The Decline Continued in April: May 18 – 22

Like just about everything else, the housing market slammed on the brakes in April. Here are the five things we learned from U.S. economic data released during the week ending May 22.


Forward-looking economic indicators show business activity fell sharply again in April (but not as drastically as March). The Conference Board’s Leading Economic Index (LEI) shed 4.6 points in April to a reading of 98.8 (2016=100), down 11.7 percent from a year earlier. Four of ten LEI components made positive contributions to the measure, including stock prices and the interest rate spread. The other six components pulled down the LEI, led by average manufacturing hours, jobless claims, and building permits. The coincident index nosedived by 9.4 points to 96.6, down 9.4 percent from April 2019. Of the index’s four components, the two tied to nonfarm payrolls and industrial production pulled the index down. The lagging index, however, advanced by 4.5 points to 115.3 that left the measure up 7.3 percent over the past year. The press release said the broad-based drop in the LEI “suggests that an imminent re-opening of some sectors does not imply a fast rebound for the economy at large.”


Sales of previously owned homes were not immune to the pandemic in April. The National Association of Realtors reports that existing home sales sank 17.8 percent during the month to a seasonally adjusted annualized rate (SAAR) 4.330 million units. This was the biggest single-month percentage drop in home sales in a decade, leaving the measure at its lowest mark since July 2010. Sales were down in all four Census regions on both a month-to-month and year-to-year basis. Beyond softer demand, holding back sales was the number of homes on the market. There were 1.470 million homes on the market at the end of April, down 1.3 percent from March and 19.7 percent from April 2019, and the equivalent to a 4.1 month supply. The median sales price of $286,800 was up 7.4 percent from a year earlier.


…neither were housing starts. The Census Bureau estimates privately-owned housing starts plummeted 30.2 percent during April to a seasonally adjusted annualized rate (SAAR) of 891,000 units. This was the data series’ largest single-month decline (going back to 1959) and left starts at its lowest level since 2015. Single-family home starts were down 25.4 percent from March while the multi-family home (5+ units) starts were off 40.3 percent. Starts fell sharply in all four Census regions on both a month-to-month and year-to-year basis. Looking towards the future, annualized count of issued building permits slumped 20.8 percent to 1.074 million units (also a five-year low). Home completions slowed 8.1 percent to an annualized 1.176 million units. 


Homebuilder confidence rebounded a smidge in May. The National Association of Home Builders’ Housing Market Index added seven points during the month to a seasonally adjusted reading of 37, after plummeting 42 points in April. (An HMI reading below 50 means that more homebuilders see the housing market as “poor” versus being “good.”). The HMI recovered some of its April losses in three of four Census regions: West (+12 points to 44), South (up eight points to 42), and Midwest (adding seven points to 32). The HMI shed another two points in the Northeast, however. The present sales index added six points to 52 while the expected sales index advanced by ten points to 46 and prospective traffic measure moved forward by eight points to 21. The press release noted that “[l]ow interest rates are helping to sustain demand.”


Payrolls shriveled as the unemployment rate rose in all 50 states and the District of Columbia in April. The Bureau of Labor Statistics indicates that the unemployment rate hit new data series highs (going back to 1976) in 43 states, with the highest rates reported in Nevada (28.2 percent), Michigan (22.7 percent), Hawaii (22.3 percent). Only four states had unemployment rates below ten percent: Nebraska (8.3 percent), North Dakota (8.5 percent), Utah (9.7 percent), and Maryland (9.9 percent). States reporting the largest payroll declines were California (-2,344,700), New York (-1,827,300), and Texas (-1,298,900). Payrolls also were below their year-ago levels in all 50 states and the District of Columbia. 

Other U.S. economic data released over the past week:
Jobless Claims (Week ending May 16, First-Time Claims, seasonally adjusted): 2,438,000 (-249,000 vs. the previous week, +2,225,000 vs. the same week a year earlier). 4-week moving average: 3,042,000 (+1,274.9% vs. the same week a year earlier).
FOMC minutes

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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