News & Events

Economic Advisor: May 4, 2017
May 4, 2017


 

New home sales hit an eight-month high, layoffs saw an unexpected upturn, and durable goods orders posted moderate gains.

New Home Sales

Sales of new single-family homes grew 5.8 percent in March to reach an annual rate of 621,000, according to last week’s joint report from the Census Bureau and the Department of Housing and Urban Development. March’s sales were well above market expectations of 580,000, and marked the highest monthly sales in eight months. Compared to last year, March’s sales were 15.6 percent higher than March 2016’s pace of 537,000.

Looking at price, the median sales price for new homes sold during March came in at $315,100, and the average sales price totaled $388,200. In terms of inventory, the estimated number of new homes for sale at the end of March totaled 268,000, which represented a 5.2-month supply at March’s sales rate.

“The housing market continues to look quite good,” PNC Financial Services Group Chief Economist Gus Faucher told the Reuters news service. “Consumers also have more jobs and are getting higher wages, so they will likely increase their spending this year.”

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly laid off during the week ending April 22 took an unexpected jump up to 257,000, a sizable increase of 14,000 claims from the preceding week’s total of 243,000, the Employment and Training Administration reported last week. The figure was a good deal higher than the 245,000 claims the market had expected.

“The weekly jobless claims suggest the labor market is tight as a drum for this cycle anyway, with further improvement unlikely, now that all those left unemployed in the wake of the recession and financial crisis have found work,” MUFG Union Bank Economist Chris Rupkey told Business Insider.

The four-week moving average — considered a more stable measure of jobless claims — ticked down to 242,250, a dip of 500 claims from the preceding week’s average of 242,750. The key is that jobless claims are in their 112th week below 300,000, a sign that economists consider an indicator of a healthy job market.

Durable Goods Orders

New orders for manufactured durable goods grew 0.7 percent in March to reach $238.7 billion, the Census Bureau reported last week. This marked the third straight month durable goods orders saw a gain. That said, the month’s performance was off the mark, following up February’s 2.3 percent increase. March’s 0.7 percent increase was also well below the 1.4 percent gain the market had anticipated.

The big driver for March’s gains was the volatile transportation category. Transportation equipment grew 2.4 percent to $83.3 billion for the month. Excluding transportation, new orders actually dropped 0.2 percent, and stripping out defense — another volatile category — new durable goods orders notched up 0.1 percent.

This week, we can expect:

  • Monday — Personal incomes and spending for March from the Bureau of Economic Analysis; construction spending for March from the Census Bureau.
  • Tuesday — Car and truck sales for April from the auto manufacturers.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; factory orders and balance of trade for March from the Census Bureau.
  • Friday — Consumer credit for March from the Federal Reserve; unemployment rate, payrolls, average workweek and hourly earnings for April from the Bureau of Labor Statistics.

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