Sales of new homes hit their highest level in 10 months, while layoffs saw a sizable decline, and GDP continued to grow, but at a slower rate.
New Home Sales
Sales of new homes got a shot in the arm in December, with completed transactions of new single-family homes growing a healthy 10.8 percent to hit an annual rate of 544,000, according to last week’s report from the Census Bureau. Compared to a year ago, this was 9.9 percent higher than December 2014’s rate of 495,000.
This was the highest rate in 10 months, and many housing market watchers chalked it up to December’s relatively mild weather. All told, 2015 saw 501,000 new homes sold, which was 14.5 percent higher than 2014’s total of 437,000.
“This is a promising sign for the housing market as we move into 2016,” Genworth Mortgage Insurance Chief Economist Tian Liu told the New York Times. “We expect the strong increase in new-home sales to continue as the fundamentals in the housing market remain strong and newer vintage homes are in short supply.”
Looking at price, the median sales price of new homes sold in December was $288,900 and the average sales price was $346,400. In terms of inventory, there were 237,000 new homes for sale at the end of December, representing a 5.2-month supply at December’s sales pace.
Initial Jobless Claims
After a couple weeks of growth, layoffs finally dropped back down. First-time claims for unemployment benefits filed during the week ending January 23 fell to 278,000, a sizable decline of 16,000 claims from the preceding week’s total of 294,000, the Employment and Training Administration reported last week.
This was welcome news, as layoffs were skirting near the 300,000-claim mark that economists generally consider the difference between a growing job market and a stalled-out job sector. Claims weren’t back to the four-decade lows they were at six weeks ago, but the numbers seem to be evening out.
“The holiday and bad weather may have complicated things,” 4Cast Inc. Senior Economist David Sloan told Bloomberg. “There’s no sign anything has changed dramatically. I don’t think companies are rushing to lay off workers.”
The four-week moving average — considered a more stable measure of layoffs — dipped to 283,000 claims, a decline of 2,250 claims from the prior week’s average of 285,250.
Gross Domestic Product
The advance figure for real gross domestic product for the fourth quarter grew at an annual rate of 0.7 percent, according to last week’s report from the Bureau of Economic Analysis. This was slightly short of analysts’ expectations for a 0.8 percent increase and was off-track from the third quarter’s 2 percent gain. All told, the economy grew 2.4 percent for 2015, which was the same rate as 2014, according to the bureau.
The bureau chalked up the increase to a combination of personal consumption expenditures, residential fixed investment, and federal government spending. Those factors were offset by poor performance in private inventory investment, exports, and nonresidential fixed investments.
Early GDP numbers are based on incomplete data and subject to revisions. More solid numbers will come in during February and March.
“It has been clear for a while that the first estimate of Q4 GDP would be sluggish, but the unreliability of this data means the primacy of the labor market data in the Fed’s thinking is unchallenged,” Pantheon Macroeconomics Economist Ian Shepherdson wrote in a note to clients.
This week we can expect:
Monday — Personal incomes and spending for December from the Bureau of Economic Analysis; December construction spending from the Census Bureau.
Tuesday — Car and truck sales for January 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; factory orders for December form the Census Bureau.
Friday — January unemployment rate, payrolls, hourly earnings and average workweek from the Bureau of Labor Statistics; December’s trade balance from the Census Bureau and Bureau of Economic Analysis; consumer credit for December from the Federal R