U.S. new home sales vault to near 14-year high in August

WASHINGTON (Reuters) – Sales of new U.S. single-family homes increased to their highest level in nearly 14 years in August, suggesting the housing market continued to gain momentum even as the economy’s recovery from the COVID-19 recession appears to be slowing.

The Commerce Department said on Thursday new home sales rose 4.8% to a seasonally adjusted annual rate of 1.011 million units last month, the highest level since September 2006. New home sales are counted at the signing of a contract, making them a leading housing market indicator.

July’s sales pace was revised upward to 965,000 units from the previously reported 901,000 units. Economists polled by Reuters had forecast new home sales, which account for about 14% of housing market sales, slipping 1% to a rate of 895,000-units.

The report followed on the heels of data this week showing sales of previously owned homes near a 14-year high in August.

The housing market is being powered by record-low mortgage rates and a pandemic-fueled migration to suburbs and low-density areas in search of more spacious accommodation as many people work from home. Unemployment has disproportionately affected low-wage workers in the services sector, who are typically young and renters.

In August, new home sales rose 5.0% in the Northeast. They jumped 13.4% in the South, which accounts for the bulk of transactions. But sales fell 1.7% in the West and decreased 21.4% in the Midwest. The median new house price fell 4.3% to $312,800 in August from a year ago. New home sales last month were concentrated in the $200,000 to $499,000 price range.

There were 282,000 new homes on the market last month, down from 291,000 in July. At August’s sales pace it would take 3.3 months to clear the supply of houses on the market, down from 3.6 months in July. About 71% of the homes sold last month were either under construction or yet to be built.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. weekly jobless claims remain perched at higher levels; housing marches on

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits fell less than expected last week and applications for the prior period were revised up, suggesting the labor market recovery had shifted into low gear amid fading fiscal stimulus.

The weekly jobless claims report from the Labor Department on Thursday, the most timely data on the economy’s health, also showed nearly 30 million people were on unemployment benefits at the end of August.

Signs the labor market was stalling came a day after the Federal Reserve vowed to kept interest rates near zero for a long time. The U.S. central bank noted that the COVID-19 pandemic “will continue to weigh on economic activity” in the near term and “poses considerable risks to the economic outlook over the medium term.” Fed Chair Jerome Powell said more fiscal support was likely to be needed for the economy.

Initial claims for state unemployment benefits fell 33,000 to a seasonally adjusted 860,000 for the week ended Sept. 12. Data for the prior week was revised to show 9,000 more applications received than previously reported. Economists polled by Reuters had forecast 850,000 applications in the latest week.

Un-adjusted claims dropped 75,974 to 790,021 last week. Economists prefer the un-adjusted claims number given earlier difficulties adjusting the claims data for seasonal fluctuations because of the economic shock inflected by the coronavirus crisis. Despite last week’s big drop in un-adjusted claims, they remain extraordinarily high.

A total 658,737 applications were received for the government-funded pandemic unemployment assistance last week. The PUA is for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs. Altogether, 1.45 million people filed claims last week.

The claims data added to reports this week showing a slowdown in retail sales and production at factories in August.

U.S. stocks opened lower. The dollar was steady against a basket of currencies. U.S. Treasury prices were higher.

STALL SPEED

After declining from a record 6.867 million at the end of March as businesses reopened after being shuttered to stem the spread of the coronavirus, claims have flattened, with layoffs spilling over to industries that were not initially impacted by the mandated closures.

A program to help businesses with wages expired in August, while $25 billion in government assistance for airlines’ payroll expires this month. Last week’s claims covered the period during which the government surveyed businesses for the non-farm payrolls component of September’s employment report.

The economy created 1.371 million jobs in August after adding 1.734 million in July. About 10.6 million of the 22.2 million jobs lost at the depth of the coronavirus crisis have been recovered.

While other sectors of the economy are losing steam, the housing market continues to power ahead, thanks to record-low interest rates and a migration to suburbs and low-density areas, spawned by the pandemic. Unemployment has disproportionately affected low-wage workers, who are typically renters.

A separate report from the Commerce Department on Thursday showed singe-family home building, which accounts for the largest share of the housing market, increased 4.1% to a seasonally adjusted annual rate of 1.021 million units in August.

Further gains are likely, with building permits for single-family housing units accelerating 6.0% to a rate of 1.036 million units. A 22.7% tumble in starts for the volatile multi-family housing segment, however, led to a 5.1% drop in overall home building to a rate of 1.416 million units last month.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. housing market pushes ahead, trade flows improve

By Lucia Mutikani

WASHINGTON (Reuters) – Contracts to buy U.S. previously owned homes rose to a nearly 14-1/2-year high in June, the latest indication that the housing market was weathering the COVID-19 pandemic far better than the broader economy.

Other data on Wednesday showed a sharp decline in the goods trade deficit last month, with trade boosted by a rebound in exports after three straight monthly decreases as the coronavirus upended global demand. The upbeat reports, however, did not change expectations that the economy contracted at its steepest pace since the Great Depression in the second quarter.

“Trade flows bounced but the underlying trend remains weak, driven by slow global activity and weak demand,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, rose 16.6% to 116.1 in June. That was the highest level since January 2006.

Economists polled by Reuters had forecast pending home contracts, which become sales after a month or two, increasing 15% in June. Pending home sales advanced 6.3% from a year ago.

The report followed on the heels of news on Tuesday that the homeownership rate raced to its highest level in nearly 12 years in the second quarter.

Reports this month showed a surge in homebuilder confidence in July, and an acceleration in home construction and sales of both new and previously owned homes in June.

The housing market is being boosted by historically low mortgage rates, offsetting record unemployment triggered by the coronavirus crisis, which has fallen disproportionately on workers in low-wage industries.

The public health crisis has seen the emergence of home offices and schooling, fueling demand for bigger homes in small metro areas, rural markets and large metro suburbs. But hurdles remain for the sector, which accounts for less than 5% of gross domestic product.

New cases of the respiratory illness are surging across the country. Analysts say disrupts to economic activity as authorities try to slow the spread of the virus could unleash a wave of white-collar job losses. There is also a persistent shortage of homes available for sale.

“The spike in COVID-19 infections in states in the South and the West, regions that account for well over 60% of existing home sales, may put some downward pressure on sales in the months ahead,” said Nancy Vanden Houten, lead economist at Oxford Economics in New York.

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. U.S. Treasury prices were mixed.

Pending home sales increased 11.9% in the populous South in June. They soared 11.7% in the West and surged 54.4% in the Northeast. Contracts rose 12.2% in the Midwest.

AUTO EXPORTS ACCELERATE

In a separate report on Wednesday, the Commerce Department said the goods trade deficit dropped 6.1% to $70.6 billion last month. Exports of goods accelerated 13.9% to $102.6 billion, eclipsing a 4.8% increase in goods imports to $173.2 billion. Goods imports fell in May to their lowest level since July 2010.

The rebound in exports was led by a 144.1% surge in shipments of motor vehicles and parts. Exports of capital goods soared 11.0% and consumer goods jumped 12.6%. There were also increases in exports of industrial supplies and other goods, but shipments of food, feeds and beverages fell.

Imports of motor vehicles and parts accelerated 107.7% last month. There were also strong gains in imports of capital and consumer goods. Imports of industrial supplies, however, fell.

Though the smaller goods trade deficit is a boost in the calculation of gross domestic product, it was offset by continued decreases in retail and wholesale inventories. Prior declines in imports forced businesses to draw down inventories.

“Even with the narrowing in the deficit between May and June, it widened on average between the first and second quarter so net exports should drag on growth in the second quarter,” said Daniel Silver, an economist at JPMorgan in New York.

The government is scheduled on Thursday to publish its snapshot of second-quarter GDP. According to a Reuters survey of economists, GDP probably contracted at a 34.1% annualized rate last quarter, the sharpest drop in output since record-keeping started in 1947. The economy contracted 5% in the January-March quarter. It entered recession in February.

Retail inventories dropped 2.6% in June after decreasing 6.2% in May. Motor vehicle and parts inventories tumbled 6.5%.

Retail inventories, excluding motor vehicles and parts, the component that goes into the calculation of GDP, fell 0.8% after dropping 1.7% in May. Wholesale inventories fell 2.0% in June after sliding 1.2% in the prior month.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci

U.S. home sales tumble as prices race to record high

FILE PHOTO: A real estate sign advertising a home "Under Contract" is pictured in Vienna, Virginia, outside of Washington, October 20, 2014. REUTERS/Larry Downing

By Lucia Mutikani

WASHINGTON (Reuters) – U.S home sales fell more than expected in June as a persistent shortage of properties pushed prices to a record high, suggesting the housing market was struggling to regain speed since hitting a soft patch last year.

Weak housing and manufacturing are holding back the economy, offsetting strong consumer spending. The National Association of Realtors said on Tuesday existing home sales dropped 1.7% to a seasonally adjusted annual rate of 5.27 million units last month. May’s sales pace was revised higher to 5.36 million units from the previously reported 5.34 million units.

“Meager inventory levels, especially in the entry-level segment, and still-rising prices continue to limit the selection of homes available to more budget-conscious buyers,” said Matthew Speakman, an economist at Zillow.

Economists polled by Reuters had forecast existing home sales slipping 0.2% to a rate of 5.33 million units in June. Existing home sales, which make up about 90 percent of U.S. home sales, decreased 2.2% from a year ago. That was the 16th straight year-on-year decline in home sales.

The weakness in housing comes despite cheaper mortgage rates and the lowest unemployment rate in nearly 50 years.

Supply has continued to lag, especially in the lower-price segment of the housing market because of land and labor shortages, as well as expensive building materials. The government reported last week that permits for future home construction dropped to a two-year low in June.

According to the NAR, there was a 19% drop from a year earlier in sales of houses priced $100,000 and below.

The Realtors group said there was strong demand in this market segment, but not enough homes for sale. The NAR also said last year’s revamp of the U.S. tax code, which reduced the amount of mortgage interest payments homeowners could deduct, was weighing on demand for homes priced at $1 million and above.

The 30-year fixed mortgage rate has dropped to an average of 3.81% from a more than seven-year peak of 4.94% in November, according to data from mortgage finance agency Freddie Mac. Further declines are likely as the Federal Reserve is expected to cut interest rates next week for the first time in a decade.

Last month, existing-home sales rose in the Northeast and Midwest. They tumbled in the populous South and in the West.

June’s drop in existing homes sales likely means less in brokers’ commissions, which suggests that housing probably remained a drag on the gross domestic product in the second quarter. Spending on homebuilding contracted in the first quarter, the fifth straight quarterly decline.

The Atlanta Fed is forecasting GDP rising at a 1.6% annualized rate in the second quarter. The economy grew at a 3.1% rate in the January-March period. The government will publish it snapshot of second-quarter GDP on Friday.

The PHLX housing index <.HGX> was little changed, underperforming a broadly firmer U.S. stock market. The dollar held near a five-week high against a basket of currencies. U.S. Treasury prices fell.

HOUSE PRICES RE-ACCELERATE

There were 1.93 million previously owned homes on the market in June, up from 1.91 million in May and unchanged from a year ago. The median existing house price increased 4.3% from a year ago to $285,700 in June, an all-time high. House price inflation had been slowing after a jump in mortgage rates last year dampened demand.

Last month, houses for sale typically stayed on the market for 27 days, up from 26 days in May and a year ago. Fifty-six percent of homes sold in June were on the market for less than a month.

At June’s sales pace, it would take 4.4 months to exhaust the current inventory, up from 4.3 months in May. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.

First-time buyers accounted for 35% of sales last month, up from 32% in May and 31% a year ago. Economists and realtors say a 40% share of first-time buyers is needed for a robust housing market.

(Reporting by Lucia Mutikani; editing by Andrea Ricci)

U.S. pending home sales increase in May

FILE PHOTO: For Sale signs stand in front of houses in a neighborhood in Davenport, Florida, U.S., June 29, 2016. REUTERS/Phelan Ebenhack

WASHINGTON (Reuters) – Contracts to buy previously owned homes increased in May, the National Association of Realtors said on Thursday.

The NAR’s pending home sales index rose to a reading of 105.4, up 1.1% from the prior month. Economists polled by Reuters had forecast pending home sales would rise 1.0%.

April’s index was unrevised at 104.3.

Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.

Compared to one year ago, pending home sales were down 0.7%, marking the 17th straight month of annual decreases.

(Reporting by Jason Lange; Editing by Paul Simao)

U.S. housing starts fall, but prior months revised up

FILE PHOTO: Single family homes being built by KB Homes are shown under construction in San Diego, California, U.S., April 17, 2017. REUTERS/Mike Blake/File Photo

WASHINGTON (Reuters) – U.S. homebuilding unexpectedly fell in May, but data for the prior two months was revised higher and building permits increased, suggesting that the housing market was drawing some support from a sharp decline in mortgage rates.

Housing starts dropped 0.9% to a seasonally adjusted annual rate of 1.269 million units last month amid a drop in the construction of single-family housing units, the Commerce Department said on Tuesday.

Data for April was revised up to show homebuilding rising to a pace of 1.281 million units, instead of increasing to a rate of 1.235 million units as previously reported. Housing starts in March were also stronger than initially estimated.

Economists polled by Reuters had forecast housing starts edging up to a pace of 1.239 million units in May. Single-family housing starts fell in the Northeast, the Midwest and West, but rose in the South, where the bulk of homebuilding occurs.

Building permits rose 0.3% to a rate of 1.294 million units in May. It was the second straight monthly increase in permits. Building permits have been weak this year, with much of the decline concentrated in the single-family housing segment. The housing market hit a soft patch last year and has been a drag on economic growth for five straight quarters.

The sector is being constrained by land and labor shortages, which are making it difficult for builders to fully take advantage of lower borrowing costs. As a result, the housing market continues to struggle with tight inventory, leading to sluggish sales growth.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)

Lower mortgage rates, prices lift U.S. new home sales to one-and-a-half-year high

FILE PHOTO: A real estate sign advertising a new home for sale is pictured in Vienna, Virginia, U.S. October 20, 2014. REUTERS/Larry Downing/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – Sales of new U.S. single-family homes rose to a near 1-1/2-year high in March, boosted by lower mortgage rates and house prices.

The third straight monthly increase reported by the Commerce Department on Tuesday suggested some recovery was under way in the housing market, which hit a soft patch last year against the backdrop of higher borrowing costs and more expensive homes.

“In this housing market, affordability for buyers is key,” said Danielle Hale, chief economist at realtor.com. “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.”

New home sales increased 4.5 percent to a seasonally adjusted annual rate of 692,000 units last month, the highest level since November 2017.

February’s sales pace was revised down to 662,000 units from the previously reported 667,000 units. Economists polled by Reuters had forecast new home sales, which account for about 11.7 percent of housing market sales, decreasing 2.5 percent to a pace of 650,000 units in March.

New home sales are drawn from permits and tend to be volatile on a month-to-month basis. They increased 3.0 percent from a year ago.

The median new house price dropped 9.7 percent to $302,700 in March from a year ago, the lowest level since February 2017. A separate report on Tuesday from the Federal Housing Finance Agency (FHFA) showed its house price index rose a seasonally adjusted 4.9 percent in February from a year ago.

That followed a 5.6 percent increase in January. The FHFA’s index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac.

U.S. financial markets were little moved by the new home sales data.

New home sales have not been severely impacted by the supply problems that have plagued the market for previously owned homes. A report on Monday showed home resales tumbled in March, weighed down by a persistent shortage of lower-priced houses.

Despite the broader housing market’s struggles with supply, the fundamentals for housing are strengthening. The 30-year fixed mortgage rate has dropped by about 80 basis points since November, according to data from mortgage finance agency Freddie Mac. That followed a recent decision by the Federal Reserve to suspend its three-year monetary policy tightening campaign.

In addition, house price inflation has slowed and wage growth has picked up. Still, land and labor shortages are constraining builders’ ability to break more ground on lower- priced housing projects. Investment in homebuilding contracted 0.3 percent in 2018, the biggest drop since 2010.

New home sales in the South, which accounts for the bulk of transactions, increased 3.6 percent in March to their best level since July 2007. Sales in the Midwest soared 17.6 percent to an 11-month high, while those in the West surged 6.7 percent to their strongest level in a year.

But sales in the Northeast tumbled 22.2 percent.

There were 344,000 new homes on the market last month, down 0.3 percent from February. At March’s sales pace it would take 6.0 months to clear the supply of houses on the market, down from 6.3 months in February.

About 62 percent of the houses sold last month were either under construction or yet to be built.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. mortgage applications rise as loan costs fall

FILE PHOTO: A home "SOLD" sign hangs in front of a house in Vienna, on the day the National Association of Realtors issues its Pending Home Sales for February report, in Virginia March 27, 2014. REUTERS/Larry Downing

NEW YORK (Reuters) – U.S. mortgage applications to buy a home and to refinance one increased last week as most borrowing costs fell in step with U.S. bond yields tied to worries about slowing economic growth, data from the Mortgage Bankers Association showed on Wednesday.

The Washington-based industry group’s seasonally adjusted index on mortgage activity rose 2.3 percent to 384.0 in the week ended March 8. The gauge has risen three of the past four weeks.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)

U.S. existing home sales fall sharply to three-year low

FILE PHOTO - A sold sign hangs in front of a house in Dallas, Texas September 24, 2009. REUTERS/Jessica Rinaldi

WASHINGTON (Reuters) – U.S. home sales fell in January to their lowest level in more than three years and house prices rose only modestly, suggesting a further loss of momentum in the housing market.

The National Association of Realtors said on Thursday existing home sales dropped 1.2 percent to a seasonally adjusted annual rate of 4.94 million units last month.

That was the lowest level since November 2015 and well below analysts’ expectations of a rate of 5.0 million units. December’s sales pace was revised slightly higher.

The drop in January came after months of weakness in the U.S. housing market. Existing home sales were down 8.5 percent from a year ago.

The U.S. housing market has been stymied by a sharp rise in mortgage rates since 2016 as well as land and labor shortages. That has led to tight inventory and more expensive homes.

At the same time, the 30-year fixed mortgage rate has dipped in recent months and house price inflation is slowing.

The median existing house price increased 2.8 percent from a year ago to $247,500 in January. That was the smallest increase since February 2012.

Last month, existing home sales fell in three of the country’s four major regions, rising only in the Northeast.

There were 1.59 million previously owned homes on the market in January, up from 1.53 million in December.

At January’s sales pace, it would take 3.9 months to exhaust the current inventory, up from 3.7 months in December. A supply of six to seven months is viewed as a healthy balance between supply and demand.

(Reporting by Jason Lange; Editing by Paul Simao)

U.S. homebuilding slowing; labor market strong

FILE PHOTO: Construction workers are pictured building a new home in Vienna, Virginia, outside of Washington, October 20, 2014./File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. homebuilding rebounded less than expected from a nine-month low in July, suggesting the housing market was likely to tread water for the rest of this year against the backdrop of rising construction costs and labor shortages.

But the fundamentals for the housing market remain strong. New filings for jobless benefits fell again last week, other data showed on Thursday, pointing to sustained labor market strength despite an escalating trade war between the United States and China that has rattled financial markets.

“It is more expensive to buy a new home for the American worker,” said Chris Rupkey, chief economist at MUFG in New York. “We cannot be confident that home construction will pick up in the near future.”

Housing starts rose 0.9 percent to a seasonally adjusted annual rate of 1.168 million units in July, the Commerce Department said. Starts fell to a nine-month low in June.

Groundbreaking activity increased in the Midwest and South, but dropped in the Northeast, and hit a more than 1-1/2-year low in the West. Last month’s increase in starts still left the bulk of June’s 12.9 percent plunge intact.

Building permits increased 1.5 percent to a rate of 1.311 million units, snapping three straight months of decreases. With permits now outpacing starts, homebuilding could pick up in the months ahead. But gains are likely to be limited as builders continue to complain about rising construction costs as well as shortages of skilled labor and land.

Lumber prices shot up after the Trump administration slapped anti-subsidy duties on imports of Canadian softwood lumber. Though prices have dropped in the past months, they remain high.

The housing market has underperformed a robust economy, with economists also blaming the slowdown on rising mortgage rates, which have combined with higher house prices to make home purchasing unaffordable for some first-time buyers.

The 30-year fixed mortgage rate has risen more than 50 basis points this year to an average of 4.53 percent, according to data from mortgage finance agency Freddie Mac. While that is still low by historical standards, the rise has outpaced annual wage growth, which has been stuck below 3 percent.

At the same time, house prices have increased more than 6.0 percent on an annual basis, largely driven by a dearth of properties available for sale. Residential investment contracted in the first half of the year and economists do not expect housing to contribute to growth in the final six months of 2018.

The economy grew at a 4.1 percent annualized rate in the second quarter, the fastest in nearly four years and almost double the 2.2 percent pace logged in the January-March period.

Economists polled by Reuters had forecast housing starts rising to a pace of 1.260 million units last month and permits increasing to a rate of 1.310 million units.

“Given the chronic lack of affordable housing and rapidly escalating home prices, it is worrisome that on a per capita basis, the country is producing new single-family housing stock at a rate that is similar to the trough of a typical recession,” said Sam Khater, chief economist at Freddie Mac.

The PHLX housing index <.HGX> was trading higher, tracking a broadly firmer U.S. stock market. The dollar slipped against a basket of currencies and U.S. Treasury prices fell.

TIGHT SUPPLY

Single-family home building, which accounts for the largest share of the housing market, rose 0.9 percent to a rate of 862,000 units in July. Single-family homebuilding has lost momentum since hitting a pace of 948,000 units last November, which was the strongest in more than 10 years.

Permits to build single-family homes jumped 1.9 percent in July to a pace of 869,000 units. Single-family building permits in the South, where more than half of homebuilding occurs, vaulted to an 11-year high in July.

Starts for the volatile multi-family housing segment gained 0.7 percent to a rate of 306,000 units in July. Permits for the construction of multi-family homes climbed 0.7 percent to a pace of 442,000 units.

With the moderate rise in homebuilding last month, housing inventory is likely to remain tight. In addition, housing completions fell for a third straight month, hitting an eight-month low rate of 1.188 million.

Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap. The stock of housing under construction was little changed at 1.122 million units.

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 212,000 for the week ended Aug. 11.

The claims data is being closely watched for signs of layoffs as a result of the Trump administration’s protectionist trade policy, which has also led to tit-for-tat import tariffs with other trading partners, including the European Union, Canada, and Mexico.

There have been reports of some companies either laying off workers or planning to as a result of the import duties. But with many companies reporting difficulties finding qualified workers, the fallout from the trade tensions might be minimal.

A third report showed factory activity in the mid-Atlantic region slowing sharply in August as new orders growth cooled. The Philadelphia Federal Reserve said its business conditions index tumbled 14 points to a 21-month low of 11.9 this month. Manufacturers were, however, optimistic about business prospects over the next six months.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)