Existing home sales outpaced expectations to hit an eight-year high, while new home sales were at a seven-month low. Meanwhile, lay-offs shrank to their smallest rate in more than 40 years.
Existing Home Sales
Sales of existing single-family homes, townhomes, condominiums and co-ops, increased 3.2 percent to an annual rate of 5.49 million in June, according to last week’s report from the National Association of Realtors. This was not only well ahead of the market expectation for a 5.4 million-unit pace, but marked the highest level in more than eight years.
“Buyers have come back in force, leading to the strongest past two months in sales since early 2007,“ NAR Chief Economist Lawrence Yun said. “This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that’s giving more households the financial wherewithal and incentive to buy.“
Looking at price, the median existing-home price for all housing types in June rose to $236,400, which is 6.5 percent higher than June 2014’s and surpassed July 2006’s peak median sales price of $230,400. Looking at inventory, the supply of existing homes at the end of June grew 0.9 percent to 2.3 million units available for sale. This put the inventory of existing homes available for sale at five months.
“Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers,“ Yun noted. “Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes.“
New Home Sales
While existing home sales skyrocketed, sales of new, single-family homes fell to an annual rate of 482,000 in June, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development. This was 6.8 percent below May’s revised rate of 517,000, and marked a seven-month low.
However, compared on an annual basis, June’s sales pace was 18.1 percent higher than June 2014’s estimate of 408,000. If anything, the experts advised against reading too much into new home sales, when other real estate activity — such as existing homes sales — was performing so much better.
“We should not get too worried about the signal from the new home sales data at this point,“ JPMorgan Economist Daniel Silver told the Reuters news service.
In terms of prices, the median sales price of new homes sold in June was $281,800, and the average sales price was $328,700. Looking at inventory, the estimated number of new homes for sale at the end of June was 215,000, which represented a 5.4-month supply at June’s sales rate.
Initial Jobless Claims
First-time claims for unemployment insurance benefits filed by recently unemployed individuals plummeted to a 40-year low. Initial jobless claims filed during the week ending July 18, dropped to 255,000, a tumble of 26,000 claims from the previous week’s total of 281,000, the Employment and Training Administration reported last week.
The news marked the lowest point for lay-offs since November 24, 1973’s total of 233,000 claims. The big driver for the substantial drop was likely lay-offs due to restructuring in the car industry, but there was no denying that lay-offs were in retreat.
“This week’s claims reading may have been exaggerated on the low side but there is certainly no sign of the labor market losing momentum,“ High Frequency Economics’ Jim O’Sullivan told the Wall Street Journal. “The message: Employment growth remains more than strong enough to keep the unemployment rate declining.“
The four-week moving average — considered a more stable measure of lay-off activity — fell to 278,500, a decrease of 4,000 from the previous week’s unrevised average of 282,500. This was still well below the 300,000-claim mark that indicates a healthy job market.
This week we can expect:
- Monday — Durable goods orders for June from the Census Bureau.
- Tuesday — Consumer confidence for July from The Conference Board.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration; advanced second quarter GDP estimate from the Bureau of Economic Analysis.
- Friday — Consumer sentiment for July from the University of Michigan and Thompson-Reuters Survey of Consumers.
Last week’s economic news included an encouraging report from the National Association of Home Builders, whose housing market index held steady with a reading of 60 in July. This was the 13th consecutive month for readings over 50, which indicate that more builders are confident about housing markets than those who are not. July’s reading was noteworthy as it was the highest since November 2005 prior to the recession.
Housing Starts, Building Permits Increase
The Commerce Department provided further evidence of stronger housing markets with reports on housing starts and building permits issued in June. Housing starts rose from May’s reading of 1.07 million to 1.17 million, which surpassed the expected reading of 1.11 million housing starts.
May’s reading for housing starts was revised from 1.04 million to 1.07 million an annual basis.
Construction of apartments and other multifamily housing complexes attained their highest level since 1987, which supports reported trends that millennials who prefer to live in larger cities are renting rather than buying homes. Housing starts gained nearly 10 percent between May and June. Would-be home buyers are also renting due to tighter mortgage approval standards; others may be “sitting on the fence” as they wait for further indications of stronger labor markets and improvements in overall economic conditions.
Building permits issued in June supported trends in housing starts, with permits for multi-family housing units higher by 16. 10 percent and was the highest reading for multi-family building permits since 1990. Analysts said that the increase in multifamily building permits was in caused by the pending expiration of a tax credit for builders in New York State that was set to expire June 30.
Permits for single family homes rose only 0.90 percent in June, to an annual pace of 689,000 but this was still the highest reading for single family housing permits since 2008.
Mortgage Rates Rise, Jobless Claims Fall
Freddie Mac reported that average mortgage rates rose last week. The rate for a 30-year fixed rate mortgage averaged 4.09 percent and was higher by five basis points. The average rate for a 15-year mortgage was also five basis points higher at 3.25 percent. The average rate for a 5/1 adjustable rate mortgage was up by three basis points to 2.96 percent. Discount points were 0.60 percent for 15 and 30 year mortgages and 0.50 percent for 6/1 adjustable rate mortgages.
New jobless claims fell to 281,000 last week against the prior week’s reading of 296,000 new claims and an expected reading of 285,000 new jobless claims. Analysts said that the current reading indicates that last week’s spike in new unemployment claims was a false alarm. Seasonal anomalies and re-tooling at some auto plants were cited as causes for the prior week’s high reading. New jobless claims have remained under the benchmark reading of 300,000 since February for the longest consecutive period in 15 years.
Last week’s reports ended with the University of Michigan’s Consumer Sentiment Index, which fell from June’s reading of 96.1 to 93.3; analysts expected a reading of 95.0.
Scheduled economic reports for next week include new and existing home sales, and FHFA home prices along with weekly reports on mortgage rates and new jobless claims.
Last week’s scheduled economic events were few due to the Independence Day holiday. Freddie Mac’s weekly survey of mortgage rates brought good news as mortgage rates fell across the board. The Federal Reserve released the minutes of its most recent Federal Open Market Committee (FOMC) meeting and weekly jobless claims rose.
Job Openings Rise to Highest Level Since 2000
The Labor Department reported that U.S. job openings rose from April’s reading of 5.33 million to 5.36 million job openings in May. This was the highest reading for job openings since the report’s inception in 2000. Private sector job openings rose to 4.85 million, an increase of 16 percent. Government jobs rose increased by 511,000 open jobs from April’s reading of 430,000 job openings. Based on the Labor Department’s report of 8.67 million unemployed workers, there were 1.60 job seekers for each job opening in May as compared to 2.10 job seekers for each job available in May 2014. There were approximately 1.80 job seekers for each job available when the recession started in December 2007.
FOMC Minutes: Fed Issues No Firm Date for Raising Rates
On Wednesday, the Federal Reserve released the minutes of June’s FOMC meeting, during which nine of ten committee members indicated that they were not ready to raise the federal funds rate. One FOMC member indicated that they were willing to wait for another meeting or two to raise rates. While FOMC has hinted at the likelihood of raising rates this fall, committee members are wary of moving too quickly and cited developments in China and Greece as concerns that contributed to the committee’s current wait and see position. When the Fed does raise its target rates from 0.00 percent, consumers can expect higher mortgage and loan rates.
Freddie Mac: Mortgage Rates Fall, Jobless Claims Rise
Mortgage rates fizzled last week with Freddie Mac reporting average rates lower for all types of mortgages. The average rate for a 30-year fixed rate mortgage was four basis points lower at 4.04 percent and discount points unchanged at 0.60 percent; the average rate for a 15-year fixed rate mortgage was also four basis points lower at 3.20 percent. Average discount points for a 15-year mortgage fell from 0.60 to 0.50 percent. The average rate for a 5/1 adjustable rate mortgage fell by six basis points to 2.93 percent with discount points unchanged at 0.40 percent.
According to the Labor Department, weekly jobless claims rose to 297,000 new claims filed as compared to 282,000 new claims filed the previous week. There were no estimates for last week’s jobless claims due to the holiday.
This week’s scheduled economic reports include Retail Prices, Retail Prices Except Automotive and the NAHB Housing Market Index. The Commerce Department is set to release monthly readings for Housing Starts and Building Permits. In addition to Freddie Mac’s report on mortgage rates and the Labor Department’s report on new jobless claims, the University of Michigan will wrap up the week with its Consumer Sentiment report.
Technology is infiltrating every aspect of our lives. Twenty years ago, who could have predicted we’d have the Internet in our pockets? Or a refrigerator that tracks our purchases? There are so many choices when it comes to connecting your home and finding fun ways to let technology make your life easier. But which new tech tools are really worth the cost?
GE has come out with a range of connected appliances. Smart ovens can be turned on to preheat while you’re still driving home from the grocery store, and you can also change the temperature or get a notification that dinner is done right from your phone, too.
According to thewirecutter.com, they’re just not worth it — yet. GE’s Wi-Fi enabled fridges, due out in fall 2015, will let you know when the water filter needs changing or if the door has been left open. One day your fridge will be able to order more milk when you’re running low and check you’ve got all the ingredients for pasta primavera. Currently, though, fancy refrigerators mostly play music and post notes for the next person nearby to buy that milk. Plus, thewirecutter says, the software in general can’t be upgraded. Wait until these things have developed further.
Huh? Do you really need an alert when your dishwasher is done? Personally I set mine to run either overnight or in the morning before I leave for work. I find it’s usually done by the next time I’m in the kitchen
Kwikset, a pretty well-known maker of locks, has developed an ekey system. You can share a key with anyone, so no more fake rocks in the yard or placing a spare above the front door (or sending your five-year-old through the doggy door, ahem). Keys can be assigned to multiple people and can be revoked right from your phone. Know when your door is opened when you’re not home. You can even create a “scheduled” ekey that only allows access on certain days at certain times. Pricey, but super-convenient for key losers, especially if your car is also keyless.
The Nest is still the top pick for most people when it comes to home technology. The Nest Learning Thermostat is not only attractive, it’s smart—it can learn your preferences, and your daily schedule, and adjust the temperature in your home accordingly. So it saves you money as well as helping to keep you comfortable. Its interface with your phone is considered the best of all the smart thermostats out there, as well.
Control color to suit your mood, turn lights on when you’re out late or away on vacation, or schedule lighting changes from your phone or tablet. Cree, GE, and Belkin make smart LED bulbs that get pretty good reviews.
Of course, you can’t really hook up your smart home without a hub. Hubs help you get all of your smart devices controlled under one app, making life easier, which is really the ultimate goal of a smart home, right? PCMag recommends the SmartThings Hub and devices from IControl, and Logitech. There’s also the Wink Connected Home Hub, Apple’s Homekit, and the Insteon Hub to turn your Wi-Fi enabled home features into remotely controlled smart accessories that you access on the go. If you’re working on a budget, the Quirky Pivot Power Genius is a smart power strip that you can use to control plug-in items you already have in your home.
Our lives are getting easier — or are they getting more complicated? Either way, these smart, connected home appliances and features can help you take care of your home with the touch of a few buttons, and soon these tools will be taking care of us!