March 31, 2021
Sales of existing and new homes both dropped while layoffs declined to their lowest level since the beginning of the pandemic.
Existing Home Sales
After two months of gains, existing home sales fell in February. Transactions of existing single-family homes, townhomes, condos and co-ops dropped 6.6 percent from January to an annual rate of 6.22 million, according to last week’s report from the National Association of Realtors. While down for the month, when compared to the same period a year ago, February’s sales were 9.1 percent higher than February 2020’s pace of 5.7 million.
Despite the drop, the housing market is still performing better than it was prior to the COVID-19 pandemic, according to NAR Chief Economist Lawrence Yun. That said, Yun did warn of a possible slowdown.
“I still expect this year’s sales to be ahead of last year’s, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy,” Yun explained. “Many Americans have been saving money, and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”
Looking at inventory, the number of existing homes for sale at the end of February was 1.03 million units, which represented a two-month supply at February’ sales pace. February’s inventory was essentially unchanged from January and was 29.5 percent below February 2020’s supply of 1.46 million units.
February’s median price for all existing homes of all types was $313,000, which marked a 15.8 percent increase over February’s 2020’s median price of $270,400. This was the 108th consecutive month of year-over-year gains. As prices continued to climb, Yun cautioned that home affordability was weakening and that more housing inventory “is the best way to address surging home costs.”
New Home Sales
Sales of new, single-family homes tumbled to an annual rate of 775,000 in February, which was 18.2 percent below January’s pace of 948,000, the Census Bureau and the Department of Housing and Urban Development reported last week. February’s sales were well under economists’ expectations of a drop to an annual rate of 870,000 for the month.
However, when compared to the same period a year ago, February’s sales were 8.2 percent over February 2020’s pace of 716,000.
Looking at pricing, the median price for new single-family homes sold in February was $349,400, which was 5.3 percent higher than February 2020’s median price of $331,800.
In terms of inventory, the estimated number of new homes for sale at the end of February totaled 312,000, representing a 4.8-month supply at February’s sales rate.
A few key factors impacted new home sales in February: harsh winter weather, tight inventory pushing prices higher, and high lumber prices further constricting inventory. That said, many economists predicted a rebound.
“With the number of willing buyers still running ahead of available homes for sale, the spring season is expected to bring additional energy to the new home market,” Realtor.com Senior Economist George Ratiu noted in a public statement.
Initial Jobless Claims
First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending March 20 dropped to 684,000, which was 97,000 claims down from the preceding week’s revised total of 781,000, the Employment and Training Administration reported last week.
This was the lowest point for jobless claims since the COVID-19 pandemic began.
“This is definitely a positive signal, and a move in the right direction,” High Frequency Economics’ Chief U.S. Economist Rubeela Farooqi told the New York Times.
Similarly, the four-week moving average – regarded as a more reliable measure of jobless claims – fell to 736,000 claims, which was 13,000 claims below the previous week’s revised average of 749,000.
This week, we can expect:
Tuesday – Consumer confidence for March from The Conference Board.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; car and truck sales for March from the auto manufacturers; construction spending for February from the Census Bureau and Department of Housing and Urban Development.
Friday – Payrolls, unemployment rate and hourly earnings for March from the Bureau of Labor Statistics.
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