New home sales were down but outpaced market expectations, while lay-offs crept up but remained well inside safe territory, and personal incomes were up.
New Home Sales
The big news last week was new home sales for August, which hit an annual rate of 609,000, according to last week’s joint report from the Census Bureau and the Department of Housing and Urban Development.
This marked a 7.6 percent drop from July’s rate of 659,000, but was 13,000 units higher than the 585,000-unit pace the market had expected. Compared to last year’s sales for the same time period, August’s sales were 20.6 percent over August 2015’s rate of 505,000.
Looking at price and supply, August’s median sales price for new homes was $284,000, and the average price was $353,600. The inventory of new home for sales at the end of August was 235,000, which represented a 4.6-month supply at August’s sales rate. Once again, many economists pointed at narrow inventory as a cause of inflated prices, which ultimately cut into sales volume.
“After a solid July, new home sales came back to earth a little bit in August, though last month’s data still offer some decent news for the market,” Zillow Chief Economist Svenja Gudell told Housingwire. “… Builders have been focused on the higher end of the market for much of the past few years, but there are concrete signs emerging that more attention is now being paid to the lower end — new homes priced in the $200,000-$299,000 range, just below the median price, saw the biggest jump in sales activity.”
Initial Jobless Claims
First-time claims for unemployment benefits filed by the newly unemployed during the week ending Sept. 24 hit 254,000, a gain of 3,000 claims over the preceding week’s total of 251,000, the Employment and Training Administration reported last week. The gain was much lower than the increase to 259,000 claims that job market watchers had expected.
The four-week moving average — considered a more stable measure of lay-offs — actually dipped to 256,000 claims, a loss of 2,250 claims from the prior week’s average of 258,250.
This marked the 82nd straight week that claims have been below the 300,000-claim mark that economists consider indicative of a growing job market. This is the longest such streak since 1970.
“It is difficult to communicate just how extraordinary these data have been over the past year,” Stephen Stanley chief economist of Amherst Pierpont Securities wrote in a public client statement.
Personal Incomes and Spending
Personal incomes grew 0.2 percent, or $39.3 billion, in August, the Bureau of Economic Analysis reported last week, which was in line with market expectations of 0.2 percent growth. Disposable personal income (DPI; income after taxes) grew by 0.2 percent, or $31.9 billion.
Personal consumption expenditures (PCE) increased $6.2 billion (less than 0.1 percent). Personal outlays — purchases of durable and non-durable goods — increased $6.1 billion in August. Personal saving grew to $807.6 billion in August from July’s $781.9 billion and the personal saving rate —savings as a percentage of DPI — ticked up to 5.7 percent from 5.6 percent in July.
This week we can expect:
- Monday — Construction spending for August from the Census Bureau; car and truck sales for August from the auto manufacturers.
- Wednesday — Balance of trade for August from the Census Bureau and the Bureau of Economic Analysis; August factory orders from the Census Bureau.
- Thursday — Initial jobless claims for last week form the Employment and Training Administration.
- Friday — Consumer credit for August from the Federal Reserve; wholesale inventories for August from the Census Bureau; September payrolls, unemployment rate, hourly earnings and average workweek from the Bureau of Labor Statistics.