Weekly Economic Update - Not An Illusion

It is true that the older one gets the faster time seems to fly by, but this time it isn’t your imagination. We really did get two new home sales reports in 10 days and the second batch of residential construction data in three weeks as the Census Bureau catches up with its shutdown data drought.

The December new home sales report last week surprised everyone with a 16.9% jump to 621,000 units (now revised to 652,000). January took some of it back. Sales fell by 6.9% to 607,000 units, putting the annual rate 4.1% behind that of last January. It could have been worse as three regions posted double digit declines, but sales in the West jumped by nearly 28% to an annual rate of 184,000 units.

The current inventory of 336,000 new homes for sale now represents a 6.6-month supply, one month more than in January 2018. This helps ease some price pressure and both median and average prices have edged down a bit over the last 12 months.

Construction, which had a weak ending last year, roared out of the gate in 2019. Permitting was up a respectable enough 1.4% to a seasonal rate of 1.345 million units in January although single family permits were 2.1% lower than in December, but it was housing starts and completions that headlined the report. Starts increased by 18.6% (single-family starts rose by 25.2%) to 1.230 million units from December’s really awful 1.08-million-unit estimate. Completions, which usually don’t get a lot of attention, soared 27.6% to an annualized 1.24-million-unit annual rate.

Despite the good numbers, construction still has some catching up to do. Permits are down 1.5% and starts 7.8% from January 2018 levels.

“Fluky” Not Foreboding

The Employment Situation report left a lot of people breathless--and that wasn’t a good thing. It was the worst month for job creation since September 2017 and it took two hurricanes that month to do it. There were 20,000 new jobs created in February compared to an upwardly revised 311,000 in January. It doesn’t seem to be an indication of trouble ahead. One economist called the number “fluky” while another said, "The three-month trend in job gains remains solid while survey data suggest no letup in demand for workers by employers."

There was good news in the report as well. The unemployment rate dropped back down to 3.8% after a few months at 3.9% and 4.0% and wages rose 0.4% for the month and 3.4% on an annual basis.

Saving the best news for last; the 30-year mortgage rates lost another 10-basis points last week, finishing at 4.31%. Freddie Mac says it is the lowest rate since February 2018. Maybe its time to call your favorite loan officer.  

03.14.2019

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