Last Week’s Economic News in Review-Nov 25 2020

Existing home sales continued to rise, while housing starts exceeded expectations, and layoffs increased.

Existing Home Sales

Sales of existing single-family homes, townhomes, condos and co-ops grew 4.3 percent in October to hit an annual rate of 6.85 million in October, according to last week’s report from the National Association of Realtors. October’s sales marked the fifth straight month of growth, and when compared to the same period a year ago, were 26.6 percent higher than October 2019’s rate of 5.41 million.

The housing sector continues to perform surprisingly well considering how hard COVID-19 shutdowns have impacted other sectors, noted NAR Chief Economist Lawrence Yun.

“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” Yun noted in comments accompanying NAR’s release. “The surge in sales in recent months has now offset the spring market losses.”

Yun added that he estimated that existing-home sales would rise by 10 percent to 6 million in 2021.

Looking at price, October’s median price for all existing homes of all types during October was $313,000, which marked a 15.5 percent increase over October 2019’s median price of $271,100. This was the 104th consecutive month of year-over-year gains.

The number of existing homes for sale at the end of October dropped to 1.42 million units, which represented a 2.5-month supply at October’s sale pace, which marked an all-time low for monthly housing supply. October’s inventory was 2.7 percent below September and 19.8 percent under October 2019.

Housing Starts

Of course, this isn’t to say the housing industry isn’t trying to increase inventory to meet demand. Starts on housing hit an annual rate of 1.530 million in October, which was 4.9 percent higher than September’s rate of 1.459 million, the Census Bureau and the Department of Housing and Urban Development reported last week.

October’s starts were well past economists’ expectations of an annual rate of 1.490 million, and when compared to the same period a year ago, were 14.2 percent higher than October 2019’s pace of 1.340 million.

Starts on single-family homes rose to an annual rate of 1.179 million in October, which was 6.4 percent above September’s rate of 1.108 million. That said, starts on buildings with five units or more fell to an annual rate of 334,000, which was 3.2 percent below September’s pace of 345,000.

“The million-dollar question remains how long the recovery in housing can continue as the shocking number of new coronavirus cases is paralyzing commerce in many parts of the country and leading to new restrictions and lockdowns,” MUFG Chief Economist Chris Rupkey told the Reuters news service.

Initial Jobless Claims

In related news, initial jobless claims filed by recently unemployed Americans during the week ending November 14th grew to 742,000, an increase of 31,000 claims from the previous week’s 711,000 claims, the Employment and Training Administration reported last week.

The four-week moving average, which is considered a more stable measure of jobless claims, dipped to 742,000, which was 13,750 claims below the preceding week’s average of 755,750 claims.

This was the first gain since the beginning of October and elicited some worry from economists.

“The latest data points to the fragility of the recovery as the COVID crisis worsens,” Oxford Economics Chief U.S. Economist Gregory Daco told the New York Times. “If this trend continues, it’s an indication that the labor market recovery has gone into reverse.”

This week, we can expect:

• Tuesday – Consumer confidence for November from The Conference Board.
• Wednesday – Initial jobless claims for last week from the Employment and Training Administration; durable goods for October from the Census Bureau; new homes sales for October from the Census Bureau and Department of Housing and Urban Development; personal incomes and consumer spending for October from the Bureau of Economic Analysis.

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