Last Week’s Economic News in Review (July 28th, 2021)
July 28th, 2021
Existing home sales grew, as did housing starts. However, building permits were down, and layoffs were up.
Existing Home Sales
Transactions of existing single-family homes, townhomes, condos and co-ops rose 1.4 percent in June to an annual rate of 5.86 million, according to last week’s report from the National Association of Realtors. Compared to the same period a year ago, June’s sales were 22.9 percent higher than June 2020’s pace of 4.77 million.
“Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales,” Lawrence Yun, NAR’s chief economist, noted in comments accompanying the association’s report. “Home sales continue to run at a pace above the rate seen before the pandemic.”
Looking at inventory, the number of existing homes for sale at the end of June was 1.25 million units, which represented a 2.6-month supply at June’s sales pace. June’s inventory was up 3.3 percent from May’s inventory but was 18.8 percent below June 2020’s supply of 1.54 million units.
June’s median price for all existing homes of all types was $363,300, which was 23.4 percent higher than June 2020’s median price of $294,400. This was the 112th consecutive month of year-over-year gains.
Housing Starts
Starts on the construction of private housing in June rose to an annual rate of 1,64 million, which was 6.3 percent over May’s revised rate of 1.54 million, according to last week’s report from the Census Bureau and Department of Housing and Urban Development.
June’s starts were also over economists’ forecasts of a pace of 1.59 million, and when compared to the same period a year ago, were 29.1 percent over June 2020’s pace of 1.27 million. Starts on single-family homes increased to an annual rate of 1.16 million in June, which was 6.4 percent above May’s revised pace of 1.09 million.
Meanwhile, building permits issued in June for the construction of private homes dipped to an annual rate of 1.59 million, which was 5.1 percent under May’s revised rate of 1.68 million. Permits for single-family homes declined to a rate of 1.06 million for the month, which was 6.3 percent down from May’s revised pace of 1.13 million.
At the moment, all eyes are on homebuilders. Lumber prices have begun declining, so they can work to expand inventory and meet still-growing demand. At the same time, they don’t want too much inventory when winter rolls around, which is one reason why permits declined.
“Builders are grappling with whether to ramp up inventory and pass lower prices to consumers, or take advantage of the current opportunity to offset last year’s setbacks by boosting profit margins,” Realtor.com Senior Economist George Ratiu told MarketWatch.
Initial Jobless Claims
First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending July 17th rose to 419,000, which was 51,000 claims above the preceding week’s revised total of 368,000, the Employment and Training Administration reported last week.
The four-week moving average – regarded as a more reliable measure of jobless claims – ticked up to 385,250 claims, which was 750 claims over the previous week’s revised average of 384,500.
“The rise in jobless claims this week tells us that the labor market’s troubles are not completely behind us and the Delta variant may yet throw a monkey wrench into the economic recovery from the shortest recession in American history,” FWDBONDS LLC Chief Economist Christopher Rupkey told the Reuters news service.
This week, we can expect:
Monday – New home sales for June from the Census Bureau and Department of Housing and Urban Development.
Tuesday – Durable goods orders for June from the Census Bureau; consumer confidence for May from The Conference Board.
Wednesday – Trade in goods for June from the Bureau of Economic Analysis.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; second-quarter gross domestic product from the Bureau of Economic Analysis.
Friday – Personal incomes and spending for June from the Bureau of Economic Analysis.
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