August 26, 2020
Housing saw a surge with a significant jump in sales of existing homes and starts on the construction of new homes. That said, layoffs surged, as well.
Existing Home Sales
Sales of existing single-family homes, townhomes, condos and co-ops, jumped 24.7 percent in July to an annual rate of 5.86 million, the National Association of Realtors reported last week. This marked the second straight month of sizable sales gains, and when compared to the same period a year ago, July’s sales were up 8.7 percent over July 2019’s pace of 5.39 million.
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” NAR Chief Economist Lawrence Yun noted in comments accompanying the NAR release. “With the sizable shift in remote work, current homeowners are looking for larger homes, and this will lead to a secondary level of demand even into 2021.”
Looking at prices, July’s median existing-home price for all housing types hit $304,100, which was 8.5 percent higher than July 2019’s median of $280,400. This marked the 101st consecutive month of year-over-year gains, and the first time the national media surpassed $300,000.
In terms of inventory, the number of existing homes for sales at the end of July fell 2.6 percent from June to 1.5 million units, representing a 3.1-month supply at July’s sales pace. Compared to the same period a year ago, July’s inventory was 21.1 percent below July 2019’s supply of 1.9 million homes.
Starts on the construction of new homes shot up to an annual rate of 1,496,000 units, which was 22.6 percent higher than June’s pace of 1,220,000, the Census Bureau and the Department of Housing and Urban Development reported last week.
This represented the most significant monthly gain for housing starts since October 2016, and when compared to the same period a year ago was 23.4 percent higher than July 2019’s rate of 1,212,000.
July also set the fastest pace for housing starts since February 2020. With July’s gain, starts on new homes are just 4.5 percent below February’s rate of 1.567 million units.
Starts on single-family homes hit an annual rate of 940,000 in July, which was 8.2 percent above the revised June figure of 869,000. Starts on buildings with five units or more reached a pace of 547,000.
Initial Jobless Claims
In employment news, initial jobless claims filed by recently unemployed Americans during the week ending Aug. 15 grew to 1,106,000, a gain of 135,000 claims over the previous week’s 971,000 claims, the Employment and Training Administration reported last week.
The four-week moving average, which is considered a more stable measure of jobless claims, fell to 1,175,750, which was 79,000 claims below the preceding week’s average of 1,254,750 claims.
While the previous report gave room for optimism as it marked the first time that weekly claims totaled less than 1 million since COVID-19 first impacted the economy, the resumption of those million-plus levels quickly shut the door on that confidence.
“The labor market is a long way from being healthy,” Oxford Economics lead U.S. economist Nancy Vanden Houten stated in a client note.
This week, we can expect:
- Tuesday – Consumer confidence for August from The Conference Board; new home sales for July from the Census Bureau and Department of Housing and Urban Development.
- Wednesday – Durable goods orders for July from the Census Bureau.
- Thursday – Initial jobless claims for last week from the Employment and Training Administration.
- Friday – Personal incomes and spending for July from the Bureau of Economic Analysis.
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