Last Week’s Economic News in Review (October 27th, 2021)
October 27th, 2021
Sales of existing homes rebounded, while new home construction shrank, and layoffs continued dropping.
Existing Home Sales
After falling 2 percent in August, transactions of existing single-family homes, townhomes, condos and co-ops rose 7 percent in September to an annual rate of 6.29 million, according to last week’s report from the National Association of Realtors. September’s sales were slightly better than analysts’ expectations of an annual rate of 6.1 million, but compared to the same period a year ago, September’s sales were 2.3 percent lower than September 2020’s pace of 6.44 million.
“Some improvement in supply during prior months helped nudge up sales in September,” Lawrence Yun, NAR’s chief economist, noted in comments accompanying the association’s report. “Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year.”
Looking at inventory, while previous months might have aided September’s sales, supplies for the month tightened. The number of existing homes for sale at the end of September was 1.27 million units, which represented a 2.4-month supply at September’s sales pace. August’s inventory was down 0.8 percent from August’s inventory and was 13 percent below August 2020’s supply of 1.48 million units.
September’s median price for all existing homes of all types was $352,800, which was 1.09 percent down from August’s median of $356,700. That said, September’s median price was 13.3 percent higher than September 2020’s median price of $311,500. This was the 115th consecutive month of year-over-year price gains.
Housing Starts
When it comes to the creation of new housing inventory, starts on the construction of private housing in September fell to an annual rate of 1.55 million, which was 1.6 percent below August’s revised rate of 1.58 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, September’s starts were 7.4 percent above September 2020’s pace of 1.44 million.
Starts on single-family homes were virtually unchanged in September, hovering at an annual rate of 1.08 million, which was essentially the same in August. Starts on buildings with five units or more declined to an annual rate of 467,000, which was 5.1 percent below August’s pace of 492,000.
Meanwhile, building permits issued in September for the construction of private homes declined to an annual rate of 1.58 million, which was 7.7 percent below August\’s revised rate of 1.72 million. Permits for single-family homes ticked down to a rate of 1.04 million for the month, which was 0.9 percent down from August’s revised pace of 1.05 million. Permits issued for buildings with five units or more tumbled 21 percent to an annual rate of 498,000 in September after hitting a pace of 630,000 in August.
Initial Jobless Claims
In employment news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending October 16th declined to 290,000, which was 6,000 claims down from the preceding week’s revised total of 296,000, the Employment and Training Administration reported last week.
The decline not only put initial claims for the week below economists’ expectations for an increase to 300,000 claims, but also marked the lowest level for initial claims since March 14, 2020’s 256,000 claims. Furthermore, economists consider any level of first-time claims below 300,000 to indicate a growing job market.
The four-week moving average – regarded as a more stable barometer of jobless claims – fell to 319,750 claims, which was 15,250 claims below the previous week’s revised average of 335,000. This, too, marked the lowest level for this average since March 14, 2020, when it was 225,500.
This week, we can expect:
Tuesday – Consumer confidence for October from The Conference Board; new home sales for September from the Census Bureau and Department of Housing and Urban Development.
Wednesday – Durable goods orders for September from the Census Bureau; trade in goods for August from the Bureau of Economic Analysis.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; Third Quarter gross domestic product from the Bureau of Economic Analysis.
Friday – Personal incomes and spending for September from the Bureau of Economic Analysis.
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