Last Week’s Economic News in Review (November 3rd, 2021)
November 3rd, 2021
New home sales continued to rise, while consumer confidence improved, and layoffs continued to fall.
New Home Sales
Sales of new, single-family homes grew to an annual rate of 800,000 in September, which was 13.9 percent up from August’s revised pace of 702,000, the Census Bureau and the Department of Housing and Urban Development reported last week.
September’s sales exceeded economists expectations of a smaller increase to an annual rate of 760,000 for the month, and marked a six-month high for new home sales. That said, when compared to the same period a year ago, September’s sales were 17.6 percent below September 2020’s pace of 971,000.
Looking at pricing, the median price for new single-family homes sold in September was $408,800, which was 1.8 higher than August’s revised median price of $401,500 and 18.6 percent higher than September 2020’s median price of $344,400.
Looking at inventory, the estimated number of new homes for sale at the end of September totaled 379,000, representing a 5.7-month supply at September’s sales rate.
“Limited existing inventory and low interest rates are keeping demand strong, and more potential buyers may be coming off the fence as they expect interest rates to rise in the future,” National Association of Home Builders Chairman Chuck Fowke noted in a public statement.
Consumer Confidence
After declining three months in a row, the Consumer Confidence Index ticked up to 113.8 in October, rising from 109.8 in September (a baseline of 100 was set in 1985), according to last week’s report from The Conference Board.
The Present Situation Index, which measures consumers outlook on current income, business and job market conditions, rose to 147.4 in October from 144.3 in September. The Expectations Index, which gauges consumers short-term outlook for the economy and their place in it, grew to 91.3 in October from 86.7 in September.
The percentage of consumers stating that business conditions were “good” ticked down to 18.6 percent in October from 19.1 percent in September. However, those reporting they felt business conditions were “bad” declined to 24.9 percent in October from 25.3 percent in September.
“Consumers appraisal of present-day conditions weakened further in January, with Covid-19 still the major suppressor,” noted Lynn Franco, senior director of Economic Indicators for The Conference Board, in comments accompanying the release. “Consumers expectations for the economy and jobs, however, advanced further, suggesting that consumers foresee conditions improving in the not-too-distant future. In addition, the percent of consumers who said they intend to purchase a home in the next six months improved, suggesting that the pace of home sales should remain robust in early 2021.”
“While short-term inflation concerns rose to a 13-year high, the impact on confidence was muted,” noted Lynn Franco, senior director of Economic Indicators for The Conference Board, in comments accompanying the release. “The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October – a sign that consumer spending will continue to support economic growth through the final months of 2021.
“Likewise, nearly half of respondents (47.6 percent) said they intend to take a vacation within the next six months – the highest level since February 2020, a reflection of the ongoing resurgence in consumers willingness to travel and spend on in-person services,” she added.
Initial Jobless Claims
In employment news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending October 23rd dropped to 281,000, a decline of 10,000 claims from the previous week’s revised total of 291,000, the Employment and Training Administration reported last week.
This was lower than economists expectations of a smaller decline in initial jobless claims to 289,000, and marked the lowest level for initial claims since March 14, 2020’s weekly claims of 256,000. Economists consider anything lower than 300,000 claims a sign of a growing job market.
The four-week moving average, which is considered a more stable measure of jobless claims, fell to 299,250, which was 20,750 claims below the preceding week’s average of 320,000 claims. Like the weekly total, this was the lowest level for the four-week average since March 14, 2020, when it was 225,500.
This week, we can expect:
Monday – Construction spending for September from the Census Bureau and Department of Housing and Urban Development.
Wednesday – Factory orders for September from the Census Bureau.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; trade deficit for September from the Bureau of Economic Analysis.
Friday – Consumer credit for September from the Federal Reserve; payrolls, unemployment rate and hourly earnings for October from the Bureau of Labor Statistics.
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