September 16, 2020
New home sales enjoyed a solid rebound, while layoffs declined, but remained at historically high levels. Meanwhile, consumers’ outlook worsened.
Sales of new single-family homes shot up to an annual rate of 901,000 in July, which was 13.9 percent higher than June’s pace of 791,000, according to last week’s joint report from the Census Bureau and Department of Housing and Urban Development.
This was much stronger than the rate of 790,000 that economists had forecasted, and was the highest level for new home sales since 2006. Compared to the same period a year ago, July’s new home sales were 36.3 percent higher than July 2019’s pace of 661,000.
Looking at price, the median price for new homes sold in July fell to $330,600, which was 1.89 percent down from June’s median prices of 337,000.
In terms of inventory, the number of new homes for sale at the end of July came to 299,000, which represented a four-month supply at July’s sales rate.
Wholesale inventories fell to $632.3 billion in July, which was 0.3 percent below June level, the Census Bureau reported last week. This was slightly worse than the 0.1 percent decline that economists had forecast on average. Compared to the same period a year ago, July’s wholesale inventories were down 5.6 percent from July 2019.
It’s important to watch wholesale inventories because they represent the demand that wholesalers anticipate from their retailer customers. This, in turn, gives us an idea of whole retail spending will fare in the future.
While inventories decline, sales for wholesalers hit $479.2 billion in July, which marked a 4.6 percent gain over June. That said, when compared to the same period a year ago, wholesale sales fell 4 percent from July 2019.
July’s wholesale activity put the inventories-to-sales ratio for the month at 1.32. For comparison, July 2019’s ratio was 1.34.
Initial Jobless Claims
First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending Sept. 5 held at 884,000, which was unchanged from the preceding week’s total of 884,000, the Employment and Training Administration reported last week.
The four-week moving average – regarded as a more reliable measure of jobless claims – fell to 970,750 claims, which was 21,750 claims below the previous week’s average of 992,500.
It’s important to remember that the Labor Department changed how it seasonally adjusts initial jobless claims with the week before last’s report, so we can’t draw true, “apples to apples” comparisons to prior reports. What we do know through these claims numbers that layoffs are not declining in the way we’d like to see.
“It is especially concerning that the pace of layoffs has not slowed more materially even though the economy has reopened more fully, and more and more businesses have come back online,” Rubeela Farooqi, chief U.S. economist for High Frequency Economics, wrote in a public statement. “The risk now comes from another round of virus outbreaks in coming weeks. The labor market remains at risk of permanent damage which will prolong the path back to pre-pandemic levels.”
- Tuesday – Import prices for August from the Bureau of Labor Statistics; industrial production and capacity utilization for August from the Federal Reserve.
- Wednesday – Retail sales and business inventories for August from the Census Bureau
- Thursday – Initial jobless claims for last week from the Employment and Training Administration; housing starts for August from the Census Bureau and Department of Housing and Urban Development.
- Friday – Consumer sentiment for September from the University of Michigan Surveys of Consumers.
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