The pace of existing home sales fell, while housing starts were down, and lay-offs continued to decline.
Existing Home Sales
Existing home sales slowed for the second month in a row, falling 0.9 percent to an annual rate of 5.33 million in August, according to last week’s report from the National Association of Realtors.
August’s decline put transactions of single-family homes, town homes, condominiums and co-ops at their second-lowest pace of 2016. When compared annually, existing home sales are 0.8 percent higher than August 2015’s 5.29 million pace.
So why were sales slipping? NAR Chief Economist Lawrence Yun chalked it up to poor inventory pumping up prices beyond small gains in the labor market and incomes.
“Healthy labor markets in most of the country should be creating a sustained demand for home purchases,” Yun said. “However, there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold.”
Where inventory is concerned, the supply of homes available at the end of August dropped 3.3 percent from July to 2.04 million units for sale, representing a 4.6-month supply at the August sales pace. August’s inventory was 10.1 percent lower than the 2.27 million-unit inventory from the same period a year ago.
Not surprisingly, that shrinking inventory continues to push prices upward. August’s median price for existing homes of all types hit $240,200, which was 5.1 percent higher than August 2015’s $228,500.
And looking at real estate inventory, starts on construction of new homes during August fell 5.8 percent to an annual rate of 1.142 million, the Census Bureau reported last week.
That said, when compared annually, housing starts were 0.9 percent higher than August 2015’s pace of 1.132 million. Starts on single-family homes in August fell 6 percent to an annual a rate of 722,000.
Building permits issued in August for the construction of homes fell 0.4 percent to an annual rate of 1.139 million. Compared annually, August’s permits were 2.3 percent below August 2015’s rate of 1.166 million.
Permits issued in August for building single-family homes hit a rate of 737,000; this was actually 3.7 percent over July’s figure of 711,000.
Initial Jobless Claims
Switching to the job market, lay-offs were down. First-time claims for unemployment benefits filed during the week ending September 17 fell to 252,000, a decline of 8,000 claims from the preceding week’s total of 260,000, the Employment and Training Administration reported last week.
The four-week moving average — considered a more stable measure of lay-offs — dropped to 258,500 claims, a fall of 2,250 claims from the prior week’s average of 260,750. All told, this marked the 81st straight week of jobless claims falling below 300,000, a level that most economists consider indicative of a growing job market.
This week we can expect:
- Monday — New home sales for August from the Census Bureau.
- Tuesday — Consumer confidence for September from The Conference Board.
- Wednesday — Durable goods orders for August from the Census Bureau; second quarter GDP, third estimate, from the Bureau of Economic Analysis.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration.
- Friday — Personal incomes and spending for August from the Bureau of Economic Analysis; consumer sentiment for September from the University of Michigan Survey of Consumers.