Last Week’s Economic News in Review January 27, 2021

Existing home sales grew, as did housing starts. Meanwhile, layoffs declined, but remained at extremely high levels.

Existing Home Sales

Existing home sales rebounded in December with transactions of existing single-family homes, townhomes, condos and co-ops ticking up 0.7 percent from November to an annual rate of 6.76 million, according to last week’s report from the National Association of Realtors.

“Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic,” NAR Chief Economist Lawrence Yun noted in comments accompanying NAR’s report. “What’s even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market.”

Looking at price, December’s median price for all existing homes of all types was $309,800, which marked a 12.9 percent increase over December 2019’s median price of $274,500. This was the 106th consecutive month of year-over-year gains.

The number of existing homes for sale at the end of December dropped to 1.07 million units, which represented a 1.9-month supply at December’s sales pace. December’s inventory was 16.4 percent below November’s and 23 percent below December 2019’s supply of 1.39 million units.

Housing Starts

Starts on the construction of private housing in December reached an annual rate of 1.669 million, which was 5.8 percent over November’s rate of 1.578 million, according to last week’s report from the Census Bureau and Department of Housing and Urban Development. When compared to the same period a year ago, this was 5.2 percent higher than December 2019’s pace of 1.587 million.

Most notably, starts on single-family homes shot up to an annual rate of 1.338 million in December, which was 12 percent over November’s pace of 1.195 million. This was the highest increase since 2006 and further proof that while COVID-19 caused pandemonium in other sectors of the U.S. economy, housing remained surprisingly robust.

“We expect single-family construction to move up 9 percent in 2021 – a much-needed relief valve for homebuyers,” Danielle Hale, chief economist at Realtor.com, remarked to HousingWire. “While buyer demand has slowed since December, it remains notably higher than one year ago, giving builders a strong incentive to keep building.”

Stars on buildings with five units or more dropped to a rate of 312,000 in December, which was 15.2 percent lower than November’s rate of 368,000.

Initial Jobless Claims

First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending January 16th declined to 900,000, which was 26,000 claims down from the preceding week’s total of 926,000, the Employment and Training Administration reported last week.

The four-week moving average – regarded as a more reliable measure of jobless claims – grew to 848,000 claims, which was 23,500 claims over the previous week’s average of 824,500.

To give an idea of how bad layoffs continue to be, initial claims for this same period a year ago totaled just 282,000 (consistent weekly claims below 300,000 indicates a growing job market).

“It’s staggering, and it was worse than I thought,” Diane Swonk, chief economist for accounting firm Grant Thornton, told the New York Times. “This makes stimulus more urgent.”

This week, we can expect:

Tuesday – Consumer confidence for January from The Conference Board.

Wednesday – Durable goods order for December from the Census Bureaus.

Thursday – Initial jobless claims for last week from the Employment and Training Administration;     new home sales for December from the Census Bureau and Department of Housing and Urban     Development; fourth-quarter GDP from the Bureau of Economic Analysis; leading economic indicators   for December from The Conference Board.

Friday – Personal incomes and spending for December from the Bureau of Economic Analysis.

 

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Mission San Jose Mortgage
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