- Daily COVID-19 cases soar to new daily record.
- Unemployment is hitting records; used-vehicle sales slow.
- Housing is one of the few bright spots.
Daily new COVID-19 cases continue an upward trend. As the month closes, we are seeing a new record set in daily cases, hitting the milestone of 80,000 a day over the weekend.
In economic news, housing construction and home sales are the bright spots. Unemployment stands at record levels. Used-vehicle sales are slowing.
Housing strong: Single-family construction and home sales continue to rise. The supply of homes for sales is at record lows.
Residential construction activity increased in September as starts and permits reached new multiyear highs. Permits are up 8.1% from a year ago, and permits lead housing starts, implying starts will likely increase further as conditions allow. Beneath the top numbers, a split in the composition of new construction is clear. Single-family permits are up 24% from a year ago, while multi-family permits are down 19%. Low mortgage rates and increased demand for single-family homes and second homes have been helping new single-family construction grow since April. Multifamily is dealing with weakening demand for apartments as lower wage workers have been hardest hit in the pandemic.
Existing home sales increased again in September after strong gains every month this summer, a pace not seen since May 2006. Inventory declined again – down 19.2% from a year ago. The months’ supply of homes for sale declined to 2.7 months, which is a record low and less than half of what is considered normal. The median sales price hit a new high and represented a 14.8% year-over-year gain. Home sales improved in every region but were up the most in the Northeast and South. The National Association of Realtors also reported that sales in vacation destination counties have seen a strong acceleration since July.
Used sales slow: Used-vehicle sales lost momentum in October leading to normalized supply and price declines, but the price declines are smaller than we typically see in October. We are no longer seeing used-vehicle prices increasing in either the wholesale or retail market.
However, the seasonally adjusted Manheim Used Vehicle Value Index increased 0.9% comparing the first 15 days of October to the month of September. It should be noted that the non-seasonally adjusted (NSA) monthly change was -1.5%, which is in line with what we have been seeing in weekly price trends. The difference between the two metrics is largely a result of the seasonal adjustment, which expects a larger decline in October. For example, across the fully history of the Manheim Index, October has averaged a 2.1% monthly decline in the NSA price. Indeed, last year the decline was 2.7%.
Record joblessness: Fewer people are on traditional unemployment benefits, and fewer are filing each week. However, the number filing for unemployment assistance each week is still at levels that would have set records in any other year.
The latest data show 8.4 million people on traditional unemployment benefits, which are limited to six months of coverage. But 23.2 million remain on some form of unemployment benefits including pandemic unemployment assistance, which provides coverage beyond six months. In the early weeks of the pandemic, which was more than 6.5 months ago, 16.8 million people had filed for unemployment assistance, and those claimants would no longer qualify for continued traditional assistance. Initial claims declined to 787,000, which is an improving trend, but that number before the pandemic would have been a record going back to 1967. In other words, such a high level of initial claims suggest that layoffs continue as businesses contend with reduced activity.
Bumpy consumer sentiment: Consumer sentiment has been bumpier this month but so far it has improved modestly. The index of consumer sentiment from Morning Consult lost some ground last week. The daily index as of last Friday was down 0.1% from a week ago. Sentiment is now down by 18.5% compared to February.
Check back on Smoke on Cars for a video that will include updated data.