Inventory of Homes for Sale Falls to All-time Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – ROSE 3.6 percent, 190,000, in December to a seasonally adjusted annual sales rate of 5.54 million;
  • Sales pace for October was unchanged;
  • The inventory of homes for sales FELL 14.6 percent, (240,000) to 1.4 million; the months’ supply of homes for sales dropped 0.7 months to 3.0 months.
  • Median price of an existing single-family home ROSE 1.2 percent, $3,200, to $274,500;
  • Year-year the median price is up 7.8 percent or $19,800;

Trends:

  • Year-year sales were UP 2.7 percent, the fifth consecutive month of year-to year increases after 16 months of year-year declines;
  • The inventory of homes for sales fell for the seventh straight month to its lowest level since the NAR began publishing its home sales report in 1999
  • The months’ supply of homes for sale also fell to the lowest level on record;
  • The annual sales pace of existing single-family homes rose to its highest level since March 2018 (5.6 million);

Data Source: National Association of Realtors (NAR)

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With near record low mortgage rates existing home sales jumped up in December but that could be a temporary blip.

The monthly report of the National Association of Realtors also showed a record low inventory of homes for sale and the months’ supply of homes on the market.

The good news for realtors and sellers alike came with an increase in prices as the median price of an existing single-family home rose 1.2 percent in December, the second straight month-month increase after four straight months of decline.

For those shopping by payment, the price increase was essentially offset by all but flat interest rates. The average rate for a 30-year fixed rate loan in December was 3.72 percent, up a smidgen for 3.70 percent in November.

The decline in inventory could be reversed with the price increase as would-be sellers are enticed back into the market. That would be good news not just for retailers but appliance and furniture retailers who have seen revenues suffer with weak home sales.

For all of 2019, the average pace of home sales was 5,341.000 up just 0.13 percent for 2018 when the average sales pace was 5,334,000.

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.

Job Openings Fell Sharply in November as New Jobs Dipped

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Job openings at the end of November PLUNGED 7.6 percent to 6.8 million;
  • Hiring in November ROSE 0.7 percent from October to 5.82 million
  • The ratio of job openings per unemployed FELL to 1.17 in November from 1.26 in October

Trends:

  • Job openings dropped in November to the lowest level since February 2018: 6.53 million
  • Number of job openings was down year-year for the sixth straight month for the first time since the end of 2009
  • November hires represented 79.1 percent of end-of-October job openings, weakest percentage since May/June 2019;
  • Job openings per unemployed fell to the lowest level since March

Data Source: Bureau of Labor Statistics

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Despite a strong November jobs report, there were more warnings about the job market Friday in the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) report.

Employers managed to add 145,000 new jobs in November even though job openings fell to their lowest level in 21 months. And employers managed to fill almost 80 percent of those openings. Still the hiring record for 2019 looks blotchy. The month-month change in the number of hires has been negative in six of the first 11 months of 2019, compared with just two negative months in 2018.

Still, the projected number of hires for all of 2019 is on track to exceed 2018 hires by 1.5 percent, though the number of separations is also on course to exceed 2018.

And, the ratio of job openings per unemployed, a key measure of employment though well-below Great Recession levels, fell for the first time in four months hinting that getting a job from unemployment is becoming more challenging. That conclusion is borne out by the consistent growth of the four-week moving average of continued unemployment insurance claims.

That ratio fell in several key industry sectors dimming the outlook for growth in trade, manufacturing, and transportation – although the last may be seasonal. The number of job openings in the leisure and hospitality sector fell sharply in November ahead of a seasonal hiring spurt.

Despite slight dips, the number of job openings remained strong in construction, manufacturing and information sectors with an even stronger outlook for transportation, financial activities and traded where the number of job openings rose.

You can hear Mark Lieberman on P.O.T.U.S Morning Briefing (Sirius 124) every Friday at 6:20 am Eastern Time. Follow him on Twitter at @foxeconomics.

Housing Starts Hit 13-year High in December

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Homebuilding activity, measured by housing starts ROSE sharply in December hitting the highest level in 13 years,
  • The seasonally adjusted annual rate of total starts ROSE 16.9 percent or 233,000 to1.61 million;
  • Starts for new single-family homes ROSE 11.2 percent or 106,000 to 1.05 million;
  • The rate of total housing permits FELL 58,000 or 3.9 percent in December to 1.42 million;
  • The pace of single-family permits fell 5,000 or 0.5 percent to 916.000;
  • The SAAR of all housing completions ROSE 62,000 or 5.1 percent to 1.28 million while the pace of new single-family completions ROSE 6,000 or 0.7 percent to 912,000.

Trends:

  • The month-month increase in total housing starts was the largest since October 2016;
  • Single-family starts rose to the highest level since June 2007;
  • Single-family housing starts were up year-year for the seventh straight month.

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

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Single-family homebuilding moved higher again in December, reinforcing solid builder confidence levels according to the Census Bureau and Department of Housing and Urban Development.

The HUD-Census report showed housing activity reaching new post-recession highs, suggesting a comeback for housing. The home-building data supports strong builder confidence as suggested by the National Home Builders Association’s housing market index. That index slipped one point in January but remains at a solid 75 the NAHB reported Thursday.

Even with the month-month decline in housing permits, single-family permits accounted for 64.7 percent of all permits, up from 62.5 percent in November. For the year, single-family permits represented 63.0 percent of all permits, down from 64.6 percent in 2017 and 2018.

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

The downward trend of single-family home building suggests builders are becoming more prudent and more closely matching construction to sales trends. New home sales represented 80.9 percent of starts in the first 11 months of 2019 compared with 73.5 percent in 2017-18.

The report on December 2019 new home sales is scheduled for release on Jan 27.

Builder confidence, as reflected in the National Association of Home Builders’ Housing Market Index, showed a slight slippage in the outlook for current sales of new single-family homes in its January reading though the “buyer traffic” component of the index rose in January.

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 January

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index SLIPPED one point in January to a still lofty 75 (out of 100);
  • Current sales component of the HMI FELL three points to 81;
  • The outlook for future sales (six months out) in the near term was UNCHANGED at 79
  • The measure of buyer traffic ROSE one point to 58
  • Regionally, the index IMPROVED in all four census regions, reaching a three-year high of 86 in the West.

Trends:

  • The total HMI had not fallen month-month since it dipped two points in June to 64;
  • The month-month drop in the total index was only the second in the last 13 months;
  • The three-point slide in current sales was the largest since that measure fell six points in December 2018.

Data Source: National Association of Home Builders (NAHB)

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The National Association of Home Builders’ Housing Market Index teetered back ever-so-slightly to realty as the builder confidence index slipped one point in January to a still high 75.

The index has been above the “break-even” point of 50 for 80 straight months, almost as long as it was mired below 50 – 85 months – in the aftermath of the Great Recession.

During the 80 months, residential construction employment has jumped 36 percent, from 2.15 million to 2.92 million. In the same period – since March 2013 – new home sales have risen 60 percent from a seasonally adjusted annual rate of 449,000 to 719.000 and the median price of a new home is up 32.1 percent, from $250,500 to $330,800.

During that period too the now home market has shifted from single- to multi-family as indicated by government reports on new housing permits and starts.

In March 2013, 65 percent of new building permits were for single-family homes while most recently that share dropped to 61.9 percent. The homeownership rate has fallen too, though not as sharply – from 65 percent to 64.1 percent.

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.

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.

Retail Sales Improve in December on Price Increases, Boosting Holiday Sales

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Retail sales (measured by prices) ROSE 0.33 percent or $1.8 billion in December;
  • Retail sales for November were revised down slightly to show an increase of $527.8 million from October instead of the originally reported $528,0 million.
  • Sales improved at every store category, offsetting a $1.37 billion drop in auto sales;
  • Percentage sales increases were led by a 2.8 percent increase at gasoline stations (where prices declined by 1.7 percent) followed by a 1,6 percent increase in sales at clothing stores;
  • Non-store retailers (essentially online sales) accounted for 12.6 percent of all retail activity in December, up from 12.2 percent in December 2018;
  • All retail activity was up 5.9 percent year-year in December – compared with 3.5 percent in November — while the Consumer Price Index rose 2.3 percent from December 2018 to December 2019.

 Trends:

  • Total retail sales improved month-month in all but two months in 2019 compared with 2018 when sales fell month-month in six of 12 months;
  • BLS reported the number of retail jobs ROSE in December for the third straight month (after seven straight months of decline),

Data source: Census Bureau  

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Consumer spending – measured by retail sales grew $1.8 billion in  December producing a  gain of 4.7 percent for the November-December holiday shopping season over 2018.

The largest (percentage) gain in sales came at furniture stores consistent with the year-end uptick in both new and existing home sales. Appliance stores registered a 0.6 percent December increase, wiping out the 0.3 percent dip in November.

The Census Bureau report on retail activity is not adjusted for price changes which means an increase in prices shows up as an increase in sales, assuming no change in volume. Witness gasoline station sales which rose 2.8 percent in December though the average price of a gallon of gasoline fell 1.7 percent suggesting consumers may have reacted to the lower prices by driving more during the holiday season.

The 3.3 percent year-year increase in furniture store sales in December, followed year-year gains in both new- and existing-home sales though those sales increases have not pushed up sales at appliance stores.

The increase in sales also reflects higher prices from tariff increases in the Administration’s ongoing efforts to improve the nation’s trade deficit by hiking tariffs on goods (and materials) especially those from China.

Consumer spending represents about two-thirds of the economy and retail sales about 55 percent of consumer activity. The retail report suggests good news for fourth-quarter GDP as retailers head into the holiday shopping season though many large retailers have already announced cutbacks.

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 him on Twitter at @foxeconomics.  

Unemployment insurance Claims Fall Back but Hiring Backlog Persists

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 204,000 1st-time claims for unemployment insurance for the week ended January 11, 2020, a DECLINE of 10,000from the previous week’s unrevised 214,000;
  • The four-week moving average of initial claims FELL 7,750 to 224,000;
  • Four-week moving average represented 0.136 percent of employment, DOWN from 0.141 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 4, DOWN 37,000 from the previous week’s UPWARDLY REVISED 1,804,000 (from 1,803,000)
  • The four-week moving average of continued claims ROSE 10,500 to 1,755,500.

Trends:

  • The number of first-time claims for unemployment insurance fell for the fifth straight week for the first time since last March-April;
  • The four-week moving average of continued claims for unemployment insurance rose for the fifth straight week and has increased for 13 of the last 15 weeks;
  • The four-week moving average of continued claims rose to its highest level since last March

Data Source: Department of Labor

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The pathway from employment to a new job remains clogged according to data from the Labor Department on continued claims for unemployment insurance, suggesting a continued mismatch between available jobs and the newly unemployed.

The increase in the four-week moving average of continued claims represents the backlog in the number of individuals unable to escape from unemployment rolls by getting a new job. Indeed, the data are consistent with statistics in the monthly Employment Situation showing a steady decline in the number of “re-entrants” to the labor force (from unemployment rolls). Since January, the number of re-entrants to the labor force has dropped almost 16 percent and last month represented 28.9 percent of the total number of persons unemployed, down from 31.3 percent a year earlier.

The data suggest strongly unemployed individuals are unable to requalify for the jobs they once had.

The statistics are like those in the monthly Job Openings and Labor Turnover Survey which have been showing gaps between job openings and hires in the same industries.

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 Unemployment Insurance Claims Drop but Continued Claims Shoot Up

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 214,000 1st-time claims for unemployment insurance for the week ended January 4, 2020, a DECREASE of9,000from the previous week’s upwardly revised 223,000 (from 222000);
  • The four-week moving average of initial claims FELL 9,500 to 224000;
  • Four-week moving average represented 0.144 percent of employment, UP from 0.142 percent one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,803,000 for the week ended December 28, UP 75,000 from the previous week’s UNREVISED 1,728,000;
  • The four-week moving average of continued claims ROSE 33,000 to 1,744,750.

Trends:

  • The number of initial claims for unemployment fell for the fourth straight week for the first time since March-April last year;
  • The four-week moving average of first-time unemployment insurance claims fell for the first time in five weeks;
  • The week-week increase in continued unemployment insurance claims was the largest since the week ended November 28, 2015 when continued claims rose 80,000.

Data Source: Department of Labor

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First-time claims for unemployment insurance fell back for the fourth straight week, the Labor Department reported Thursday, returning to the recent normal range.

But, the lasting nature of those who lost their jobs in the preceding four weeks showed up in continued claims which jumped 75,000 to the highest level since April 2018.

The job losses came largely in California in the wake of wildfires ravaging that state.

The Labor Department report will have no impact on the Employment Situation release from the Bureau of Labor Statistics due Friday.

That report is expected to continue to show strength. The monthly report from payroll processing firm ADP showed an increase of 202,000 private sector jobs in December. At the same time, the government has begun adding Census workers which should show up as a jump in federal employment 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

Unemployment Insurance Claims Slide but Remain High

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 234,000 1st-time claims for unemployment insurance for the week ended December 14, 2019, a DECREASE of18,000from the previous week’s unrevised 252,000;
  • The four-week moving average of initial claims ROSE 1,500 to 225,500;
  • Four-week moving average represented 0.142 percent of employment, UP from 0.141 percent one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,722,000 for the week ended December 7, UP 51,000 from the previous week’s UPWARDLY REVISED 1,671,000 (from 1,667,000)
  • The four-week moving average of continued claims ROSE 6,250 to 1,683,500.

Trends:

  • The surge in the number of continued claims was the largest the week ended February 16 when continued claims rose 54,000;
  • According to the Labor Department, four states saw an increase of first-time of more than 8,000 for the week ended December 7
  • The four-week moving average of initial claims rose to its highest level since February.

Data Source: Department of Labor

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First-time claims for unemployment insurance fell back 18,000 for the week ended December 14, the Labor Department reported Thursday.

And using state reports received on a one-week lag, the Labor Department attributed the 51,000 increase in first time claims for the week ended December 7 to California wildfires and layoffs in the transportation and warehousing sector, a product of higher tariffs which tamped down imports.

The higher number of initial claims hints at a possible increase in the nation’s unemployment rate when the Bureau of Labor Statistics’ Employment Situation Report for December is released January 10. From mid-November to mid-December, the number of first-time claims rose 6,000 and the four-week moving average of initial claims increased 4,250. Both measures also increased from mid-November to mid-December.

The relatively high level of first-time claims for the week ended December 14 is particularly worrisome. While the data for the previous week was likely impacted by the often-extended Thanksgiving Day holiday, there was no calendar interference in the subsequent week.

Weekly claims data are highly volatile in the best of times, even more so in a week which reflected a later-than-usual Thanksgiving holiday. During holiday periods displaced workers can file claims electronically even as government workers who process them may take vacation.

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

Existing Home Sales Slip in November

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – FELL 1.7 percent, 90,000, in November to a seasonally adjusted annual sales rate of 5.35 million;
  • Sales pace for October was revised DOWN 20,000 to 5.44 million;
  • Median price of an existing single-family home ROSE 0.1 percent, $300, to $271,300;
  • Year-year the median price is up 5.4 percent or $13,900;
  • Number of homes available for sale DECLINED 130,000 to 1.64 million;
  • The months’ supply of homes for sale in November FELL to 3.7 months from 3.9 months.

Trends:

  • Year-year sales were UP 2.7 percent, the fifth consecutive month of year-to-year increases after 16 months of year-year declines;
  • The median price of an existing single-family home ROSE for the first time in five months;
  • The inventory of homes for sale fell for the fifth straight month, the longest stretch of monthly declines since the number of homes for sale fell for six straight months from July through December last year.

Data Source: National Association of Realtors (NAR)

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Despite near record low mortgage rates and stable prices, existing home sales slipped 1.7 percent in November, underscoring a difficult year for existing home sales.

The dip in home prices has trimmed prices of existing homes leading many would-be sellers to take their homes off the market, reducing choices for buyers, trimming the average sales pace to 5.36 million in the first 11 months of 2018 to 5.23 in the first 11 months this year.

The number of homes for sale shrank to 1.64 million in November, the lowest level since 1.63 million in February which was followed in March by a 4.9 percent drop in sales. The 130,000 drop in the inventory of homes for sale was the largest single-month decline since last December when the number of homes on the market fell 210,000.

As if to replace the shrinking inventory of existing homes for sale, the number of permits and starts for single-family homes increased in November, the government reported earlier this week. And, with the increase in homebuilding, the housing market, reflecting builder sentiment, rose sharply in December.

Homebuilding – that is new homes sold – represents about 10 percent of the home sales market but has a disproportionate impact on the economy, reflecting as it does construction labor, and the purchase of building material and supplies.

Also, according to the National Association of Home Builders, the buyer of a new home spends an average of $9,500 on furnishing during the first year of homeownership compared with $6,500 spent by the buyer of an existing home.

The decline in existing home sales came despite two straight months – August and September –in which the NAR’s pending home sales index (reflecting contracts for sale) rose. The pending home sales index fell on October suggesting another dip in sales (closings) in December.

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.

Housing Permits, Starts Hit 12-year High in November

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Home-building activity, measured by housing permits and starts ROSE in November with both hitting a post-Recession high
  • The seasonally adjusted annual rate of total starts ROSE 3.2 percent or 32,000 to1.37 million;
  • Starts for new single-family homes ROSE 2.0 percent or 18,000 to 936,000;
  • The rate of total housing completions ROSE 117,000 or 10.3 percent in October;
  • The SAAR of single-family completions ROSE 4.5 percent or 39,000.

Trends:

  • Total permit activity for November rose to the highest level since May 2007;
  • Single-family permit activity rose to its highest level since August 2007;
  • Single-family housing starts were up year-year for the sixth straight month.

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

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Single- and multi-family homebuilding moved higher in November, reinforcing solid builder confidence levels according to the Census Bureau and Department of Housing and Urban Development.

The HUD-Census report showed housing activity reaching new post-recession highs, suggesting a comeback for housing. The home-building data reinforces strong builder confidence as suggested by the National Home Builders Association’s housing market index. That index rose to a 20-year high this month the NAHB reported Monday.

The rebound in builder sentiment suggests a recovery in the housing sector. New home sales which slipped slightly in October (the most recent data) are nonetheless up a solid 31.6 percent year over year due in large measure to low interest rates and falling prices. The median price of a new single-family home in October was $316,700m a drop of $11,600 or 3.5 percent from a year ago.  (The report on November new home sales and prices is scheduled for release next Monday.)

The uptick in both permits and starts comes as good news for construction employment which has seen slow growth in the last few months. The number of residential construction jobs, according to the Bureau of Labor Statistics grown just 0.8 percent since the beginning of the year compared with 3.8 percent growth in the first 11 months last year.

The increase in total permits was due largely to an increase in multi-family activity which accounted for 14,000 units compared with 7,000 single-family homes.

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