News & Events

Economic Advisor: January 31, 2018
January 31, 2018


 

Existing home sales fell and new home sales tumbled. Meanwhile, lay-offs increased.

Existing Home Sales

Sales of existing single-family homes, townhomes, condominiums and co-ops fell 3.6 percent in December to an annual rate of 5.57 million, the National Association of Realtors reported last week. That said, sales were up 1.1 percent for the year, marking 2017 as the best year for existing home sales in 11 years.

“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” noted NAR Chief Economist Lawrence Yun. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.

“Closings scaled back in most areas last month for this same reason,” he continued. “Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.”

Looking at affordability, December’s median price for existing homes of all types grew to $246,800, which marked a 5.8 percent gain over December 2016’s $233,300. This was the 70th consecutive month of year-over-year increases.

In terms of supply, December’s pool of existing homes for sale fell 11.4 percent to 1.48 million units, amounting to a 3.2-month supply at December’s sales pace. This was 10.3 percent down from December 2016’s 1.65 million homes for sale, with unsold inventory at its lowest point since NAR began tracking it in 1999.

New Home Sales

Sales of new, single-family homes suffered their biggest fall since August 2016, tumbling 9.3 percent to an annual rate of 625,000, according to last week’s joint report from the Census Bureau and the Department of Housing and Urban Development. That said, compared to the same period last year, December’s performance was 14.1 percent over December 2016’s pace of 548,000.

Housing market watchers had anticipated a fall from November’s strong showing, but not this big (average forecasts put the projected rate at 679,000). They chalked up December’s unexpectedly poor performance to December’s unseasonably cold weather.

Looking at price, December’s average sales price for new homes was $398,900 and the median sales price was $335,400. In terms of inventory, the estimated number of new homes for sale at the end of December was 295,000, which represented a of 5.7-month supply at December’s sales rate.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending Jan. 20 increased to 233,000 claims, a gain of 17,000 claims over the previous week’s total of 216,000, according to last week’s report from the Employment and Training Administration. While up, this was better than market expectations of 240,000 jobless claims for the week.

The four-week moving average, which is considered a more stable measure of jobless claims, ticked down to 240,000, which was 3,500 claims lower than the preceding week’s average of 243,500 claims.

This latest report marked the 151st straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market. The Administration added that it continues to experience hurricane-related reporting difficulties in Puerto Rico and the Virgin Islands.

This week, we can expect:

  • Monday — Personal incomes and spending for December from the Census Bureau.
  • Tuesday — Consumer confidence for January from The Conference Board.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; construction spending for December from the Census Bureau; car and truck sales for January from the auto manufacturers.
  • Friday —Payrolls, unemployment rate, average workweek and hourly earnings for January from the Bureau of Labor Statistics; consumer sentiment for January from the University of Michigan Surveys of Consumers; Factory orders for December from the Census Bureau.

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