average — considered a more stable measure of layoff activity — grew to 275,750 claims, an increase of 7,500 claims from the prior week’s average of 268,250 claims. In any case, the week’s lay-offs marked the 63rd consecutive week of total initial jobless claims falling below 300,000, an indicator that economists consider representative of a growing job market.
This week we can expect:
- Tuesday — New home sales for April from the Census Bureau.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration; durable goods orders for April from the Census Bureau.
- Friday — First quarter GDP, second estimate from the Bureau of Economic Analysis; May consumer sentiment from the University of Michigan Survey of Consumers.