Housing Stayed Hot This Summer: September 21 – 25

Housing, unlike the rest of the economy, shined in August. Here are the five things we learned from U.S. economic data released during the week ending September 25.


Existing home sales rose to a 14-year high in August. The National Association of Realtors reports sales of previously owned homes swelled for the third straight month with a 2.4 percent advance to a seasonally adjusted 6.00 million units. With the 10.5 percent year-to-year increase, home sales were at their highest point since December 2006. Sales grew in all four Census regions on both a month-to-month and year-to-year basis. Even with the strong rebound in transactions, sales likely would have been even greater if inventories were not so tight. The 1.49 million homes for sale at the end of August represented declines of 0.7 percent from July and 18.6 percent from a year earlier and translated into a mere 3.0 month supply. The median sales price of $310.600 was up 11.4 percent over the previous year. NAR expects homes sales will remain strong “with mortgage rates hovering around 3 percent and with continued job recovery.”

As did sales of new homes. The Census Bureau reports the seasonally adjusted annualized rate of new home sales rose 4.8 percent for the month and 43.2 percent from a year earlier to 1.011 million, its high water mark since September 2006. Sales rose in the South (+13.4 percent) and Northeast (+5.0 percent) but declined in the Midwest (-21.4 percent) and West (-1.4 percent). All four Census regions had double-digit positive percentage 12-month comparables. Inventories of new homes contracted 8.3 percent from July and 40.0 percent from August 2019 to 282,000 units, equivalent to a 3.0 month supply.

The U.S. economy expanded further in August, but growth continued to moderate. The Chicago Fed National Activity Index (CFNAI), a weighted average of 85 economic indicators, shed 175-basis points during the month. The resulting CFNAI of +0.79 was the fourth straight positive monthly reading, indicating an economy growing faster than its historical average. Forty-five of the 85 indicators positively contributed to the CFNAI, but only 29 improved from their July marks. All four major categories of components made smaller contributions to the headline index: production (shedding 103-basis points to +0.23), sales/orders/inventories (losing 57-basis points to -0.04), personal consumption/housing (falling 13-basis points to -0.04), and employment (slipping two-basis points to +0.63).

Factory orders sputtered in August. New orders for manufactured durable goods grew 0.4 percent to a seasonally adjusted $232.8 billion, per the Census Bureau. This was down sharply from June’s 7.7 percent rise and July’s 11.7 percent surge. Transportation goods orders advanced 0.5 percent despite weakness among aircraft and motor vehicles. Nontransportation durable goods orders increased 0.5 percent, led by machinery (+1.5 percent), computers/electronics (+1.2 percent), and primary metals (+1.2 percent). Orders fell for electrical equipment/appliances (-1.5 percent) and fabricated metals (-1.3 percent). Civilian nonaircraft capital goods orders—a proxy for business investment—grew 1.8 percent in August after jumping in June and July 4.3 percent and 2.5 percent, respectively.

Home prices rose in July. The Federal Housing Finance Agency’s purchase-only House Price Index (HPI) jumped 1.0 percent on a seasonally adjusted basis during the month, matching June’s rise. The HSI measures transaction prices of homes purchased with a conforming mortgage. Home prices rose in all nine Census regions, led by gains in New England (+2.0 percent), East South Central (+1.4 percent), and East North Central (+1.3 percent). Home prices have risen 6.5 percent over the past year. The press release links the “dramatic rise” in home prices to “the historically low interest rate environment and rebounding housing demand even as the supply of homes for sale remains constrained.”

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

  • Jobless Claims (Week ending September 19, First-Time Claims, seasonally adjusted): 870,000 (+6,000 vs. the previous week, +655,000 vs. the same week a year earlier). 4-week moving average: 878,250 (+311.8% vs. the same week a year earlier).

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

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