News & Events

Economic Advisor: March 28, 2018
March 28, 2018


 

Existing home sales reversed a downward trend, but new home sales continued to fall. Meanwhile, layoffs increased slightly.

Existing home sales rallied

Despite consistently low inventory levels and faster price growth, existing-home sales bounced back in February after two straight months of declines, according to the National Association of Realtors. Sizeable sales increases in the South and West offset declines in the Northeast and Midwest.

Transactions of existing single-family homes, townhomes, condominiums and co-ops, increased three percent to hit an annual rate of 5.54 million in February, the National Association of Realtors reported last week. Compared to the same period last year, sales were up 1.1 percent from February 2017.

“The very healthy U.S. economy and labor market are creating a sizeable interest in buying a home in early 2018,” NAR Chief Economic Lawrence Yun reported. “However, even as seasonal inventory gains helped boost sales last month, home prices — especially in the West — shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

Looking at price, February’s median price for existing homes of all housing types grew to $241,700, which was up 5.9 percent from February 2017’s median price of $228,200. This marked the 72nd consecutive month of monthly year-over-year price increases.

Looking at supply, the pool of existing homes at the end of February grew 4.6 percent to 1.59 million units for sale, representing a 3.4-month supply at February’s sales pace. Compared to last year, February’s inventory was down 8.1 percent from February 2017’s 1.73 million-homes supply.

New Home Sales

Meanwhile, sales of new single-family homes continued to fall in February, but not as sharply as they did in January. New home sales fell to an annual rate of 618,000 for the month, which was 0.6 percent below January’s revised rate of 622,000, according to last week’s joint report from the Census Bureau and the Department of Housing and Urban Development.

While down from last month, when compared to the same period last year, February’s sales were 0.5 percent higher than February 2017’s rate of 615,000. That said, this report does mark a three-month decline.

“After a third bad month in a row, the haltingly progressive, two-steps-forward, one-step-back pattern the new home sales market has been in for much of the past year is in danger of reversing itself,” Zillow Senior Economist Aaron Terrazas wrote in a public statement.

Looking at price, the average price for new homes sold in February was $376,700 and the median sales price was $326,800. Looking at inventory, the estimated number of new homes for sale at the end of February totaled 305,000, which represented a 5.9-month supply at February’s sales pace.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending March 17 grew to 229,000, an increase of 3,000 claims from the prior week’s total of 226,000, according to last week’s report from the Employment and Training Administration.

The four-week moving average, which is considered a more stable measure of jobless claims, notched up to 223,750, a gain of 2,250 claims from the preceding week’s average of 221,500 claims.

This latest report marked the 159th 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 the Virgin Islands and Puerto Rico.

This week, we can expect:

  • Tuesday — Consumer confidence for March from The Conference Board.
  • Wednesday — Fourth quarter GDP from the Bureau of Economic Analysis.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; personal incomes and spending for February from the Bureau of Economic Analysis; and consumer sentiment for March from the University of Michigan Surveys of Consumers.

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