March 1, 2017
Existing home sales kicked off 2017 with a roaring start, while new home sales grew at a lower than anticipated rate, and layoffs were up.
Existing Home Sales
Sales of existing homes for January grew to their fastest pace in nearly a decade, according to data released by the National Association of Realtors last week.
Total sales of existing single-family homes, townhomes, condos and co-ops, grew 3.3 percent to reach an annual rate of 5.69 million for the month. Compared annually, January's sales were up 3.8 percent from January 2016’s 5.48 million. This was the strongest monthly performance since February 2007’s rate of 5.79 million.
“Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” said NAR Chief Economist Laurence Yun. “Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.”
January’s median price for existing homes of all types hit $228,900, which compared annually, was 7.1 percent higher than January 2016’s $213,700. This marked the 59th straight month of year-over-year price gains.
Looking at supply, the inventory of existing homes for sale at the end of January grew 2.4 percent to 1.69 million homes for sale, representing a 3.6-month inventory of homes for sale at January’s sales rate. That said, this was still down 7.1 percent from January 2016’s 1.82 million, marking the 20th straight month of year-over-year inventory contractions.
New Home Sales
Turning to new real estate, sales of new single-family homes during January grew 3.7 percent to an annual rate of 555,000, the Census Bureau and the Department of Housing and Urban Development reported last week. Compared annually, January’s sales were 5.5 percent higher than January 2016’s pace of 526,000.
While up for the month, January’s sales were below market expectations, which had anticipated a surge to a rate of 566,000. Jonathan Smoke, Chief Economist of Realtor.com, chalked up the slowdown in growth rate to various, supply-side factors impacting home builders, such as regulatory burdens, labor shortages, and a lack of capital and financing.
“Those reasons are partly why new homes cost 37 percent more than existing homes, based on differences in median prices, and that difference is keeping the new home market from growing to take advantage of strong demand,” he said. “Consumers who have the luxury of being able to wait for a new home to be built and pay a little more can avoid the cutthroat competition we’re seeing for existing homes — but lots of people don’t have that option.”
The median sales price for new houses sold in January was $312,900, and the average sales price was $360,900. Looking at inventory, the supply of new homes for sale at the end of January totaled 265,000, representing a 5.7-month supply at January’s sales pace.
Initial Jobless Claims
First-time claims for unemployment benefits filed by the recently laid off grew more than expected. Initial claims filed during the week ending February 18 hit 244,000, a gain of of 6,000 claims over the preceding week’s total of 238,000, the Employment and Training Administration reported last week. While up, initial claims remained well below the 300,000-claim mark, a level economists consider indicative of a growing job market.
The four-week moving average — considered a more stable measure of layoffs — dipped to 241,000, a decline of 4,000 claims from the prior week’s average of 245,000. This marked the lowest average since the week of July 21, 1973’s average of 239,500.
This week, we can expect a light calendar of economic reports, due to the holidays:
Monday — Durable goods orders for January from the Census Bureau.
Tuesday — Second estimate of fourth quarter gross domestic product from the Bureau of Economic Analysis; consumer confidence for February from The Conference Board.
Wednesday — Personal incomes and spending for January from the Bureau of Economic Analysis; construction spending for January from the Census Bureau; car and truck sales for February from the auto makers.
Thursday — Initial jobless claims for last week from the Employment and Training Administration.