News & Events

Economic Advisor: August 29, 2018
August 28, 2018


 

Sales of existing and new homes continued to fall, while layoffs declined.

Existing Home Sales

Sales of existing homes fell for the fourth month in a row to their lowest rate in more than two years. Total transactions of single-family homes, townhomes, condominiums and co-ops, dropped 0.7 percent to an annual rate of 5.34 million in July from 5.38 million in June, the National Association of Realtors reported last week.

This was well below the 5.4 million pace that economists had projected, and when compared to last year, July’s sales were 1.5 percent below July 2017’s pace. Once again, overly high prices were to blame, according to NAR Chief Economist Lawrence Yun.

“Led by a notable decrease in closings in the Northeast, existing home sales trailed off again last month, sliding to their slowest pace since February 2016 at 5.21 million,” Yun said. “Too many would-be buyers are either being priced out or are deciding to postpone their search until more homes in their price range come onto the market.”

Looking at existing home prices, July’s median price for all housing types hit $269,600, which was 4.5 percent higher than July 2017’s median price of $258,100. This marked the 77th consecutive month of year-over-year price gains.

Looking at supply, the number of existing homes for sale at the end of July dropped 0.5 percent to 1.92 million units, representing a 4.3-month supply at July’s sales rate.

New Home Sales

Sales of new single-family homes in July 2018 fell to an annual rate of 627,000, which was 1.7 percent below June’s pace of 638,000, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development.

July’s sales pace was the lowest in nine months and well below the rate of 640,000 that economists had forecasted. That said, when compared to the same period a year ago, July’s sales were 12.8 percent higher than July 2017’s rate of 556,000.

Looking at price, the median sales price of a new home sold in July 2018 was $328,700, and the average price came in at $394,300. Looking at inventory, the number of new homes for sale at the end of July totaled 309,000, representing a 5.9-month supply at July’s sales pace.

Initial Jobless Claims

Layoffs continued to fall with first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending August 18 ticking down to 210,000, a dip of 2,000 claims from the preceding week’s total of 212,000, the Employment and Training Administration reported last week. This was welcome news given that the market had expected initial claims to increase to 215,000.

Meanwhile, the four-week moving average — regarded as a more reliable measure of initial jobless claims — notched down to 213,750, a drop of 1,750 claims from the prior week’s average of 215,500. Last week’s report also marked the 181st week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

 

  • Tuesday — Consumer Confidence Index for August from The Conference Board.
  • Wednesday — Revised second quarter gross domestic product from the Bureau of Economic Analysis.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; personal incomes and spending for July from the Bureau of Economic Analysis.
  • Friday — Consumer sentiment for August from the University of Michigan Surveys of Consumers.

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