Last Week’s Economic News in Review

Economic Advisor
Sales of existing homes enjoyed healthy growth, and layoffs declined, while consumer sentiment slightly contracted.

Existing Home Sales 

Sales of existing single-family homes, townhomes, condominiums and co-ops grew a solid 2 percent to hit an annual rate of 5.48 million in October, according to last week’s report from the National Association of Realtors. This was the strongest pace since June, but when compared to last year was still down 0.9 percent from October 2016.

The improving job market is giving prospective homebuyers more confidence, according to NAR Chief Economist Lawrence Yun, but the narrow home supply is inhibiting real housing market growth.

“While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated,” Yun noted.

Starts on single-family homes also saw solid growth in October, growing to a rate of 877,000, which was 5.3 percent higher than September’s pace of 833,000.

“The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida,” he added. “However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms.”

Looking at price, October’s median price for existing homes of all types grew 5.5 percent over October 2016 to hit $247,000, marking the 68th consecutive month of year-over-year gains. Looking at inventory, the supply of existing homes for sale at the end of October dropped 3.2 percent to 1.8 million units for sale, representing a 3.9-month supply. Compared to the same period last year, this was 10.4 percent lower than October 2016, and was the 29th straight month supply has fallen on a year-over-year basis.

Consumer Sentiment 

Consumer sentiment dropped a bit, falling 2.2 percent from October’s grade of 100.7, to 98.5 for November, the University of Michigan Surveys of Consumers reported last week. That said, when compared to last year, consumer sentiment was still 5 percent higher than November 2016’s 93.8.

The four-week moving average, which is considered a more stable measure of jobless claims notched up to 237,750, an increase of 6,500 claims from the preceding week’s average of 231,250 claims.

The current economic conditions index, which describes how consumers feel about the economy’s present performance, dropped 2.6 percent in November from October’s 116.5 ranking to 113.5. The index of consumer expectations, which describes how consumers feel the economy will fare over the near term, notched down 1.8 percent from a score of 90.5 to 88.9.

“In contrast to the media buzz about approaching cyclical peaks and an aging expansion, with the implication of greater uncertainty about future economic trends, consumers have voiced greater certainty about their expectations for income, employment, and inflation,” said Surveys of Consumers Chief Economist Richard Curtin, in a public statement.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending November 18 fell to 239,000, a decline of 13,000 claims from the preceding week’s total of 252,000, the Employment and Training Administration reported last week. This was the same level two weeks prior and essentially in line with market expectations of 240,000 claims for the week.

The Administration noted that the hurricanes’ impact on the jobs report is now mainly localized to the Virgin Islands Administration with Puerto Rico seeing improved reporting.

The four-week moving average — regarded as a more reliable measure of initial jobless claims — notched up to 239,750 claims, an increase of 1,250 claims from the prior week’s average of 238,500.

This was the 142nd consecutive week in which initial claims were below the 300,000-claim level, which economists consider is an indicator of a growing job market.

This week, we can expect:

  • Monday — New home sales for October from the Census Bureau.
  • Wednesday — Third quarter GDP from the Bureau of Economic Analysis.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; personal incomes and spending for October from the Bureau of Economic Analysis.
  • Friday — New car and truck sales for October from the auto manufacturers; construction spending for October from the Census Bureau.

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