No Harvey Impact yet but 1st Time Unemployment Insurance Claims Rise

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 236,000 1st time claims for unemployment insurance for the week ended August 27, 1,000 MORE than the previous week;
  • The number of initial claims for the week ended August 19 was UNCHANGED at 232,000;
  • The four-week moving average of first time claims FELL 1,250 to 236,750 or 0.154 percent of total employment;
  • The number of continued claims – reported on a one-week lag – for the week ended August 19 was 1,942,000, a decline of 12,000 from the previous week’s unrevised number;
  • The four-week moving average of continuing claims DROPPED 6,250 to 1,951,500;

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The increase in first time claims for unemployment insurance for the week ended August 26, as the Department of Labor reported Thursday is just a tease as to what this report will look like in a few weeks.

If history is any guide, we can probably expect unemployment insurance claims to jump by about 100,000, In 2005, about two weeks after Hurricane Katrina ravaged Louisiana (and, not, internet rumors notwithstanding Barack Obama was not president then), initial claims which had been averaging about 320,000 per week, spiked by 96.000 and then dropped 65,000 two weeks later. Claims returned to their pre-storm average within two months.

President Obama was in the White House when Superstorm Sandy tore up the East Coast in 2012, sending first-time claims up 90,000 two weeks later.

Just as Harvey’s impact on employment will be transitory, so too will be impact of the storm be on gasoline prices, affected because it hit a refinery-rich part of the country. Analysts expect a 15¢ jump in the per gallon price of gasoline in the next couple of weeks but prices should be back to pre-storm levels in a couple of weeks.  Platforms and rigs were shut down in anticipation of the storm, which made landfall late Friday as a Category 4 storm but weakened mid-Saturday into a tropical storm. Following Katrina, gasoline prices shot up 40¢ per gallon within a month but then fell back to below pre-storm levels two months later.

Thursday’s data on claims will have no impact on the Bureau of Labor Statistics’ report Friday on the August labor market. The unemployment rate is expected to remain at 4.3 percent and non-farm payrolls to increase about 182,000 which would be below the July increase of 209,000 and the three-month average increase of 195,000.

Average hourly earnings are expected to increase 6¢ to $26.42 which would compute to a 2.6 percent annual increase and average weekly earnings are expected to slip $3.59 to $905.83 which would be 2.6 percent higher than August 2016.

You can hear Mark Lieberman tomorrow (Friday Sep. 1) at 8:45 am and again at 12:05 pm on POTUS Sirius XM 124 and every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

Unemployment Rate Drops to 4.5% in March as Job and Earnings Growth Stall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate FELL in March to 4.5 percent, the lowest rate in almost 10 years (May 2007);
  • Payroll jobs INCREASED 98,000 in March, the weakest job growth since last May;
  • Prior month job totals were revised down: February from a gain of 235,000 to a gain of 219,000 and January from a gain of 238,000 to an increase of 216,000 jobs;
  • Private sector payrolls rose 89,000 in March, also the weakest growth since last May;
  • Average weekly hours in March FELL to 34.3, the lowest since last November;
  • Average weekly earnings INCREASED in March to $896.60 — up $1.77 from February but the 2.4 percent year-year growth was slightly weaker than the 2.5 percent annual growth recorded in February;
  • Average hourly earnings ROSE 5¢ in March to $26.14, a 2.7 percent year-year jump; in February average, hourly earnings registered a 2.8 percent year-year improvement;
  • The number of full-time workers INCREASED 326,000 in February; the number of part-time workers ROSE 149,000;
  • Labor force participation rate HELD at 63.0 percent;
  • Employment-Population ratio ROSE to 60.1 percent, the highest level since February 2009;
  • The number of multiple jobholder went UP 138,000; multiple jobholders represent 5.2 percent of all employed individuals, up from 5.1 percent in February;

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Despite the lowest unemployment rate in almost 10 years, this has to be considered a disappointing Employment Situation report, with the weakest job growth in 10 months and downward revisions to the job totals reported for the first two months of the Trump Administration. The revisions to January and February job growth trimmed the number of new jobs by 38,000.

So, what happened?

Some of the changes can be attributed simply to the calendar as the number of retail jobs fell marking the official end of the holiday shopping season. Some too relates to the weather with 6,000 new construction jobs in March, down from the addition of 15,000 in February.

Unusually good winter weather in the Midwest and Northeast probably strengthened job growth in January and February. March was payback time.,

Offsetting the drop in retail jobs, the number of restaurant jobs grew 21,700. Restaurant jobs have been a steady source of job growth having increased for 57 consecutive months. But, those jobs remain among the lowest paying jobs.

The health care sector too remained a strong source of new jobs, adding 16,700 jobs in March, the 54th straight month of job growth. The health care sector, of course, dodged a bullet when the House cancelled a vote on a replacement for the Affordable Care Act. Since the ACA took effect, the number of health care jobs has increased by 1.5 million or just over 39,000 per month.

Wage growth, though up in March appears to be slowing slightly. Coupled with the dip in average weekly hours, it means workers have less, not more, money in their pockets. Indeed, the slight drop in weekly hours is a bad omen for future hiring. An increase in hours would mean employers have to add to staff. In the immediate aftermath of the onset of the Great Recession, hours fell below 34, dropping as low as 33.8.

Average weekly earnings fell in the construction, and manufacturing sectors. The construction sector is one of the highest paying industry sectors with average weekly earnings of $1,039.77, topped only by the utilities sector ($1,5550.86) and the mining and logging sector ($1,262.69). Manufacturing workers earned an average of $864.84 per week in March, down $2.04 from February. Construction worker earnings fell $6.97 a week in March.

The weakness in hours and the mild slowing in wage growth suggest a weaker labor market than we’d like to see but there also seems to be little basis for concern about inflationary pressures.

The overall job growth should be tempered by the increase of 138,000 multiple jobholders.

The drop in the unemployment rate though remains the redeeming factor in this report. The number of persons unemployed fell 326,000 to 7.2 million, the lowest level since September 2007. Delving into that number, the number of individuals unemployed because of layoffs dropped 190,000 in March and the number of individuals unemployed for fewer than five week dropped 232,000. Some of those could have left that bracket and are now unemployed for 5-14 weeks, but that category fell 29,000. Together that suggest that new entrants to the ranks of the unemployed don’t remain there very long.

Unemployment rates for sub-categories also showed improvement. The unemployment rate for blacks dipped to a still high 8.0 percent from 8.1 percent in February and the unemployment rate for Hispanics dropped 0.5 percent to 5.1 percent. Even the teenage unemployment rate was down, dropping 1.3 percentage points to 13.7 percent, the lowest it has been since May 2001 when it stood at 13.4 percent.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124.

You can follow Mark Lieberman on Twitter at @foxeconomics.

 

1st Time Jobless Claims Remain Highly Volatile, Falling 10,000 in Last Week

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • 1st time claims for unemployment insurance for the week ended December 3 FELL 10,000 to 258,000;
  • The number of claims for the week ended November 28 was unchanged at 268,000
  • Filings remained under 300,000 for the 92nd straight week, the longest streak since 1970;
  • Four week moving average of first time claims INCREASED 1,000 to 252,500;
  • The four week moving average represented 0.166 percent of total employment, UP .001 percentage points from a week earlier;
  • Continuing claims for the week ended November 28 – reported on a one-week lag – DECREASED 79,000 – largest week-week drop since July 2015 — to 2,005,000;
  • The number of continuing claims for the week ended November 21 was REVISED UP 3,000 to 2,084.000;
  • Four-week moving average of continuing claims FELL 9,500 to 2,028,750;

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First time claims for unemployment insurance remained extremely volatile as the calendar turned to December, with a five-figure swing for the fifth straight week, according to the Labor Department.

The average change (regardless of direction) for the last five weeks has been 15,400 compared 6,600 for the previous five weeks. To be sure, the net change has been a drop of 7,000 claims over the last five weeks, but the wide swings suggest some instability in labor markets which would call into question the wisdom of tinkering with interest rates in the short term. Nonetheless, “body language” from the Federal Open Market Committee – the federal Reserve Board’s policy-setting arm – suggest the FOMC is poised to lower the target fed funds rate when it convenes next Tuesday. Though widely anticipated, the FOMC action could our a damper on holiday sales. Retailers had been anticipating strong sales, up about 3.6 percent, according to the National Retail Federation (NRF).

The NRF estimated retailers would add between 640,000 and 690,000 jobs to deal with the increased sales volume for the holiday season which, according to NRF, covers all of November and December.

The four week moving average, designed to smooth the volatility of the weekly numbers, is showing less of a swing in the last five weeks ranging from an increase of 1,000 to a drop of 6,000 and a net decline of 5,250 for the period dropping the total to 252,500, 6.7 percent below the level a year ago.

Despite the recent volatility, both initial claims and continuing claims have been on a relatively stable downward trajectory over the past year. Continuing claims, often seen as a surrogate for hiring, are down 10.7 percent from a year ago. The four-week moving average of continuing claims has dropped a more modest7.1 percent.

In raw numbers, continuing claims fell 241,000 in the last year with most of that decline, 137,000, since September 1.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

First-time Unemployment insurance Claims Fall but Continued Claims Increase;

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 216,000 1st-time claims for unemployment insurance for the week ended February 29, 2020, a DROP of3,000from the previous week’s unrevised 219,000;
  • The four-week moving average of initial claims ROSE3,250 to 213,000;
  • Four-week moving average represented 0.136 percent of employment, UPfrom 0.134one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,729,000 for the week ended February 22, UP 7,000 from the previous week’s DOWNWARDLY REVISED 1,722,000 (from 1,724,000)
  • The four-week moving average of continued claims FELL 7,000 to 1,721,250

Trends:

  • First-time claims FELL for the first time in four weeks;
  • The four-week moving average of continued claims for unemployment insurance rose for the first time in five weeks;
  • The mid-month four-week moving average of continued claims for unemployment insurance fell for the first time since last September suggesting it has become easier for persons on unemployment insurance to find a new job.

Data Source: Department of Labor https://oui.doleta.gov/press/2020/0305

First-time claims for unemployment insurance fell for first time in four weeks while the second straight week while continued claims rose the Department of Labor reported Thursday.

While one week doesn’t indicate a trend, taken together the two datasets hint at a tightening of the robust labor market, suggesting the Corona Virus may be starting to have some impact on labor data.

[“Continued claims” refers to unemployed workers who qualify for benefits under unemployment insurance. In order to be included in continued claims, the person must have been covered by unemployment insurance and be currently receiving benefits.]

The report Thursday came as the number of Corona Virus on the United States continues to grow along with suggestions the disease could lead to a recession in the United States

Thursday’s report came one day before the Bureau oi Labor Statistics is scheduled to release the Employment Situation report for February. That report is expected to show a gain of 175,000 jobs in February including temporary jobs with the Census Bureau

From mid-January to mid-February, initial claims for unemployment insurance fell 12,000 and the four-week moving average of continued claims fell 8,000, both data points supporting another increase in jobs in the Employment Situation report. Continued claims fell 14,000 and the four-week moving average of continued claims fell 26,750 indicating a significant number of those who had been collecting unemployment insurance were successful in searching for a new job.

You can hear Mark Lieberman’s analysis of the monthly Employment Situation report tomorrow, March 6 at 8:40 am on POTUS’ Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

Unemployment insurance Claims Increase; Continued Claims Drop

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 219,000 1st-time claims for unemployment insurance for the week ended February 22, 2020, an INCREASE of 8,000from the previous week’s upwardly revised 211,000 (from 210,000);
  • The four-week moving average of initial claims ROSE 500 to 209,750;
  • Four-week moving average represented 0.134 percent of employment, UP from 0.133 one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,724,000 for the week ended February 15, DOWN 9,000 from the previous week’s UPWARDLY REVISED 1,733,000 (from 1,726,000)
  • The four-week moving average of continued claims ROSE 5,250 to 1,729,250

Trends:

  • The four-week moving average of continued for unemployment insurance rose for the first time in five weeks;
  • The four-week moving average of first-time claims for unemployment insurance rose for the first time this year (falling for seven straight weeks).

Data Source: Department of Labor https://oui.doleta.gov/press/2020/0227

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First-time claims for unemployment insurance rose for the third straight week in the week ended February 22, the first time claims have increased for three straight weeks since September. California wildfires remain the culprit and are affecting continued claims.

[Continued claims refer to unemployed workers that qualify for benefits under unemployment insurance. In order to be included in continued claims, the person must have been covered by unemployment insurance and be currently receiving benefits.]

The number of continued claims fell 9,000 suggesting some of those previously laid off have either been rehired or found other jobs despite the fact job openings slid in the last Job Openings and Labor Turnover Survey report.

From mid-January to mid-February, continuing claims fell 9,000 and the four -week moving average of continued claims fell 14,000, both data points supporting another increase in jobs when the Employment Situation report is released March 6.

You can hear Mark Lieberman Friday mornings at 6:20 am on POTUS’ Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics. 7

New Home Sales Shoot to 13 Year High

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales SHOT UP 7.9 percent in January to a seasonally adjusted annual rate (SAAR) of 764,000;
  • The December sales pace originally reported as 694,000 was REVISED UP to 708,000
  • The inventory of unsold new homes ROSE 1,000 in January to 328,000;
  • With the faster sales pace, the months’ supply of new homes for sale FELLto 5.1 in January from 5.5 in December;
  • Median price of a new home ROSE $24,100, 7.4 percent, to $348,200 in January, after falling $3,900 in December;
  • Year-year the median price of a new home is UP 14.0 percent or $42,800.

Trends:

  • The sales pace for new single-family homes rose to its highest level since July 2007;
  • The month-month increase in homes for sale was the largest since last June (up 131,000)
  • The number of homes for sale has risen year-year fort eight straight months

Data Source: Census Bureau and Department of Housing and Urban Development

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Sales of new single-family homes rose sharply in January, barreling to a post Recession high of 764,000, the Census Bureau and Department of Housing and Urban Development reported jointly Wednesday.

Buyers shrugged off a 7.4 percent increase in prices, as the average rate on a 30-year fixed rate mortgage fell to 3.62 percent from 3.72 percent in December, 2019. The average rate was 4.46 percent in January 2019.

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the January reading of 764,000 units is the number of homes that would sell if this pace continued for the next 12 months. The parallel statistic for existing home is in the National Association of Realtors’ Pending Home Sales report.

The Census-HUD report goes a long way to explaining the high level of builder confidence noted in the National Association of Home Builders’ Housing Market Index. The HMI was at 74 this month according to NAHB.

New home act6ivity is clearly on an upward trajectory.  The seasonally adjusted annual rate of sales has topped 700,000 for six of the last eight months and averaged 692,000 over the last 12 months, a gain of 11.7 percent over the 619,000 average for the previous 12 months. At the same time the number of residential construction jobs has increased by 1.5 percent while there are 2.3 unemployed construction workers for every job openings in the sector.

Hear Mark Lieberman on P.O.T.U.S. (Sirius-XM 124) Friday at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

Home Prices Rise Slows in December

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Case Shiller CoreLogic indices ROSE in December, but at a slower pace than November
  • The 10-city index IMPROVED 0.05 percent, compared with an increase of 0.11 percent in November;
  • The 20-city index was UP 0.04 percent compared with 0.11 percent in November;
  • National Index ROSE 0.08 percent, compared with 0.10 percent in November;
  • Year-year the National index ROSE 6.5 percent, the 20-city index was UP 2.9 percent, the 10-city index ROSE 2.4 percent;
  • The price index rose in 13 of the 20 cities surveyed in December compared with 16 cities in November
  • Year-year the price growth slowed in six cities in December compared with four in November.

Trends:

  • The three indices have improved for 11 straight months;
  • The price index ROSE for the 24th straight month in Miami while falling for the fifth straight month in Detroit.

Data Source: S&P Case Shiller/Core Logic

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Home price growth slowed in December as mortgage rates continued to inch up contributing to a slowdown in the number of homes for sale.

Even as the pace of existing-home sales themselves rose 3.4 percent in December, according to the National Association of Realtors, the combination of rising interest rates and higher home prices points to a tough market for realtors and empty nesters trying to sell. Indeed, the NAR’s Pending Home Sales Index fell 4.9 percent in December suggesting fewer completed sales (closings) in February.  

The headline from the NAR’s home sales report though was the dramatic 15.2 percent) drop in homes for sale. The number of homes on the market relates strongly to the value of homes. Per the Case-Shiller CoreLogic Index, home prices in the Case-Shiller 10-city index rose just 2.4 percent in 2019 compared with a 3.6 percent increase in 2018 and 6.0 percent increase in 2017.

Prices in the 20-city index rose 2.9 percent in 2019, were up 4.0 percent in 2018, and soared 6.9 percent in 2017.

The price boosts don’t seem to have made their way to sellers though as the National Association of Realtors reported the inventory of home for sale fell to an all-time low in December, a slippage likely to affect future home sales.

Meanwhile, according to the December Case Shiller CoreLogic report, home prices rose just 0.1 percent in the Northeastern and Western cities surveyed, were flat in Southern cities and fell 0.4 percent in Midwestern cities.

Prices rose fastest in December in Phoenix where they went up 6 percent. Prices fell fastest in Cleveland and Minneapolis (down 0.6 percent each).

Year-year prices rose fastest in Phoenix, up 6.5 percent, Charlotte (5.3 percent and Tampa (5.2 percent)

The slower price growth combined with near-record low mortgage interest rates failed to significantly boost sales of existing single-family homes, exacerbating a weak housing market.

Hear Mark Lieberman this Friday on P.O.T.U.S. radio’s Morning Briefing, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

Home Sales Slip as Price Rise

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing-home-sales – closed sales – FELL 1.3 percent, 70,000, in January to a seasonally adjusted annual sales rate of 5.46 million;
  • Sales pace for December was revised DOWN from 5.54 million to 5.3 million;
  • The inventory of homes for sales ROSE 30,000, 2.2 percent, to 1.42 million;
  • The inventory of homes for dale for December (SAAR) was REVISED DOWN 10,000 to 1.39 million;
  • Median price of an existing single-family home ROSE 0.7 percent, $800, to $266,300;

Trends:

  • Year-year sales were UP 10.8 percent, the sixth consecutive month of year-to year increases after 16 months of year-year declines;
  • The inventory of homes for sales ROSE for the first time in seven months despite the third straight month of price declines;
  • The year-year growth in the median price of an existing home marked the 95th straight month of year-year price growth..

Data Source: National Association of Realtors (NAR))

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As expected (in this space a month ago) s existing home sales fell 1.3 percent though a slight increase in prices brought some sellers back to the market.

Home prices grew in January providing a modest boost to the inventory of homes for sale from the record low in December.

The boost in sales came as the average rate for a 30-year fixed rate mortgage dropped to 3.62 percent from 3.72 percent in December and from 4.46 percent in January 2019.

The sales pace underscored the continuing tough home sales market. The market improved modestly in 2019 with 5.34 million sales, up from 5.334 million one year earlier.

Hear Mark Lieberman every Friday, on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

Unemployment insurance Claims Increase; Continued Claims Remain High

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 210,000 1st-time claims for unemployment insurance for the week ended February 15, 2020, an INCREASE of4,000from the previous week’s upwardly revised 206,000 (from 205,000);
  • The four-week moving average of initial claims was DOWN 3,250at 209,000;
  • Four-week moving average represented 0.136 percent of employment, DOWNfrom 0.137one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,726,000 for the week ended February 8, UP 25,000 from the previous week’s UPWARDLY REVISED 1,701,000 (from 1,698,000)
  • The four-week moving average of continued claims FELL 5,250 to 1,722,250

Trends:

  • The four-week moving average of first-time claims for unemployment insurance has fallen for seven straight weeks;
  • The four-week moving average of first-time claims for unemployment insurance is at its lowest level since last April.

Data Source: Department of Labor https://oui.doleta.gov/press/2020/0220

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First-time claims for unemployment insurance ticked up 4,000 during the week ended February 15, the Department of Labor reported Thursday. The weekly report though remained consistent with other indicators of an ongoing strong labor market.

The only blemish on the otherwise strong labor market was the report of an increase of 25,000 continuing claims, tracking individuals who had been collecting unemployment insurance and indicating their ability (or inability) to find a job.

The claims data are consistent with the most recent Job Openings and Labor Turnover Survey (JOLTS) report which showed job openings falling in December to the lowest level sine April 2018. Indeed, openings fell in just about every industry category (the sole exception was education and health services),

The claims report did offer a positive forecast for the next Employment Situation report due for release March 6.

From mid-January to mid-February, first-time claims for unemployment insurance fell 13,000 and the four-week moving average of initial claims fell 8,250, both suggesting no increase in the unemployment rate. The unemployment rate was 3.58 percent (reported as 3.6 percent) in January, up from 3.5 percent (3.50 percent) in December.

You can hear Mark Lieberman Friday mornings at 6:20 am on POTUS’ Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics. 7

Housing Permits Hit 13-year High in January, Housing Starts Fall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Homebuilding activity, measured by housing starts SLIPPED 3.6 percent in January after hitting the highest level in 13 years in December;
  • Single-family starts FELL 63,000, 5.9 percent in January; the SAAR for total starts FELL 59,000.
  • Housing permits meanwhile soared with the strongest month-month gain (185,000) since June 2008
  • The SAAR of all housing completions FELL 43,000 or 3.3 percent to 1.28 million while the pace of new single-family completions FELL 32,000 or 3.5 percent to 877,000.

Trends:

  • January permit filings reached their highest level since March 2007 (1.596 SAAR) The month-month increase in total housing starts was the largest since October 2016;
  • Despite the month-month decline, the SAAR of single-family starts topped 1 million for the second straight month for the first time since June-July 2007;
  • Single-family housing starts were up year-year for the eighth straight month.

 Data Source: Census Bureau and Department of Housing and Urban Development

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After a torrid December, single-family housing starts fell 5.9 percent in January wiping out a modest gain in multi-family starts.

The slippage came one day after the National Association of Home Builders reported builder confidence and the outlook for new home sales fell.

The HUD-Census report for January was disappointing, following as it did a December which showed housing activity reaching new post-recession highs. It followed too the monthly Employment Situation report which showed residential construction jobs increasing by 21,000, the strongest monthly gain in a year. The report tracked an analysis by NAHB showing a preference for multi-family rather than single-family housing by younger buyers.

The government report also showed slippage in housing completions, with single-family completions representing nearly 75 percent of the total decline.

The Census-HUD data also appeared to support the conclusions of the NAHB report on buyer preferences. Even as total permits rose in January, permits for single-family homes represented 63.6 percent of all permits, down from 65.4 percent in December. The shift from single- to multi-family in January is part of a longer trend. Single-family permits represented 63,1 percent of all permits in 2019, down from 64,6 percent in 2017 and 2018.

Single-family starts represented 69.0 percent of all starts ion 2019, down from 69.9 percent in 2018 and 70.5 of all starts in 2017.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

Builder Confidence Slips but Remains High in February

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index SLIPPED one point in February to a still-high 74 (out of 100);
  • Each of the components of the HMI FELL one point;
  • Regionally, the index IMPROVED in two of the four census regions, slipping five points in the Midwest and four in the West while increasing five points in the Northeast and two in the South.

Trends:

  • The total HMI fell for two straight months for the first time since the end of 2018;
  • All three components fell month-month for the first time since last June;
  • The current sales measure has declined in three of the last four months.

Data Source: National Association of Home Builders (NAHB)

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Despite continued low-interest rates, the National Association of Home Builders’ Housing Market Index slipped for the second straight month in February but remained at a solid 74 (out of 100).

The index has been above the “break-even” point of 50 for 64 months – since June 2014.

Even though builder confidence has improved, sales of new single-family homes have declined for three straight months and the inventory of new homes for sale remains low. The number of new homes for sales during 2019 averaged 331,000 per month. In the last pre-recession year, 2007, the number of new homes for sale averaged 531,000 per month.

Similarly, builders are adjusting to a new normal in new single-family construction. In 2019, the seasonally adjusted annual rate of single-family starts averaged 894,000 per month down 13.7 percent from 1,036 in 2007.

Builder confidence rose to its highest level in 20 years in early December (based on sentiment at the end of November) as the outlook for current sales, for sales six months forward and buyer traffic all rose.

The increase in confidence has come despite relatively weak new home sales. In the ten years since the end of the Great Recession, new home sales have averaged about 483,000 per month. In the same time span before the Recession began, new home sales averaged 992,000 per month.

The explanation appears to be the Recession itself which discouraged younger families from homownership, reducing construction of new homes. In addition to supply-and-demand mechanics, younger would-be homeowners have redefined the American Dream from a home with a backyard to apartment-style multi-family living closer to jobs and a reduced demand on resources.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time. Follow Mark Lieberman on Twitter at @ foxeconomics.

New Home Sales Fall for 3rd Straight Month

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales EDGED DOWN 0.4 percent in December to a seasonally adjusted annual rate (SAAR) of 694,000 but was up 23 percent (130,000) in the last year;
  • The November sales pace originally reported as 719,000 was REVISED DOWN to 697,000
  • The inventory of unsold new homes ROSE 5,000 in December to 327,000;
  • The months’ supply of new homes for sale ROSE to 5.7 in December from 5.5 in November;
  • Median price of a new home RECOVERED to $331,400 in December, up $10,500 after falling $2,500 in November;
  • Year-year the median price of a new home is UP 0.5 percent or $1,700.

Trends:

  • The sales pace for new single-family homes fell for the third straight month
  • The month-month increase in homes for sale was the largest in a year (up 12,000 in December 2018) but the inventory was 19,000 less than December 2018;
  • The number of homes for sale has fallen in eight of the last 12 months.

Data Source: Census Bureau and Department of Housing and Urban Development

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Sales of new single-family homes continued to slip and slide in December, dropping for the third straight month. the Census Bureau and Department of Housing and Urban Development reported Monday. November’s sharp increase in the sales pace was revised down.

Only a sharp surge of new home sales in the West – homes built to replace those destroyed during summer wildfires – prevented the sales data from marking a complete wipeout in sales. (The government report tallies contracts for sale, not closings.) The pace of sales in the West nearly doubled to 241,000 in December from 121,00 a year ago.

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the December reading of 694,000 units is the number of homes that would sell if this pace continued for the next 12 months.

In a report on existing home sale closings, the National Association of Realtors reported a 190,000 or 3.6 percent increase for December with the pace of existing home sales reaching the highest level since March 2018, 21 months.

But new home sales, though up from a year ago, continue to struggle despite builder confidence remaining at high levels. The National Association of Home Builders reported last week an uptick in multi-family construction following a preference by younger buyers for apartments closer to where they work.

New home sales though have been helped by mortgage rates which fell to and have remained near historic lows., offsetting the recent increase in prices.

According to Freddie Mac, the average rate for a 30-year fixed rate loan in December was 3.72 percent, up just a smidgen for 3.70 percent in November.

The challenges to home sales have been slowly disappearing but not enough to anticipate a sharp uptick in sales of new or existing homes. That said, the inventory of existing homes for sale fell to an all-time low in December which could drive more potential buyers to consider new homes.

Hear Mark Lieberman on P.O.T.U.S. (Sirius-XM 124) Friday at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

Unemployment insurance Claims Increase

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 211,000 1st-time claims for unemployment insurance for the week ended January 18, 2020, an INCREASE of6,000from the previous week’s upwardly revised 205,000 (from 204.000);
  • The four-week moving average of initial claims FELL 3,250 to 213,350;
  • Four-week moving average represented 0.136 percent of employment, DOWN from 0.138 percent one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,767,000 for the week ended January 11, DOWN 37,000 from the previous week’s UPWARDLY REVISED 1,768,000 (from 1,767,000)
  • The four-week moving average of continued claims ROSE 2,000 to 1,757,750.

Trends:

  • The four-week moving average of first-time claims for unemployment insurance FELL for the third straight week;
  • The four-week moving average of continued claims for unemployment insurance ROSE for the sixth straight week and has increased in 14 of the last 16 weeks;
  • The four-week moving average of continued claims rose to its HIGHEST LEVEL since May 2018

Data Source: Department of Labor

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First-time claims for unemployment insurance blipped up by 6,000 during the week ended January 18, the only blemish in an otherwise positive report on unemployment insurance claims, the Department of Labor reported Thursday.

In another positive development, the Labor Department reported a drop in continued claims for unemployment insurance implying improvement in hiring prospects for long term unemployed. That’s a reversal from two weeks ago when continued claims jumped more than 4 percent, the largest week-week increase since the week ended November 3, 2012

The sharp jump in continued claims followed an equally sharp increase in first-time claims which rose 49,000 in the week ending last December 3, primarily due to California wildfires.

This week’s report offered a first glimpse at indicators for the February 7 Employment Situation release indicating first-time claims for unemployment insurance rose 23,000 from mid-December to mid-January but the four-week moving average fell 12,500 from mid-December to mid-January. That movement suggests little if any change to the 3.5 percent unemployment rate.

You can hear Mark Lieberman Friday mornings at 6:20 am on POTUS’ Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics. 7