Economic Outlook Tempers, Except for Housing: October 19 – 23

The housing market heated up further in September, but pictures of the broader economy were less upbeat. Here are the five things we learned from U.S. economic data released during the week ending October 23.


Forward-looking economic measures suggest the rebound is moderating. The Conference Board’s Leading Economic Index (LEI) added 7/10ths of a point in September to a reading of 107.2 (2016=100). While the LEI has gained 10.3 points since its pandemic bottom of 96.9 in April, the measure remained 4.0 percent below where it was this time last year. Five of the LEI’s ten components made positive contributions to the index, led by jobless claims, manufacturing new orders, and the interest rate spread. The coincident index eked out a 2/10ths of a point gain to 101.7 (-5.0 percent versus September 2019) with three of four index components making positive contributions. The lagging index slipped by 1/10th of a point to 107.6 (-0.6 percent versus September 2019), with only two of seven components making positive contributions. The press release noted the “decelerating pace of improvement suggests the U.S. economy could be losing momentum heading into the final quarter of 2020.

Sales of previously owned homes swelled to a 14-year high in September. Existing home sales soared 9.4 percent during the month to a seasonally adjusted annualized rate of 6.54 million units. The National Association of Realtors’ measure was not only up a whopping 20.9 percent from a year earlier, but it also represented the most homes sold since May 2006. Sales grew in all four Census regions on both a month-to-month and year-to-year basis. Inventories were exceedingly tight—the 1.47 million homes available for purchase at the end of September (-1.3 percent versus August 2020 and -19.2 percent versus September 2019) translated into a mere 2.7 month supply. NAR reported that more than seven in ten homes sold during September had been on the market for less than a month. As a result, the median sales price of $311,800 was up an incredible 14.8 percent from a year earlier.

Housing starts jumped again in September. The Census Bureau estimates housing starts grew by 1.9 percent during the month to a seasonally adjusted annualized rate (SAAR) of 1.415 million units. New single-family home starts rose 8.5 percent while those of multi-family units fell 14.7 percent. Starts were 11.1 percent ahead of their year-ago pace, split between a 22.3 percent advance for single-family homes and a 17.4 percent drop for multi-family units. It appears that interest in new homes continued to build, with issued building permits increasing 5.2 percent to an annualized 1.553 million units (+8.1 percent versus September 2019). As with starts, the growth was on the single-family side, where permits rose 7.8 percent during the month and were 24.3 percent ahead of year-ago levels. Permits for multi-family units inched up 1.0 percent during the month but remained 22.4 percent under their September 2019 reading. Housing completions surged 15.3 percent in September to an annualized 1.226 million (+25.8 percent versus September 2019).

Homebuilders’ optimism rose to an all-time high in October. The National Association of Home Builders’ (NAHB) Housing Market Index (HMI) added two points during the month to a seasonally adjusted reading of 85. The HMI has been above a reading of 50—indicative of a greater percentage of builders viewing the housing market as “good” versus being “poor”—for five straight months with the measure hitting a data series high for a second consecutive month. The HMI rose in the Northeast and West but slipped in both the Midwest and South. The single-family home sales index added two points to 90, while the expected sales measure added three points to 88. The index tracking the track of prospective buyers held steady at 74. The press release noted that housing was a “bright spot for the economy, supported by increased buyer interest in the suburbs, exurbs, and small towns.”  

Payrolls grew in 30 states in September. The Bureau of Labor Statistics reports that nonfarm payrolls expanded in 30 states during the month, with the largest gains occurring in New York (+109,300), California (+96,000), and New Jersey (+60,200). Payrolls decreased in three states (Indiana, Hawaii, and Kansas) and essentially held steady in 17 states and the District of Columbia. Payrolls were down relative to a year earlier in 48 states and the District of Columbia, with the largest year-to-year percentage declines reported in Hawaii (-18.4 percent), New York (-11.2 percent), Michigan (-9.6 percent), and Vermont (-9.6 percent). The two states where payrolls were statistically the same relative to September 2019 were Idaho and Utah.

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

  • Jobless Claims (Week ending October 17, First-Time Claims, seasonally adjusted): 787,000 (-55,000 vs. the previous week, +574,000 vs. the same week a year earlier). 4-week moving average: 811,250 (+276.9% vs. the same week a year earlier).
  • Beige Book

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

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