Last Week's Economic News in Review

April 3, 2019

New home sales grew more than expected, while housing starts contracted, and layoffs fell.

New Home Sales

Sales of new single‐family homes in February hit an annual rate of 667,000, marking a 4.9 percent gain over January's rate of 636,000, the Census Bureau and the Department of Housing and Urban Development reported last week.

February's sales were well above economists' expectations of sales of 625,000. Compared to last year, February's sales were 0.6 percent higher than February 2018's pace of 663,000.

Looking at price, the median sales price for new homes sold in February was $315,300, and the average sales price was $379,600. In terms of inventory, the number of new homes for sale at the end of February totaled 340,000, representing 6.1-month supply at February's sales rate.

"This trend supports the fact that lower mortgage rates have started to entice buyers this Spring and foreshadows a potential strengthening of existing-home sales in the months to come," said Chief Economist Danielle Hale to the New York Times.

Housing Starts

Looking at future housing inventory, construction starts on private housing dropped to an adjusted rate of 1.16 million in February, marking an 8.7 percent drop from January's rate of 1.27 million, according to last week's report from the Census Bureau and the Department of Housing and Urban Development.

This was a bit lower than the annual rate of 1.2 million that economists had predicted for February. Compared to the same period last year, this was 9.9 percent below February 2018's rate of 1.29 million.

Starts on single‐family homes in February plummeted to an annual rate of 805,000, which was a sizable 17 percent lower than January's pace of 970,000. Starts on buildings with five or more units skyrocketed to an annual rate of 352,000, which was 23.5 percent higher than January's rate of 285,000.

Initial Jobless Claims

Looking at layoffs, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending March 23 dipped to 211,000, a decline of 5,000 claims from the preceding week's total of 216,000, the Employment and Training Administration reported last week. Economists had projected an increase to 222,000.

The four-week moving average - regarded as a more reliable measure of initial jobless claims- fell to 217,250, a drop of 3,250 claims from the prior week's average of 220,500. This marked the 212th week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.

Economic releases appear to have caught up from the recent government shutdown. This week, we can expect:

  1. Monday - Retail sales for February and business inventories for January from the Census Bureau; construction spending for February from the Census Bureau and the Department of Housing and Urban Development.

  2. Tuesday - Car and truck sales for March from the auto makers; durable goods orders for February from the Census Bureau.

  3. Thursday - Initial jobless claims for last week from the Employment and Training Administration.

  4. Friday - Consumer credit for February from the Federal Reserve; payrolls, unemployment rate, and hourly earnings for March from the Bureau of Labor Statistics.