Sales of new homes dropped, while incomes declined and spending increased. Meanwhile, layoffs rose.
New Home Sales
Sales of new, single-family homes declined to an annual rate of 999,000 in October, which was 0.3 percent below September’s pace of 1 million, the Census Bureau and the Department of Housing and Urban Development reported last week.
When compared to the same period a year ago, October’s sales were a whopping 41.5 percent higher than October 2019’s rate of 706,000.
“Buyer traffic remained strong in October even as the country’s attention was focused on the elections and policy issues going into 2021,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB), in a public statement. “Mortgage rates remain low, and builder confidence is at an all-time high, indicating that demand remains steady and sales will remain solid.”
Looking at price, the median price for new single-family homes sold in October was $330,600, which was 6.02 percent higher than October 2019’s median price of $311,800.
In terms of inventory, the estimated number of new homes for sale at the end of October totaled 278,000, representing a 3.3-month supply at October’s sales rate.
Incomes and Spending
Personal incomes decreased $130.1 billion, a 0.7 percent drop, in October, according to last week’s report from the Bureau of Economic Analysis. Disposable personal income (DPI; income after taxes) declined $134.8 billion, a 0.8 percent fall.
At the same time, personal consumption expenditures (PCE) increased $70.9 billion, a 0.5 percent advance. October’s PCE gains reflected an increase of $12.7 billion in spending for goods and a $48.7 billion increase in spending in services. Spending on recreational goods and vehicles led goods spending growth, while healthcare spending increases led services spending gains.
Initial Jobless Claims
Looking at employment news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending November 21st grew to 778,000, which was 30,000 claims higher than the preceding week’s total of 748,000, the Employment and Training Administration reported last week.
The four-week moving average – regarded as a more reliable measure of jobless claims – rose to 748,500 claims, which was 5,000 claims up from the previous week’s average of 743,500.
The ongoing high layoff levels continued to worry economists.
“If claims continue to move higher in the coming weeks, the chances of the U.S. economy tipping back into a contraction will intensify,” said Eliza Winger, an associate economist with Bloomberg.
This week, we can expect:
- Tuesday – Construction spending for October from the Census Bureau and Department of Housing and Urban Development; car and truck sales for November from the auto manufacturers.
- Thursday – Initial jobless claims for last week from the Employment and Training Administration.
- Friday – Payrolls, unemployment, and hourly earnings for November from the Bureau of Labor Statistics; factory orders and balance of trade for October from the Census Bureau.
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