Last Week\’s Economic News in Review (September 29th, 2021)

September 29th, 2021

Sales of existing homes fell, while new home sales grew. Meanwhile, housing starts and building permits increased.

Existing

Home Sales

After rising 2 percent in July, transactions of existing single-family homes, townhomes, condos and co-ops fell 2 percent in August to an annual rate of 5.88 million, according to last week\’s report from the National Association of Realtors. Compared to the same period a year ago, August\’s sales were 1.5 percent lower than August 2020\’s pace of 5.97 million. August\’s sales were slightly better than analysts\’ expectations of an annual rate of 5.87 million.

“Sales slipped a bit in August as prices rose nationwide,” Lawrence Yun, NAR\’s chief economist, noted in comments accompanying the association\’s report. “Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory.”

Looking at inventory more closely, the number of existing homes for sale at the end of August was 1.29 million units, which represented a 2.6-month supply at August\’s sales pace. August\’s inventory was down 1.5 percent from July\’s inventory and was 13.4 percent below August 2020\’s supply of 1.48 million units.

August\’s median price for all existing homes of all types was $356,700, which was 0.8 percent down from July\’s median of $359,900. That said, August\’s median price was 14.9 percent higher than August 2020\’s median price of $310,400. This was the 114th consecutive month of year-over-year price gains.

New Home Sales

Sales of new, single-family homes grew to an annual rate of 740,000 in August, which was 1.5 percent up from July\’s revised pace of 729,000, the Census Bureau and the Department of Housing and Urban Development reported last week.

August\’s sales exceeded economists\’ expectations of a drop to an annual rate of 720,000 for the month, but when compared to the same period a year ago, August\’s sales were 24.3 percent below August 2020\’s pace of 977,000.

Looking at pricing, the median price for new single-family homes sold in August was $390,900, which was unchanged from July\’s revised median price of $390,900 and 16 percent higher than August 2020\’s median price of $336,900.

Looking at inventory, the estimated number of new homes for sale at the end of July totaled 367,000, representing a 6.2-month supply at July\’s sales rate.

Housing Starts

Starts on the construction of private housing in August rose to an annual rate of 1.61 million, which was 3.9 percent over July\’s revised rate of 1.55 million, according to last week\’s report from the Census Bureau and Department of Housing and Urban Development.

August\’s housing starts were well above economists\’ forecasts of a pace of 1.55 million, and when compared to the same period a year ago, August\’s starts were 17.5 percent over August 2020\’s pace of 1.379 million. That said, starts on single-family homes declined to an annual rate of 1.07 million in August, which was 2.8 percent down from July\’s revised pace of 1.1 million.

Meanwhile, building permits issued in August for the construction of private homes increased to an annual rate of 1.72 million, which was 6.0 percent over July\’s revised rate of 1.63 million. Permits for single-family homes rose to a rate of 1.05 million for the month, which was 0.6 percent up from July\’s revised pace of 1.04 million.

This week, we can expect:

Monday – Durable goods orders for August from the Census Bureau.

Tuesday – Trade in goods for August from the Bureau of Economic Analysis; consumer confidence for September from The Conference Board.

Thursday – Initial jobless claims for last week from the Employment and Training Administration.

Friday – Personal incomes and spending for August from the Bureau of Economic Analysis; construction spending for August from the Census Bureau and Department of Housing and Urban Development; consumer sentiment for September from the University of Michigan’s Survey of Consumers.

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Omar Khamisa
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Mission San Jose Mortgage
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