- Jobless claims drop to new pandemic low.
- Existing home sales reach the highest pace since January on low inventory.
- Consumer sentiment slumps.
Existing home sales increased more strongly than expected in September and reached the highest pace of sales since January.
The trend in new daily COVID-19 cases declined again last week as did new and continuing jobless claims, which fell to new pandemic lows. Still, however, consumer sentiment lost ground and, as a result, is down so far in October.
New construction trends slowed in September as the more volatile multifamily sector drove declines in permits and starts. Total residential construction activity remains up substantially compared to 2019.
Existing home sales increased in September to the strongest pace since January. Supply declined and remained incredibly tight for existing homes.
New construction declined: Residential construction declined in September because of a pullback in multifamily activity, which had driven gains in August. The seasonally adjusted annualized rate (SAAR) of starts declined 1.6% and permits declined an even larger 7.7%.
After the September decline, starts were still up 7.4% from last September and up 21.0% compared to September 2019. Permits were unchanged from a year ago and up 10.4% compared to 2019. Permits lead starts, so the permitting pace at 1.589 million units was higher than the 1.555 million starts pace, and that is an indication that starts will increase in future months. Material shortages and associated increases in costs, as well as labor shortages, have been holding back activity this year.
Single-family activity was stable as single-family starts were unchanged in September from August. Single-family permits declined 0.9% in September while multi-family permits declined 18.3%. Compared to 2019, single-family permits were up 16%, and multi-family permits were up 1%. Multifamily trends are more volatile in this government sourced survey data. With rent increases accelerating, multifamily is likely to grow in the future.
Home sales rose: Existing home sales increased more strongly than expected in September and reached the highest pace of sales since January. The existing home sales SAAR increased 7.0% to 6.29 million. At the September rate, existing home sales were down 2.3% from a year ago but up 17.4% compared to September 2019. Inventory declined to 1.27 million units, which was down 13.0% from a year ago.
The National Association of Realtors reported that 86% of the homes sold in September were on the market for less than a month, and the typical time on the market was 17 days, which was unchanged from April, May, June, July, and August and still a record low. The months’ supply of homes for sale declined to 2.4 months, which was the tightest level of supply since April and less than half of what is considered normal. The median sales price saw a seasonal decline to $352,800 from a record $362,800 in June. Prices were up 13.3% from a year ago. Home sales were up in every region in September.
Consumer sentiment fell: The daily index of consumer sentiment from Morning Consult declined slightly for five straight days before increasing slightly last Friday, producing a 0.8% decline week over week. As a result, sentiment is down 0.7% for the month after declining 5.5% in July, 3.1% in August, and 0.8% in September. The Morning Consult Index as of Friday is down 20.7% since February 29, 2020. Friday’s index level is where it was in early February.
Jobless claims decline: As of October 9, 2.48 million Americans remain on traditional unemployment benefits, which are limited to at most six months of coverage. About 11.3 were on some form of unemployment benefits including pandemic unemployment assistance as of September 4, which was when that assistance ended, removing support from 8.5 million people.
Initial claims declined last week to 290,000, which was a new low for the pandemic. Weekly claims remain elevated but are slowly declining toward the 212,000 average per week in 2020 in the weeks before the pandemic began.
An Auto Market Report video will be published in Smoke on Cars on Tuesday, October 26.