Housing Is a Bright Spot: August 17 – 21

Housing helped carry the U.S. economy mid-summer. Here are the five things we learned from U.S. economic data released during the week ending August 21.


Existing home sales rose in July. The National Association of Realtors reports sales of previously owned homes rose 24.7 percent during the month to a seasonally adjusted annualized rate (SAAR) of 5.86 million units. This beat the previous monthly percentage increase record of 20.7 percent set during the prior month and left home sales 8.7 percent ahead of July 2019 levels. Sales were up sharply from June in all four Census regions and failed to grow year-to-year only in the Northeast. Sales probably would have been even stronger if not for a very tight inventory—there were 1.50 million homes for sale at the end of July, down 2.1 percent from June and 21.1 percent from a year earlier and representing a mere 3.1 month supply. The median sales price of $304,100 was up 8.5 percent over the previous year. Linking it to more people working remotely, the press release notes that “current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”

…As did housing starts. Housing starts surged 22.6 percent in July to a seasonally adjusted annualized rate (SAAR) of 1.496 million units. This was the most massive single-month percentage increase for the Census Bureau data series since 2016 and followed significant gains in both May and June. Single-family home starts grew 8.2 percent while those for multi-family units (5 or more) surged 56.7 percent. Indicative of further strengthening, the number of issued building permits rose 18.8 percent to an annualized 1.495 million, 9.4 percent above year-ago levels. Permits for both single-family and multi-family homes were double-digit percentages above month-ago and year-ago levels. Housing completions increased 3.6 percent to an annualized 1.28 million units.

Homebuilder sentiment surged to a record high in August. The National Association of Home Builders’ Housing Market Index (HMI) added another six points during the month, after having swelled by 42 points during the three prior months. The seasonally adjusted reading of 78 is a record high for the 35-year old data series. A reading above 50 means a higher percentage of homebuilders see the housing market as “good” versus being “poor.” The HMI improved in all four Census regions, with sizable advances in all but the Midwest. The present sales of single-family homes index added six points to 84 while the expected sales measure grew by three points to 78. The index for the traffic of prospective buyers rose by eight points to 65.  The press release noted that “[h]ousing has clearly been a bright spot during the pandemic.”

Forward-looking economic indicators signaled further economic strengthening (although at a slower rate). The Leading Economic Index (LEI) from the Conference Board added 1.4 points in July to a reading of 104.4 (2016=100), its smallest increase over the past three months. Despite the recent gains, the LEI remained 6.8 percent below year-ago levels. Six of ten LEI components made positive contributions, led by manufacturing hours worked, building permits, and jobless claims. The coincident index advanced by 1.2 points to a reading of 99.2, leaving the measure 6.8 percent below its July 2019 mark. All four coincident index components made positive contributions, led by nonfarm payrolls and industrial production. The lagging index shed 1.1 points to 109.2, which was nevertheless 0.6 percent ahead of its year-ago reading. The press released noted that “[t]he LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020.”

Employment expanded in most parts of the U.S. in July. The Bureau of Labor Statistics reports that nonfarm payrolls grew “significantly” in 40 states and the District of Columbia during the month, led by gains in California, New York, and New Jersey. Only New Mexico experienced a statistically significant decline in jobs during July. Payrolls, however, remained below year-ago levels in all 50 states and the District of Columbia (although the year-to-year decline for Idaho is not “statistically significant” per the BLS). The states with the largest year-to-year percentage declines workers were Hawaii (-16.1 percent), New York (-13.7 percent), Massachusetts (-12.2 percent), Vermont (-12.0 percent), and Alaska (-11.9 percent).

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending August 15, First-Time Claims, seasonally adjusted): 1,106,000 (+135,000 vs. the previous week, +891,000 vs. the same week a year earlier). 4-week moving average: 1,175,750 (+445.0% vs. the same week a year earlier).
  • Treasury International Capital (June 2020, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$78.8 billion (vs. May 2020: +$59.1 billion, vs. June 2019: +$63.2 billion).
  • FOMC minutes

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

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