Economic Review For Last Week And Whats To Come April 29 2014

Economic Review For Last Week And Whats To Come April 29 2014

 Real estate dominated last week's economic headlines, with sales of both existing and news homes dropped, as inventory remained scant and prices grew. Meanwhile, initial jobless claims experienced an unexpected spike. 

Existing Home Sales 

March saw basically flat sales of existing homes, but inventory continued to push prices upward. Sales of existing single-family homes, townhomes, condominiums and co-ops, slipped 0.2 percent to an annual rate of 4.59 million in March from 4.6 million in February, and are 7.5 percent below the 4.96 million-unit pace in March 2013, the National Association of Realtors reported. 

This marked the slowest since July 2012's 4.59 million-pace, and the month was clearly underperforming by historical standards, according to NAR chief economist Lawrence Yun. That said, Yun said he expects improvement. 

“There really should be stronger levels of home sales given our population growth,” he noted. “In contrast, price growth is rising faster than historical norms because of inventory shortages.” 

“With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly,” he added. 

Looking at price, March median existing-home price for all housing types grew 7.9 percent from March 2013 to hit $198,500. Total housing inventory rose 4.7 percent in March to 1.99 million existing homes available for sale, representing a 5.2-month supply at the current sales pace. The median time on market for all housing types was 55 days in March, which was down from 62 days in February, as well as 62 days in March 2013. 

New Home Sales 

Turning to new real estate, sales of new single-family homes dropped to an annual rate of 384,000 units in March, according to data released last week by the Census Bureau and the Department of Housing and Urban Development. This marked a hefty 14.5 percent decline from February's revised rate of 449,000 and was 13.3 percent under March 2013's rate of 443,000. 

March's drop marked an eight-month low for new home sales, various analysts sought an explanation for the drop. Given that the rough winter weather was wearing off by March, many expects felt snow couldn't be the sole cause of the drop. 

“The housing recovery is on pause,” RBS Securities Inc. economist Guy Berger told Bloomberg. “There may be some weather impact, but it doesn't seem like that's what's really holding things back. What does seem to be holding things back is this shortage of inventory.” 

Where inventory was concerned, the estimate of new homes for sale at the end of March was 193,000, which represented a six-month supply at March's sales rate. Looking at price, the median price tag for new homes sold in March 2014 was $290,000, and the average sales price was $334,200. 

Employment 

After some relative calm, initial jobless claims saw a spike, according to last weeks report from the Employment and Training Administration. 

First-time claims for unemployment benefits by the newly unemployed during the week ending April 19 saw a 7.9 percent jump to 329,000, a gain of 24,000 over the previous week's revised level of 305,000. This outpaced analysts' expectations of roughly 315,000 claims. 

Before getting too worried, the four-week moving average — considered a more reliable gauge of near-term employment activity — only grew by 1.5 percent to 316,750 claims, an increase of 4,750 from the previous week's unrevised average of 312,000 claims, the Administration reported. 

Moreover, regardless of a single swing, initial jobless claims are still at their lowest level since 2007, indicating that firings have slowed considerably. 

“You're hard-pressed to make much of weekly wiggles; we still expect that the broader trend in claims will continue to hover around 300,000,” Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC, told USA Today. “At the end of the day, it's encouraging that the firing side of the equation continues to show improvement, and that's what's been happening, even with today's number.” 

This week we can expect:

  • Tuesday — April consumer confidence from The Conference Board.
  • Wednesday — Advance GDP for the first quarter from the Bureau of Economic Analysis.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; personal incomes and spending for March from the Bureau of Economic Analysis; March construction spending from the Census Bureau; and April car and truck sales from the auto manufacturers.
  • Friday — April unemployment, payrolls, earnings and workweek from the Bureau of Labor Statistics; March factory orders from the Census Bureau.

IF you have any questions call Sharon Skinner 864-430-8683. If you are ready to buy a home call either Sharon or myself to help you get started!


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