October 21, 2021 | 10:26
Want To Buy My House? Ye.
Good news.... which is also not great news....
U.S. existing home sales beat expectations in September, jumping 7.0% to 6.29 mln units annualized. That's the biggest one-month move since July 2020 and the highest level since the start of the year. They're still below year-ago levels but those are 'base effects'... everyone moving out to the burbs or to cheaper locales while doing the same job. Singles and multis attracted more buyers, which hasn't happened since last December. And note that this is only the 3rd time in 2021 that sales of single-family homes rose. Again, chalk it up to supply issues ..... of homes themselves. Yes, the housing market has had its own "supply problems" for some time, if you look at inventories and months' supply. During normal times, there are around 6 months out there... now, try 2.4.
Every region saw more "SOLD" signs stuck in the front lawn, with the South racking up the biggest gain (8.6%). And with demand still strong, prices are up. The median sales price rose 13.3% y/y; and, a little quicker for single-family homes. With prices up, and mortgage rates off the lows (but still historically low), it is getting tougher for first-timers to get their foot in the door. The share of sales to first-time homeowners slipped to 28% last month, the smallest share since 2015. And, higher prices are also making buyers of second-homes think twice... their share fell 2 ppts to 13%. Those with deep pockets (all-cash) made up 23%, while repeat buyers had a steady 49%.
If I had to find something bad to say, it is this. Buying a new place means buying a new TV, perhaps, or a new sofa ("PIVOT!"). That is good news for retailers but, strangely, dare I say, not so for manufacturers as they struggle to find the materials to fill the order.
Strange times we live in these days.
Earlier today, there was positive news on the job front, with initial jobless claims slipping 6k to 290k in the survey week of October 16, while continuing claims took a 122k drop to 2,481k in the week prior. Both readings are the lowest since mid-March 2020. Let's keep that going.....and see payrolls rise and vacancies decline.
Also, in a separate report, another regional Fed manufacturing survey looked strong, which is encouraging and, frankly, a little surprising. In October, the Philly Fed Business Outlook survey rose 4.2 pts on an ISM-adjusted basis to 63.6, the highest since 1973. (Last week, the Empire State survey slipped 2.9 pts to a still high 60.0.) And anything above 50 indicates expansion. New orders and shipments improved, but there's still work to be done as unfilled orders also climbed and delivery times lengthened. So businesses hired... the employment diffusion index was near record highs, or at least, in over 50 years. Prices paid rose back above the 70 mark, joining only a few months that have made it up there (4x this year, 1x in 2008, and before that, back in the 80s). Prices received hovered near four-decade highs.